With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.
My first earnings short-squeeze trade idea is BlackBerry (BBRY - Get Report), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect BlackBerry to report revenue of $2.84 billion on a loss of 29 cents per share.Just today, Bernstein said it believes BlackBerry will likely surprise on fourth-quarter gross margins driven by BlackBerry 10 units and high margin fees. The firm expects first-quarter guidance to act as another catalyst and notes the company is in a very strong position to start shipping new devices. Bernstein has an outperform rating on the stock and has a $22 price target. The current short interest as a percentage of the float for BlackBerry is extremely high at 29.8%. That means that out of the 484.84 million shares in the tradable float, 147.22 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 7.8%, or by about 10.7 million shares. If the bears are caught pressing their bets into a solid quarter, then we could easily get a monster short-squeeze for BBRY post-earnings. From a technical perspective, BBRY is currently trending above both its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock recently sold off hard from its near-term high of $16.82 with high volume, and that selloff pushed the stock back below its 50-day moving average of $14.78 a share. Shares of BBRY have now bounced off its recent low of $13.64 and it's quickly moving within range of triggering a major breakout trade. If you're bullish on BBRY, then I would wait until after its report and look for long-biased trades if this stock manages to take out its 50-day moving average of $14.78 a share and then once it breaks out above some near-term overhead resistance levels at $16.82 to $18.32 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 65.52 million shares. If that breakout triggers, then BBRY will set up to enter new 52-week-high territory above $18.32, which is bullish technical price action. Some possible upside targets off that move are $20 to $24.