Another potential earnings short-squeeze play is semiconductor player Cree (CREE), which is set to release its numbers on Tuesday after the market close. Wall Street analysts, on average, expect Cree to report revenue $412.46 million on earnings of 39 cents per share.
Just recently, Wedbush said it expects Cree to report roughly in-line second quarter results and thinks the company could provide weak third quarter guidance. However, the firm believes the company's margins and revenue can expand over the longer term, as LED chip prices increase. The firm maintains its $77 price target and outperform rating on shares of CREE.The current short interest as a percentage of the float for Cree stands is pretty high at 9.3%. That means that out of the 116.96 million shares in the tradable float, 10.99 million shares are sold short by the bears. This is far from a huge short interest, but its more than enough to spark a solid short-covering rally on shares of CREE post-earnings if the company can deliver the earnings news the bulls are looking for. From a technical perspective, CREE is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently gapped down sharply from around $68 to $60.14 a share with above-average volume. Following that gap down, shares of CREE have held support just above its 200-day moving average of $61.72 a share. If you're in the bull camp on CREE, 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 $64.75 to $67.72 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.28 million shares. If that breakout hits, then CREE will set up to re-fill some of its previous gap-down-day zone from last October that started at $75.98 a share. I would simply avoid CREE or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below both its 200-day moving average at $61.72 a share to its 50-day moving average of $59.21 a share with high volume. If we get that move, then CREE will set up to re-test or possibly take out its next major support levels at $55 to $52 a share. Any high-volume move below those levels will then put its next major support level at $48 into range for shares of CREE.
Fusion-IO Another potential earnings short-squeeze candidate is database solutions provider Fusion-IO (FIO) which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Fusion-IO to report revenue of $89.28 million on a loss of 10 cents per share. >>5 Stocks Under $10 Set to Soar The current short interest as a percentage of the float for Fusion-IO is very high at 16.8%. That means that out of the 90.93 million shares in the tradable float, around 16.55 million shares are sold short by the bears. This is a very high short interest on a stock with relatively low tradable float. If the bulls get the earnings news they're looking for, then shares of FIO could easily skyrocket higher post-earnings as the bears jump to cover some of their bets. From a technical perspective, FIO 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 five months, with shares plunging lower from its high of $15.50 to its recent low of $8.32 a share. During that downtrend, shares of FIO have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of FIO have recently formed a double bottom chart pattern at $8.40 to $8.32 a share. Following that bottom, shares of FIO have now started to move within range of triggering a major breakout trade post-earnings. If you're bullish on FIO, 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 $9.33 to $9.82 a share and then once it clears some more key overhead resistance at $9.95 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 3.39 million shares. If that breakout hits, then FIO will set up to re-test or possibly take out its next major overhead resistance levels at $11.17 to $11.31 a share. Any high-volume move above those levels will then give FIO a chance to re-fill some of its gap-down-day zone from last October that started at $13.50 a share. I would avoid FIO or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 52-week low at $8.32 a share with high volume. If we get that move, then FIO will set up to enter new 52-week-low territory, which is bearish technical price action. Some possible downside targets off that move are $7 to $6 a share.
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