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One potential earnings short-squeeze candidate is Internet-based social expression and personal publishing service provider
SFLY), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Shutterfly to report revenue of $109.74 million on a loss of 40 cents per share.
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The current short interest as a percentage of the float for Shutterfly is pretty high at 15.9%. That means that out of the 28.41 million shares in the tradable float, 5.83 million shares are sold short by the bears. This is high short interest on a stock with a relatively low float. Any bullish earnings news could easily send shares of SFLY soaring post-earnings.
From a technical perspective, SFLY is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways and consolidating for the last two months, with shares moving between $41.72 on the downside and $46.12 on the upside. A high-volume move above the upper-end of its recent range could trigger a major breakout trade for shares of SFLY post-earnings.
If you're bullish on SFLY, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 52-week high at $46.12 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 869,553 shares. If we get that breakout, then SFLY will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $60 a share.
I would avoid SFLY or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day at $43.63 a share and then below some more key near-term support levels at $42.95 to $41.72 a share with high volume. If we get that move, then SFLY will set up to re-test or possibly take out its next major support levels at $40.69 to $38 a share. Any high-volume move below $38 will then give SFLY a chance to re-fill some of its previous gap zone from February that started at $32 a share.