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My final earnings short-squeeze trade idea is industrial and construction supplies retailer
Fastenal(FAST - Get Report), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Fastenal to report revenue of $815.10 million on earnings of 37 cents per share.
The current short interest as a percentage of the float for Fastenal sits at 6.5%. That means that out of the 271.81 million shares in the tradable float, 17.77 million shares are sold short by the bears. This isn't a giant short interest, but it's more than enough to send shares of FAST sharply higher post-earnings if the company gives the bulls the earnings news they're looking for.
From a technical perspective, FAST is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been downtrending for the last month and change, with shares dropping from its high of $53.38 to its recent low of $48.33 a share. During that downtrend, shares of FAST have been mostly making lower highs and lower lows, which is bearish technical price action. That said, FAST has started to bounce off that $48.33 low, and it's now quickly moving within range of triggering a near-term breakout trade post-earnings.
If you're in the bull camp on FAST, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 50-day at $50.79 a share and then above more resistance at $51.70 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.58 million shares. If that breakout triggers, then FAST will set up to re-test or possibly take out its 52-week high at $53.83 a share. Any high-volume move above $53.83 will put FAST within range of hitting $55 to $60 a share.
I would simply avoid FAST or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support at $48.33 a share with high volume. If we get that move, then FAST will set up to re-test or possibly take out its next major support level at its 200-day moving average of $44.81 a share or at $42 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.