One potential earnings short-squeeze candidate is information technology and enterprise application solutions provider NetSol Technologies (NTWK), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect NetSol Technologies to report revenue of $13.53 million on earnings of 22 cents per share.
The current short interest as a percentage of the float for NetSol Technologies is not able at 5.4%. That means that out of the 6.70 million shares in the tradable float, 433,000 shares are sold short by the bears. This is a decent short interest on a stock with a relatively low float. Any bullish earnings news could easily spark a sharp short-covering rally for shares of NTWK post-earnings.
From a technical perspective, NTWK is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock recently started to bounce higher right off its 200-day moving average of $9.72 a share. That bounce is quickly moving shares of NTWK within range of triggering a breakout trade above a key downtrend line.If you're bullish on NTWK, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 50-day at $10.29 a share and then once it clears more key resistance levels at $10.73 to $11.05 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 115,286 shares. If that breakout hits, then NTWK will set up to re-test or possibly take out its next major overhead resistance levels at $13 to its 52-week high at $14 a share. I would avoid NTWK or look for short-biased trades if after earnings it fails to trigger that move, and then drops back below some key near-term support levels at its 200-day at $9.72 a share to $9.70 a share and then below more support at $9.57 a share with high volume. If we get that move, then NTWK will set up to re-test or possibly take out its next major support levels at $8.73 to $7 a share.
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