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My first earnings short-squeeze trade play is integrated energy player
IOC), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect InterOil to report revenue of $331.46 million on a loss of 12 cents per share.
The current short interest as a percentage of the float for InterOil is extremely high at 39.1%. That means that out of the 34.07 million shares in the tradable float, 13.45 million shares are sold short by the bears. This is a monster short interest on a stock with a relatively low float. Any bullish earnings news could easily spark a big short-squeeze for shares of IOC post-earnings.
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From a technical perspective, IOC is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently crossed back above its 50-day moving average at $74.97 a share, after it bounced higher right above its 200-day at $70.86 a share. That move is quickly pushing shares of IOC within range of triggering a major breakout trade.
If you're bullish on IOC, 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 $80 to $83.18 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 705,956 shares. If that breakout triggers, then IOC will set up to re-test or possibly take out its next major overhead resistance levels at $90 to $99 a share.
I would simply avoid IOC or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day at $74.97 a share with high volume. If we get that move, then IOC will set up to re-test or possibly take out its next major support levels at $72.56 to its 200-day at $70.86 a share. Any high-volume move below its 200-day will then put $68 into range for shares of IOC post-earnings.