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5 Stocks Set to Soar on Bullish Earnings

Verint Systems

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My final earnings short-squeeze trade idea is Verint Systems (VRNT), a provider of actionable intelligence solutions and services for enterprise workforce optimization and security intelligence, which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Verint Systems to report revenue of $226.28 million on earnings of 75 cents per share.

The current short interest as a percentage of the float for Verint Systems sits at 3.6%. That means that out of the 23.58 million shares in the tradable float, 1.29 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.7%, or by about 57,000 shares. If the shorts are caught pressing their bets too aggressively into a strong quarter, then we could easily see VRNT spike sharply higher post-earnings.

From a technical perspective, VRNT is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways for the last two months, with shares moving between $33.63 on the downside and $35.89 on the upside. A high-volume move above the upper end of its recent sideways chart pattern could easily trigger a near-term breakout trade for shares of VRNT post-earnings.

If you're in the bull camp on VRNT, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $35 to $35.89 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 379,821 shares. If that breakout triggers, then VRNT will set up to enter new 52-week high territory above $35.89, which is bullish technical price action. Some possible upside targets off that breakout are $38 to above $40 a share.

I would avoid VRNT or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average at $34.45 a share and then below more support at $33.63 to $33.21 a share with high volume. If we get that move, then VRNT will set up to re-fill some of its previous gap up zone from January that started at around $31 a share.

To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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