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Another earnings short-squeeze prospect is cloud-based, on-demand software solutions provider
EOPN), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect E2open to report revenue of $15.75 million on a loss of 20 cents per share.
The current short interest as a percentage of the float for E2open is very high at 15.4%. That means that out of the 10 million shares in the tradable float, 1.48 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 11.2%, or by about 149,000 shares. If the bears are caught pressing their bets into a bullish quarter, then shares of EOPN could explode higher post-earnings as the shorts rush to cover some of those bets.
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From a technical perspective, EOPN 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 two months, with shares soaring higher from its low of $12.27 to its recent high of $18.22 a share. During that uptrend, shares of EOPN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of EOPN within range of triggering a major breakout trade post-earnings.
If you're bullish on EOPN, 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 $18.22 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 185,838 shares. If that breakout triggers, then EOPN will set up to re-test or possibly take out its next major overhead resistance levels at $20.85 to its all-time high at $22 a share. Any high-volume move above those levels will then give EOPN a chance to tag $25 a share.
I would avoid EOPN or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 200-day at $16.57 a share and its 50-day at $15.44 a share with high volume. If we get that move, then EOPN will set up to re-test or possibly take out its next major support levels at $15 to $14 a share.