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 data storage devices player Fusion-io ( FIO), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Fusion-io to report revenue of $80.48 million on a loss of 7 cents per share.Earlier today, Piper Jafffray said its first-quarter channel checks for Fusion-io indicated a modest improvement in enterprise demand with easing competitive pressures on the company. The firm, however, keeps a neutral rating on the stock into the first quarter earnings call. Fusion-io has beat analyst estimates in each of the past four quarters. >>4 Big Stocks on Traders' Radars The current short interest as a percentage of the float for Fusion-io is extremely high at 44.7%. That means that out of the 86.11 million shares in the tradable float, 28.8 million shares are sold short by the bears. If Fusion-io can deliver the earnings news the bulls are looking for, then we could easily see a monster short-squeeze for this stock post-earnings. From a technical perspective, FIO is currently trending above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has recently started to break out above some near-term overhead resistance levels at $15.37 to $15.59 a share and above its 50-day moving average of $16.14 a share. That move is quickly pushing shares of FIO within range of triggering a major breakout trade post-earnings. If you're bullish on FIO, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some more near-term overhead resistance levels at $17 to $17.80 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.66 million shares. If that breakout triggers, then FIO will set up to re-fill some of its previous gap down zone from January that started above $20 a share. This stock could easily hit $22 to $24 if that gap gets filled with strong volume.