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5 Hated Earnings Stocks You Should Love

With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.


My first earnings short-squeeze play is three dimensional technologies licensor RealD ( RLD), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect RealD to report revenue of $42.95 million on a loss of 19 cents per share.

>>5 Breakout Trades Under $10

The current short interest as a percentage of the float RealD is pretty high at 10.4%. That means that out of the 43.68 million shares in the tradable float, 4.38 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 spark a big short-squeeze for shares of RLD post-earnings.

From a technical perspective, RLD is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways for the last month and change, with shares moving between $6.19 on the downside and $7.56 on the upside. Shares of RLD are now starting to trend within range of triggering a breakout trade above the upper-end of its recent range post-earnings.

If you're bullish on RLD, 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 $7.20 to $7.56 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 455,734 shares. If that breakout hits, then RLD will set up to re-test or possibly take out is next major overhead resistance levels at $8.26 to $9 a share. Any high-volume move above those levels will then give RLD a chance to tag $11 to $12 a share.

I would simply avoid RLD 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 $6.83 to its 52-week low at $6.19 a share with high volume. If we get that move, then RLD will set up to enter new 52-week-low territory, which is bearish technical price action. Some possible downside targets off that move are $5 to $4.50 a share.
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