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My final earnings short-squeeze play is
ZUMZ), a specialty retailer of action sports related apparel, footwear, equipment and accessories, which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Zumiez to report revenue of $147.66 million on earnings of 12 cents per share.
The current short interest as a percentage of the float for Zumiez is extremely high at 17.8%. That means that out of the 21.44 million shares in the tradable float, 3.83 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 1.4%, or about 51,000 shares. If the bears are caught pressing their bets into a bullish quarter, then shares of ZUMZ could easily rip higher post-earnings.
From a technical perspective, ZUMZ 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 five months, with shares soaring higher from its low of $17.93 to its recent high of $33.11 a share. During that uptrend, shares of ZUMZ have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ZUMZ within range of triggering a near-term breakout trade post-earnings.
If you're in the bull camp on ZUMZ, 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 at $33.11 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 488,255 shares. If that breakout triggers, then ZUMZ will set up to re-test or possibly take out its next major overhead resistance levels at $36 to $38.50 a share.
I would simply avoid ZUMZ 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 $30 to $29 a share with high volume. If we get that move, then ZUMZ will set up to re-test or possibly take out its next major support level at its 50-day moving average of $27.24 a share. Any high-volume move below $27.24 a share will then put its 200-day at $25.20 into range for shares of ZUMZ.
To see more potential earnings short squeeze plays, check out the
Earnings Short Squeeze Plays portfolio on Stockpickr.
-- Written by Roberto Pedone in Madison, Wis.