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5 Stocks Set to Soar on Bullish Earnings

NQ Mobile

Another potential earnings short-squeeze play is mobile Internet services player NQ Mobile (NQ - Get Report), which is set to release its numbers on Thursday after the market close. Wall Street analysts, on average, expect NQ Mobile to report revenue $62.83 million on earnings of 32 cents per share.

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NQ Mobile has beaten revenue estimates during the last eleven quarters and the firm has beaten analyst expectations on both the top and bottom lines during the last five quarters.

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The current short interest as a percentage of the float for NQ Mobile is extremely high at 50.3%. That means that out of the 26.28 million shares in the tradable float, 13.24 million shares are sold short by the bears. This is an enormous short interest on a stock with a very low tradable float. If the bulls get the earnings news they're looking for, then shares of NQ could easily explode sharply higher post-earnings as the bears rush to cover some of their bets.

From a technical perspective, NQ is currently trending just above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has been downtrending over the last month, with shares dropping from its high of $22.33 to its recent low of $15.03 a share. During that downtrend, shares of NQ have been consistently making lower highs and lower lows, which is bearish technical price action.

If you're in the bull camp on NQ, 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 $17 a share to its 50-day moving average of $18.36 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 3.28 million shares. If that breakout kicks off, then NQ will set up to re-test or possibly take out its next major overhead resistance levels at $20.85 to $22.33 a share. Any high-volume move above those levels will then give NQ a chance to tag or take out $25 a share.

I would simply avoid NQ 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 $15.03 to $14.28 share with high volume. If we get that move, then NQ will set up to re-test or possibly take out its next major support levels at $13.40 to $12 a share.

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