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Another potential earnings short-squeeze trade is online retailer
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.
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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.