Another potential earnings short-squeeze trade idea is in-vitro diagnostic player TearLab ( TEAR), which is set to release its numbers on Tuesday after the market close. Wall Street analysts, on average, expect TearLab to report revenue of $4.21 million on a loss of 14 cents per share.
The current short interest as a percentage of the float for TearLab is extremely high at 25.6%. That means that out of the 29.18 million shares in the tradable float, 6.95 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 8.6%, or by about 548,000 shares. If the bears are caught pressing their bets into a bullish quarter, then shares of TEAR could rip sharply higher post-earnings as the bears rush to cover some of their bets.From a technical perspective, TEAR 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 downtrending for the last three months and change, with shares moving lower from its high of $15.18 to its recent low of $9.26 a share. During that move, shares of TEAR have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of TEAR have now started to spike higher and flirt with its 50-day moving average. That move is starting to push TEAR within range of triggering a breakout trade above a key downtrend line post-earnings. If you're in the bull camp on TEAR, 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 Monday's high of $11.64 to $12.39 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 562,768 shares. If that breakout triggers, then TEAR will set up to re-test or possibly take out its next major overhead resistance levels at $13.80 to its 52-week high at $15.18 a share.