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My first earnings short-squeeze trade idea is solar module maker
First Solar (
FSLR), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect First Solar to report revenue of $725.26 million on earnings of 75 cents per share.
Over the last four quarters, revenue for First Solar has trended higher by 28.4% on average year-over-year. The largest increase came in the second quarter of the last fiscal year, when revenue soared 79.7% from the year-earlier period.
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The current short interest as a percentage of the float for First Solar is extremely high at 30.6%. That means that out of the 60.40 million shares in the tradable float, 18.43 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 12.2%, or by about 2 million shares. If the bears are caught pressing their bets into a strong quarter, then shares of FSLR could soar higher post-earnings.
From a technical perspective, FSLR 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 soaring higher from its low of $24.26 to its recent high of $47.46 a share. During that uptrend, shares of FSLR have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of FSLR within range f triggering a major breakout trade post-earnings.
If you're bullish on FSLR, 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 of $47.46 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 6.93 million shares. If that breakout hits, then FSLR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $55 to $60 a share, or even $65 a share.
I would simply avoid FSLR 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 levels at $44.11 a share with high volume. If we get that move, then FSLR will set up to re-test or possibly take out its next major support levels at $40 to $36 a share.