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5 Stocks Set to Soar on Bullish Earnings

Overstock.com

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Another potential earnings short-squeeze trade is online retailer Overstock.com (OSTK), which is set to release its numbers on Thursday before the market open. Wall Street analysts, on average, expect Overstock.com to report revenue of $301.29 million on earnings of 15 cents per share.

>>5 Rocket Stocks to Buy This Earnings Season

The current short interest as a percentage of the float for Overstock.com is pretty high at 10.9%. That means that out of the 14.71 million shares in the tradable float, 1.61 million shares are sold short by the bears. This is a stock with a pretty high short interest and very low tradable float. Any bullish earnings news could easily spark a monster short squeeze for shares of OSTK post-earnings.

From a technical perspective, OSTK is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been trending sideways inside of a consolidation pattern for the last two months and change, with shares moving between $26.86 on the downside and $32.21 on the upside. A high-volume move above the upper-end of its recent range could trigger a big breakout trade for shares of OSTK post-earnings.

If you're in the bull camp on OSTK, then I would wait until after its report and look for long-biased trades if this stock manages to take out some near-term overhead resistance levels at $30.82 to $32.31 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 335,132 shares. If that breakout hits, then OSTK will set up to re-test or possibly take out its 52-week high at $35.60 a share. Any high-volume move above that level will then give OSTK a chance to tag $40 a share.

I would simply avoid OSTK 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 $28 to $26.86 a share with high volume. If we get that move, then OSTK will set up to re-test or possibly take out its next major support levels at $24 to its 200-day moving average at $22.38 a share.

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