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My first earnings short-squeeze trade idea to consider is
Acacia Research (
ACTG), a developer, licenser and acquirer of technology patents, which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Acacia Research to report revenue of $66.98 million on earnings of 47cents per share.
The current short interest as a percentage of the float for Acacia Research is notable at 6%. That means that out of the 44.12 million shares in the tradable float, 2.85 million shares are sold short by the bears. If the bulls like the earnings news they hear, then this stock could easily see a solid short-squeeze develop post-earnings.
From a technical perspective, ACTG is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has been uptrending for the last few weeks, with shares moving higher from its low of $20.37 to its intraday high of $25.74 a share. During that move, shares of ACTG have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ACTG within range of triggering a major breakout trade.
If you're bullish on ACTG, 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 $25.74 to just above $27 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 728,541 shares. If we get that breakout, then ACTG will set up to re-test or possibly take out its next major overhead resistance levels at $30 to $32.50 a share. Any high-volume move above those levels will then put $40 into range for shares of ACTG.
I would simply avoid ACTG or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day at $24.07 a share with high volume. If we get that move, then ACTG will set up to re-test or possibly take out its next major support levels at $22 to $20.37 a share.
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