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Another potential earnings short-squeeze candidate is broadband wireless solutions provider Ubiquiti Networks (UBNT), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Ubiquiti Networks to report revenue of $119.30 million on earnings of 40 cents per share.
The current short interest as a percentage of the float for Ubiquiti Networks is pretty high at 10.7%. That means that out of the 24.78 million shares in the tradable float, 2.09 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 70.1%, or by about 859,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of UBNT could experience a big short squeeze post-earnings as the shorts rush to cover some of their bets.
From a technical perspective, UBNT is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $27.50 to its recent high of $43.99 a share. During that uptrend, shares of UBNT have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of UBNT within range of triggering a big breakout trade post-earnings.
If you're bullish on UBNT, 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 $39.82 to its all-time high at $43.99 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 782,837 shares. If that breakout hits, then UBNT will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $60 a share.
I would avoid UBNT 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 $36.74 a share to its 50-day moving average at $35.71 a share with high volume. If we get that move, then UBNT will set up to re-test or possibly take out its next major support levels at $33 to $30 a share.
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