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My final earnings short-squeeze play today is
Lumber Liquidators(LL - Get Report), a retailer of hardwood flooring and accessories, which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Lumber Liquidators to report revenue of $215.40 million on earnings of 42 cents per share.
The current short interest as a percentage of the float for Lumber Liquidators is very high at 17.9%. That means that out of the 25.94 million shares in the tradable float, 4.64 million shares are sold short by the bears. This is a low-float and high-short-interest situation. Any bullish earnings news from Lumber Liquidators could easily spark a monster short squeeze for the stock post-earnings.
From a technical perspective, LL is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last two months, with shares moving higher from its low of $53.73 to its recent high of $71.72 a share. During that uptrend, shares of LL have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of LL within range of triggering a near-term breakout trade post-earnings.
If you're in the bull camp on LL, 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 $68.18 to $70.58 a share and then once it takes out more resistance at $71.72 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 671,000 shares. If that breakout triggers, then LL will set up to enter new 52-week high territory above $71.72, which is bullish technical price action. Some possible upside targets off that breakout are $80 to $83 a share.
I would simply avoid LL or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day at $65.25 a share and then below some more key near-term support levels at $64.08 to $63.88 a share with high volume. If we get that move, then LL will set up to re-test or possibly take out its next major support levels at $60 to $58 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 Madison, Wis.