Another earnings short-squeeze candidate is branded apparel maker for the surfing, skateboarding and snowboarding markets Quiksilver (ZQK), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Quiksilver to report revenue of $505.36 million on earnings of 4 cents per share.
The current short interest as a percentage of the float for Quiksilver is pretty high at 12.3%. That means that out of the 116.49 million shares in the tradable float, 14.09 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 1.3%, or by about 187,000 shares. If the short-sellers are caught pressing their bets into a strong quarter, then we could easily see a sharp short-squeeze develop for shares of ZQK post-earnings.
From a technical perspective, ZQK 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 month and change, with shares moving higher from its low of $5.80 to its recent high of $8.14 a share. During that uptrend, shares of ZQK have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ZQK within range of triggering a major breakout trade post-earnings.
If you're bullish on ZQK, 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 $8 to its 52-week high at $8.14 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.88 million shares. If we get that move, then ZQK will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $10 to $12 a share.
I would avoid ZQK 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 $7.43 to its 50-day at $6.82 a share with high volume. If we get that move, then ZQK will set up to re-test or possibly take out its next major support levels at $6 to $5.80 a share. Any high-volume move below $5.80 to $5.65 would then put $5 into range for shares of ZQK.
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