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5 Stocks Set to Soar on Bullish Earnings


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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.

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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.
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AH $0.00 0.00%
IOC $37.11 -3.30%
NQ $3.63 -3.20%
TTWO $30.72 0.31%
XONE $9.89 3.90%


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