I would simply avoid TEAR or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 200-day moving average at $9.80 a share to more near-term support at $9.26 a share with high volume. If we get that move, then TEAR will set up to re-test or possibly take out its next major support levels at $8 to $7 a share, or even $6 a share.
One potential earnings short-squeeze candidate is biopharmaceuticals player
), which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Sarepta Therapeutics to report revenue of $4.57 million on a loss of 65 cents per share.
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The current short interest as a percentage of the float for Sarepta Therapeutics is extremely high at 33%. That means that out of the 29.07 million shares in the tradable float, 10.51 million shares are sold short by the bears. This is a huge short interest on a stock with a relatively low float. Any bullish earnings news could easily spark a monster short-squeeze for shares of SRPT post-earnings.
From a technical perspective, SRPT is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has been downtrending badly for the last month, with shares plunging from its high of $55.61 to its recent low of $34.30 a share. During that downtrend, shares of SRPT have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of SRPT have now started to spike off that $34.30 low, and it's moving within range of triggering a breakout trade above a key downtrend line.
If you're bullish on SRPT, 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 $40 a share to its 50-day moving average of $42.03 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.95 million shares. If that breakout triggers, then SRPT will set up to re-test or possibly take out its next major overhead resistance levels at $44 to $48 a share, or even $50 a share.