My first earnings short-squeeze trade idea is industrial equipment and rental player United Rentals (URI - Get Report), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect United Rentals to report revenue of $1.33 billion on earnings of $1.47 per share.
The current short interest as a percentage of the float for United Rental is very high at 12.5%. That means that out of the 92.36 million shares in the tradable float, 11.57 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of URI could easily spike sharply higher post-earnings as the bears rush to cover some of their bets.
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From a technical perspective, URI is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $52.39 to its recent high of $82.57 a share. During that uptrend, shares of URI have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of URI within range of triggering a big breakout trade post-earnings.
If you're bullish on URI, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 52-week high at $82.57 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.33 million shares. If that breakout hits, then URI will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $95 to $100 a share.
I would simply avoid URI 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 $77 to $75 a share high volume. If we get that move, then URI will set up to re-test or possibly take out its 50-day moving average of $72.74 a share. Any high-volume move below that level will then give URI a chance to tag $67.50 to $65 a share.