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5 Earnings Short-Squeeze Plays

Men's Wearhouse

My final earnings short-squeeze play is specialty retailer of men's suits and tuxedo rental products provider Men's Warehouse (MW), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Men's Wearhouse to report revenue of $671.04 million on earnings of $1.14 per share.

The current short interest as a percentage of the float for Men's Wearhouse is pretty high at 8%. That means that out of the 47.67 million shares in the tradable float, 3.81 million shares are sold short by the bears. This is a decent short interest on a stock with relatively low float. Any bullish earnings news could easily spark a sharp short-covering rally for shares of MW post-earnings.

From a technical perspective, MW is currently trending well above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock recently pulled back from its July high of $41.03 a share to its low of $37.20 a share. Shares of MW have now started to rebound off that $37.20 low and it's quickly moving within range of triggering a big breakout trade.

If you're in the bull camp on MW, 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 $41 a share to its 52-week high at $41.03 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 521,077 shares. If that breakout hits, then MW will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that breakout are $45 to $50 a share.

I would avoid MW or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support levels at $38 to $37.20 a share with high volume. If we get that move, then MW will set up to re-test or possibly take out its next major support levels at $35 to its 200-day at $34.02 a share. Any high-volume move below those levels will then put $32 to $31 into range for shares of MW.

To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Stock quotes in this article: ULTA, LULU, NTWK, UNFI, MW 
Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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