With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.
Green Mountain Coffee Roasters
My first earnings short-squeeze play is specialty coffee and coffee maker Green Mountain Coffee Roasters ( GMCR), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Green Mountain Coffee Roasters to report revenue of $963.83 million on earnings of 75 cents per share.
Just recently, KeyBanc said distributor checks suggest there is a very low probability that Green Mountain Coffee Roasters is losing share over the next year and the firm does not believe that a price war is emerging in the K-Cup channel. The firm rates the stock a buy with a price target of $100 per share.The current short interest as a percentage of the float Green Mountain Coffee Roasters is extremely high at 32.4%. That means that out of the 130.71 million shares in the tradable float, 40.08 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 11.1%, or by about 4 million shares. If the bears get caught pressing their bets into a bullish quarter, then shares of GMCR could rip sharply higher post-earnings as the bears rush to cover some of their short positions. From a technical perspective, GMCR is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last two months and change, with shares falling sharply from its high of $89.66 to its recent low of $56.87 a share. During that downtrend, shares of GMCR have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of GMCR have now started to bounce off that $56.87 low and it's quickly moving within range of triggering a near-term breakout trade. If you're bullish on GMCR, then I would wait until after its report and look for long-biased trades if this stock manages to break out above both its 200-day at $67.56 and its 50-day at $70.21 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 4.21 million shares. If that breakout hits, then GMCR will set up to re-test or possibly take out its next major overhead resistance levels at $77 to $85 a share.