Another potential earnings short-squeeze play is industrial and construction supplies retailer Fastenal (FAST - Get Report), which is set to release its numbers on Wednesday before the market open. Wall Street analysts, on average, expect Fastenal to report revenue $814.34 million on earnings of 35 cents per share.
The current short interest as a percentage of the float for Fastenal is pretty high at 9.1%. That means that out of the 271.87 million shares in the tradable float, 24.66 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 11.5%, or by about 2.53 million shares. If the bears get caught pressing their bets into a bullish quarter, then shares of FAST could soar sharply higher post-earnings as the bears jump to cover some of their short positions.
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From a technical perspective, FAST is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending a bit for the last few weeks, with shares moving higher from its low of $45.43 to its intraday high of $48.37 a share. During that uptrend, shares of FAST have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of FAST within range of triggering a big breakout trade post-earnings.
If you're in the bull camp on FAST, 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 $50 to $52 a share and then above its 52-week high at $53.38 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.88 million shares. If that breakout hits, then FAST will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $60 to $65 a share.
I would simply avoid FAST 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 $ 47.15 a share with high volume. If we get that move, then FAST will set up to re-test or possibly take out its next major support levels at $45.43 to $43.53 a share. Any high-volume move below those levels will then give FAST a chance to tag $40 a share.