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My final earnings short-squeeze play is fables semiconductor player
Mellanox Technologies (
MLNX), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Mellanox Technologies to report revenue of $107.63 million on earnings of 32 cents per share.
The current short interest as a percentage of the float for Mellanox Technologies is pretty high at 12.2%. That means that out of the 37.47 million shares in the tradable float, 3.95 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low tradable float. Any bullish earnings news could easily set off a solid short-squeeze for shares of MLNX post-earnings.
From a technical perspective, MLNX is currently trending just above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been downtrending badly for the last three months and change, with shares moving lower from its high of $54.89 to its recent low of $33.69 a share. During that move, shares of MLNX have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of MLNX have recently started to trend back above its 50-day at $38.72 and well off its recent low of $33.69 a share. That move has pushed shares of MLNX within range of triggering a near-term breakout trade post-earnings.
If you're in the bull camp on MLNX, 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 at $42.45 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 798,645 shares. If that breakout hits, then MLNX will set up to re-test or possibly take out its next major overhead resistance levels at $47 to its 200-day at $48.80 a share.
I would avoid MLNX or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day at $38.72 a share and then below more near-term support at $37.57 a share with high volume. If we get that move, then MLNX will set up to re-test or possibly take out its next major support level at $33.69 to $30 a share.
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.