Another potential earnings short-squeeze candidate is used vehicles retailer CarMax (KMX - Get Report), which is set to release numbers on Friday before the market open. Wall Street analysts, on average, expect CarMax to report revenue of $3.18 billion on earnings of 53 cents per share.
The current short interest as a percentage of the float for CarMax is notable at 4.1%. That means that out of the 221.86 million shares in the tradable float, 9.16 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a decent short squeeze post-earnings if KMX can deliver the news the bulls are looking for.
From a technical perspective, KMX is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has just started to trend back above its 50-day moving average of $47 a share, after touching its recent low of $44.90 a share. That spike is starting to push shares of KMX within range of triggering a near-term breakout trade post-earnings.
If you're bullish on KMX, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 200-day moving average of $48.12 a share and then once it clears some near-term overhead resistance levels at $48.67 to $49.68 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.87 million shares. If that breakout starts after earnings, then KMX will set up to re-fill its previous gap-down-day zone from December that started at $53 a share. Any high-volume move above $53 would then give KMX a chance to tag $60 a share.
I would avoid KMX 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 $44.90 to $43.90 a share with high volume. If we get that move, then KMX will set up to re-test or possibly take out its next major support levels at its 52-week low of $40.34 a share to $37.50 a share.