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TheStreet Open House

5 Hated Earnings Stocks You Should Love

Stock quotes in this article: RLD, TEAR, SRPT, CALL, XONE

I would avoid SRPT 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 of $36.57 a share to more near-term support at $34.30 a share with high volume. If we get that move, then SRPT will set up to re-test or possibly take out its next major support levels at $29 to $25 a share.

MagicJack VocalTec

Another earnings short-squeeze prospect is voice-over-Internet-protocol service provider MagicJack VocalTec ( CALL), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect MagicJack VocalTec to report revenue of $37.53 million on earnings of 42 cents per share.

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The current short interest as a percentage of the float for MagicJack VocalTec is extremely high at 39.7%. That means that out of the 10.70 million shares in the tradable float, 4.09 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of CALL could easily explode to the upside post-earnings as the bears rush to cover some of their bets.

From a technical perspective, CALL is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last three months and change, with shares moving lower from its high of $16.57 to its recent low of $11.13 a share. During that downtrend, shares of CALL have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of CALL have now started to spike higher off that $11.13 low, and it's moving within range of triggering a near-term breakout trade.

If you're bullish on CALL, 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 $12.53 a share to its 50-day moving average at $13.08 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 219,488 shares. If that breakout triggers, then CALL will set up to re-test or possibly take out its next major overhead resistance levels at $14.50 to $15.50 a share, or even $16.50 a share.

I would simply avoid CALL 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 $12 to $11.13 a share with high volume. If we get that move, then CALL will set up to re-test or possibly take out its next major support levels at its 52-week low of $10.90 a share.

ExOne

My final earnings short-squeeze idea is three-dimensional printing machines and printed products provider ExOne ( XONE), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect ExOne to report revenue of $11.81 million on earnings of 2 cents per share.

The current short interest as a percentage of the float for ExOne is extremely high at 42.5%. That means that out of the 8.06 million shares in the tradable float, 3.63 million shares are sold short by the bears. This is a huge short interest on a stock with a very low float. If the bulls get the earnings news they're looking for, then shares of XONE could skyrocket higher post-earnings as the bears rush to cover some of their short positions.

From a technical perspective, XONE is currently trending above its 50-day moving average, which is bullish. This stock has been uptrending strong for the last month, with shares moving higher from its low of $42.16 to its recent high of $60.99 a share. During that move, shares of XONE have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of XONE within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on XONE, 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 $60.99 to $65 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 934,482 shares. If that breakout triggers, then XONE will set up to re-test or possibly take out its next major overhead resistance levels at $70 to $73 a share. Any high-volume move above those levels will then give XONE a chance to re-test or possibly take out its all-time high at $78 a share.

I would avoid XONE 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 at $57.50 a share with high volume. If we get that move, then XONE will set up to re-test or possibly take out its next major support levels at $54.10 a share to its 50-day moving average of $53.33 a share. Any high-volume move below those levels will then give XONE a chance to tag $50 to $47.50 a share.

To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

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Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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