I would avoid TSL 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 $15.92 to $14.77 a share with high volume. If we get that move, then TSL will set up to re-test or possibly take out its next major support levels $13.62 to $11 a share.
Another earnings short-squeeze prospect is multichannel video game retailer GameStop ( GME), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect GameStop to report revenue of $1.98 billion on earnings of 57 cents per share.
Just recently, Piper Jaffray analyst Michael Olson said that he is more confident that GameStop's fourth quarter revenue will surpass his estimate of $3.84 billion following Sony's announcement that North America PlayStation sales beat expectations.The current short interest as a percentage of the float for GameStop is extremely high at 17%. That means that out of the 114.10 million shares in the tradable float, 19.48 million shares are sold short by the bears. If this company can deliver the earnings news the bulls are looking for, then shares of GME could explode higher post-earning as a sharp short-covering rally takes hold. From a technical perspective, GME is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently formed a double top chart pattern, since GME ran into stiff resistance at $57.21 to $57.74 a share. If that stiff overhead resistance can get taken out post-earnings, then shares of GME will break out and have the chance to head significantly higher. If you're bullish on GME, 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 $57.50 to its 52-week high at $57.74 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.94 million shares. If that breakout hits, then GME will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $65 to $70 a share.