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My first earnings short-squeeze trade idea today is global licensor of 3D technologies
RLD), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect RealD to report revenue of $42.97 million on a loss of 19 cents per share.
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The current short interest as a percentage of the float for RealD is pretty high at 11.3%. That means that out of the 41.41 million shares in the tradable float, 4.77 million shares are sold short by the bears. This stock sports a decent short interest with a relatively low tradable float. Any bullish earnings news could easily spark a monster short-squeeze for shares of RLD post-earnings.
From a technical perspective, RLD is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways inside of a consolidation pattern for the last month and change, with shares moving between $14.17 on the downside and $15.76 on the upside. A high-volume move above the upper end of its recent range could easily trigger a major breakout trade for RLD post-earnings.
If you're bullish on RLD, 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 $15.75 to its 52-week high at $15.76 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 356,281 shares. If that breakout triggers, then RLD will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $19 to $22 a share.
I would simply avoid RLD or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day moving average at $14.49 a share and then below some key near-term support at $14.17 a share with high volume. If we get that move, then RLD will set up to re-test or possibly take out its next major support levels at $13 to $12 a share.