My final earnings short-squeeze play is technology player Silicon Graphics (SGI - Get Report), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Silicon Graphics to report revenue of $131.33 million on a loss of 16 cents per share.
The current short interest as a percentage of the float for Silicon Graphics is pretty high at 13.8 %. That means that out of the 32.17 million shares in the tradable float, 4.41 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low tradable float. If the bulls get the earnings news they're looking for, then shares of SGI could easily rip sharply higher post-earnings as the bears rush to cover some of their trades.
From a technical perspective, SGI is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways for the last three months, with shares moving between $11.57 on the downside and $13.69 on the upside. Any high-volume move above the upper-end of its recent range post-earnings could trigger a breakout trade for shares of SGI.
If you're in the bull camp on SGI, 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 overheard resistance levels at $12.86 to $13.69 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 366,922 shares. If that breakout hits after earnings, then SGI will set up to re-test or possibly take out its next major overhead resistance levels at $14 to $14.43 a share. Any high-volume move above those levels will then give SGI a chance to tag $16 to $18 a share.
I would avoid SGI 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 $11.57 to its 52-week low of $11.46 a share with high volume. If we get that move, then SGI will set up to enter new 52-week-low territory, which is bearish technical price action. Some possible downside targets off that move are $10 to $9 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.