My first earnings short-squeeze trade play is integrated energy player InterOil ( 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.>>4 GARP Growers to Buy This Summer 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.