Science Applications International
My final earnings short-squeeze idea is scientific, engineering and technology applications player Science Applications International (SAIC - Get Report), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Science Application International to report revenue of $945.16 million on earnings of 65 cents per share.
The current short interest as a percentage of the float for Science Application International sits at 3.4%. That means that out of the 48.54 million shares in the tradable float, 1.70 million shares are sold short by the bears. This is not a huge short interest, but it's more than enough to spark a decent short-covering rally post-earnings if the bulls get the earnings news they're looking for.
From a technical perspective, SAIC is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern at $34.28 to $34.04 a share, right above its 200-day moving average. This stock has now started to spike modestly higher off those support levels and it's starting to move within range of triggering a big breakout trade post-earnings.
If you're in the bull camp on SAIC, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 50-day moving average of $36.72 a share and then once it takes out more overhead resistance levels at $38.75 to its all-time high at $39.88 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 250,085 shares. If that breakout hits, then SAIC will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $55, or even $60 a share.
I would avoid SAIC 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 $34.04 a share to its 200-day moving average of $33.46 a share with high volume. If we get that move, then SAIC will set up to re-test or possibly take out its 52-week low at $29.40 a share.
To see more potential earnings short squeeze plays, check out the Earnings Short-Squeeze Plays portfolio on Stockpickr.
-- Written by Roberto Pedone in Delafield, Wis.