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
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.