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My first earnings short-squeeze play is
Acadia Pharmaceuticals (
ACAD), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Acadia to report revenue of $450,000 on a loss of 9 cents per share.
>>4 Biotech Stocks to Trade for Breakouts
The current short interest as a percentage of the float for ACADIA Pharmaceuticals is rather high at 10.3%. That means that out of the 49.34 million shares in the tradable float, 8.95 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then this stock could rip sharply higher post-earnings as the bears rush to cover some of their bets.
From a technical perspective, ACAD 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 six months, with shares soaring higher from its low of $5.72 to its intraday high of $21.30 a share. During that move, shares of ACAD have been consistently making higher lows and higher highs, which is bullish technical price action.
If you're bullish on ACAD, 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 its 52-week high of $21.30 a share (or its intraday high Tuesday if greater) with high volume. Look for volume on that move that registers near or above its three-month average volume of 3.21 million shares. If that breakout hits, then ACAD will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $30 a share.
I would simply avoid ACAD or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some near-term support levels at $18.47 to its 50-day moving average at $18.06 a share with high volume. If we get that move, then ACAD will set up to re-test or possibly take out its next major support levels at $16.26 to $14 a share.