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One potential earnings short-squeeze candidate is solar energy player
SCTY), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect SolarCity to report revenue of $27.44 million on a loss of 38 cents per share.
The current short interest as a percentage of the float for SolarCity is pretty high at 15.9%. That means that out of the 31.84 million shares in the tradable float, 4.61 million shares are sold short by the bears. This is a high short interest on a stock with a relatively low tradable float. If the bulls get the earnings news they're looking for, then shares of SCTY could explode higher post-earnings as the bears rush to cover some of their short bets.
From a technical perspective, SCTY is currently trending above its 50-day moving average, which is bullish. This stock is ripping higher today right off it 50-day with strong upside volume. This move has started to push shares of SCTY into breakout territory, since the stock has cleared some near-term overhead resistance at $44.98 a share. That move is quickly pushing shares of SCTY within range of triggering another major breakout trade post-earnings.
If you're bullish on SCTY, 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 $46 to $50 a share and then once it clears its all-time high at $52.77 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 2.64 million shares. If that breakout hits, then SCTY will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout are $60 to $65 a share.
I would avoid SCTY or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average at $39.90 a share and then below more near-term support at $38.80 share with high volume. If we get that move, then SCTY will set up to re-test or possibly take out its next major support levels at $37.30 a share to $32.66 a share.
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