Another potential earnings short-squeeze candidate is specialized semiconductor player Cirrus Logic (CRUS - Get Report) which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Cirrus Logic to report revenue of $210 million on earnings of 74 cents per share.
The current short interest as a percentage of the float for Cirrus Logic is extremely high at 22.5%. That means that out of the 63.50 million shares in the tradable float, 14.25 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.8%, or by about 391,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of CRUS could easily explode higher post-earnings as the shorts jump to cover some of their trades.
From a technical perspective, CRUS is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways and consolidating for the last three months, with shares moving between $18.55 on the downside and $21.12 on the upside. Any high-volume move above the upper end of its recent range post-earnings could easily trigger a major breakout trade for shares of CRUS.
If you're bullish on CRUS, 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 $20.70 to $21.12 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.57 million shares. If that breakout hits, then CRUS will set up to re-test or possibly take out its next major overhead resistance levels at $23.15 to $25 a share. Any high-volume move above those levels will then give CRUS a chance to tag its 52-week high at $30 a share.
I would avoid CRUS 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 $18.98 to $18.55 a share with high volume. If we get that move, then CRUS will set up to re-test or possibly take out its next major support levels at $17.36 to its 52-week low at $16.46 a share. Any high-volume move below those levels will then put $15 to $14 into range for shares of CRUS.