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My first earnings short-squeeze trade idea is Internet radio player
Pandora Media (
P), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Pandora Media to report revenue of $123.83 million on a loss of 10 cents per share.
Just recently, Barclays Capital analyst Anthony DiClemente raised his price target on Pandora shares to $17 from $10 and lifted his rating on the stock to equal weight from underweight, saying the company has made progress in making money from advertising on mobile devices.
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The current short interest as a percentage of the float for Pandora Media is extremely high at 22.1%. That means that out of the 133.15 million shares in the tradable float, 36.65 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of Pandora Media could easily soar higher post-earnings as the bears rush to cover some of their short bets.
From a technical perspective, P 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 six months, with shares soaring higher from its low of $7.53 to its recent high of $17.16 a share. During that uptrend, shares of P have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of P within range of triggering a major breakout trade post-earnings.
If you're bullish on P, 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 $17 to its 52-week high at $17.16 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 5.46 million shares. If that breakout triggers, then P will set up to re-test or possibly take out its next major overhead resistance levels at $20 to $22 a share, or even $25 a share.
I would simply avoid P 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 $15.87 a share with high volume. If we get that move, then P will set up to re-test or possibly take out its next major support level at its 50-day moving average of $14.15 a share to $13.80 a share. Any high-volume move below $13.80 will then put $12.76 to $12.66 into range for shares of P.