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Another potential earnings short-squeeze play is health care facilities and services player Chemed (CHE), which is set to release its numbers on Thursday after the market close. Wall Street analysts, on average, expect Chemed to report revenue of $368.06 million on earnings of $1.33 per share.
The current short interest as a percentage of the float for Chemed is extremely high at 21.2%. That means that out of the 18.30 million shares in the tradable float, 3.86 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.8%, or by about 175,000 shares. If the bears are caught pressing their bets into a bullish quarter, then shares of CHE could easily see a sharp short-squeeze develop post-earnings.
From a technical perspective, CHE 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 and change, with shares soaring higher from its low of $61.52 to its recent high of $76.15 a share. During that uptrend, shares of CHE have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CHE within range of triggering a near-term breakout trade.
If you're in the bull camp on CHE, 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 $76.15 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 328,633 shares. If that breakout triggers, then CHE will set up to re-fill its previous gap down zone from May that started at $81.78 a share. If that gap gets filled, then CHE could easily hit $85 to $90 a share post-earnings.
I would simply avoid CHE or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some near-term support at $74 a share with high volume. If we get that move, then CHE will set up to re-test or possibly take out its 200-day at $72.25 a share or its 50-day at $70.91 a share. Any high-volume move below those levels will then put its next major support zones at $68 to $66 into range for shares of CHE.
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