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My first earnings short-squeeze play is designer, manufacturer and marketer of wireless solutions
BBRY), which is set to release numbers on Friday before the market open. Wall Street analysts, on average, expect BlackBerry to report revenue of $3.38 billion on earnings of 11 cents per share.
Just this morning, Citigroup's Jim Suva reiterated his sell rating on BBRY and slapped a $10 per share price target on the name, citing weak demand with the addition of newer models from other smartphone makers. However, Suva notes that given the high level of short interest, we could see a short squeeze on any upside surprise to sell in units.
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The current short interest as a percentage of the float for BlackBerry is extremely high at 34.7%. That means that out of the 485.14 million shares in the tradable float, 171.31 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of BBRY could skyrocket higher post-earnings.
From a technical perspective, BBRY is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been moving sideways for the last month, with shares trending between $13.30 on the downside and $15 on the upside. A high-volume move above the upper-end of its recent range could trigger a breakout trade for shares of BBRY post-earnings.
If you're bullish on BBRY, 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 to $15.50 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 28.16 million shares. If that breakout triggers, then BBRY will set up to re-test or possibly take out its next major overhead resistance levels at $17 to its 52-week high at $18.32 a share. Any high-volume move above $18.32 will then give BBRY a chance to trend north of $20 a share.
I would simply avoid BBRY 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 $13.50 to $13.30 a share with high volume. If we get that move, then BBRY will set up to re-test or possibly take out its next major support levels at $12.55 to its 200-day moving average at $12.44 a share. Any high-volume move below $12.44 will then give BBRY a chance to trend lower toward $12 to $11 a share.