I would simply avoid SWHC or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day moving average of $11.22 a share with high volume. If we get that move, then SWHC will set up to re-test or possibly take out its next major support levels at $10.50 to its 200-day moving average of $10.34 a share. Any high-volume move below those levels will then give SWHC a chance to tag $10 to $9.50 a share.
Another earnings short-squeeze candidate is homebuilding and financial services player
), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Hovnanian Enterprises to report revenue of $582.89 million on earnings of 16 cents per share.
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The current short interest as a percentage of the float for Hovnanian Enterprises is extremely high at 20.9%. That means that out of the 123.10 million shares in the tradable float, 22.76 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.2%, or by 504,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of HOV could rip sharply higher post-earnings as the bears rush to cover some of their short positions.
From a technical perspective, HOV is currently trending just above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been downtrending over the last five months, with shares moving lower from its high of $5.92 to its recent low of $4.77 a share. During that move, shares of HOV have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of HOV have now started to rebound off that $4.77 low and it's quickly moving within range of triggering a near-term breakout trade.
If you're bullish on HOV, 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 $5.19 to $5.59 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 4.18 million shares. If that breakout hits, then HOV will set up to re-test or possibly take out its next major overhead resistance levels at $5.92 to $6.47 a share, or even $7 a share.