Ulta Salon, Cosmetics & Fragrance
My first earnings short-squeeze play is beauty supply shop operator Ulta Salon, Cosmetics & Fragrance (ULTA - Get Report), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Ulta Salon, Cosmetics & Fragrance to report revenue of $588.37 million on earnings of 67 cents per share.
The current short interest as a percentage of the float Ulta Salon, Cosmetics & Fragrance is notable at 5.1%. That means that out of the 51.36 million shares in the tradable float, 3.05 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of ULTA could rip sharply higher post-earnings as the bears rush to cover some of their bets.
From a technical perspective, ULTA 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 moving higher from its low of $72.51 to its recent high of $106.89 a share. During that uptrend, shares of ULTA have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ULTA within range of triggering a major breakout trade post-earnings.If you're bullish on ULTA, 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 $105 to its 52-week high at $106.89 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 826,691 shares. If that breakout hits, then ULTA will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that move are $115 to $120 a share. I would simply avoid ULTA or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day at $100.34 a share with high volume. If we get that move, then ULTA will set up to re-test or possibly take out its next major support levels at $96.44 to its 200-day at $93.80 a share.