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Another earnings short-squeeze prospect is builder of single-family residential homes, townhomes and condominiums
KB Home (
KBH), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect KB Home to report revenue of $450.80 million on a loss of 7 cents per share.
Just this morning, Case-Shiller Index data was released that showed home prices jumped 2.5% in April, which registered record monthly growth and the fasted year-over-year growth in seven years.
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The current short interest as a percentage of the float for KB Home is extremely high at 19.9%. That means that out of the 72.17 million shares in the tradable float, 14.40 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 13.7%, or by about 1.73 million shares. If the bears are caught pressing their bets into a bullish quarter, then shares of KBH could trend sharply higher post-earnings.
From a technical perspective, KBH is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has been downtrending for the last two months, with shares dropping from its high of $25.14 to its recent low of $18.30 a share. During that downtrend, shares of KBH have been mostly making lower highs and lower lows, which is bearish technical price action. That said, shares of KBH have started to bounce off its 200-day moving average and it's quickly moving within range of triggering a near-term breakout trade.
If you're bullish on KBH, 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 $21 to $22.49 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 4.26 million shares. If that breakout triggers, then KBH will set up to re-test or possibly take out its next major overhead resistance levels at $24 to its 52-week high at $25.14 a share. Any high-volume move above those levels will give KBH a chance to tag $30 a share.
I would avoid KBH or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 200-day at $18.23 and then below more key support at $17.11 a share with high volume. If we get that move, then KBH will set up to re-test or possibly take out its next major support levels at $16 to $14 a share.