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My first earnings short-squeeze play is global semiconductor player
Advanced Micro Devices (
AMD), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Advanced Micro Devices to report revenue of $1.42 billion on earnings of 2 cents per share.
Just recently, Wedbush Securities analyst Betsy Van Hees upgraded shares of Advanced Micro Devices to outperform from neutral, saying AMD's strong position in the gaming console sector will prove a boon for quarter-on-quarter earnings and revenue growth. "We believe AMD is back on track to deliver solid quarter-over-quarter and year-over-year earnings and revenue growth, Hees said. She raised her price target on the stock to $5 from $4.50.
>>3 Tech Stocks Rising on Big Volume
The current short interest as a percentage of the float Advanced Micro Devices is extremely high at 17.8%. That means that out of the 503.50 million shares in the tradable float, 108.70 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of AMD could easily skyrocket higher post-earnings as the bears rush to cover some of their bets.
From a technical perspective, AMD is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has recently started to bounce higher right off its 50-day moving average of $3.72 a share with strong upside volume flows. That move has now pushed shares of AMD back above some key near-term overhead resistance levels at $3.95 to $4 a share.
If you're bullish on AMD, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some past overhead resistance at $4.25 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 29.28 million shares. If that breakout triggers, then AMD will set up to re-fill its previous gap down zone from July that started at $4.65 a share. Any high-volume move above $4.65 will then give AMD a chance to tag $5 to $6, or even $6.50 a share.
I would simply avoid AMD 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 $3.72 a share to more support at $3.55 a share with high volume. If we get that move, then AMD will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $3.33 a share to more support at $3.25 a share.