The Buckle

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Yet another earnings short-squeeze play in the retail apparel sector is The Buckle ( BKE), which is set to release numbers on Thursday before the market open. This company markets a selection of casual apparel, including denim, sportswear, outerwear, accessories and footwear. Wall Street analysts, on average, expect The Buckle to report revenue of $209.02 million on earnings of 51 cents per share.

This company has seen its profits rise year-over-year by an average of 3.7% over the past five quarters. Revenue has gone up for the past three straight quarters. During the first week of August, The Buckle reported that same-stores sales rose by 6.8% in July, which was lower than Wall Street estimates of 10.5%. But the stock has been hammered going into the quarter, with shares down from a recent high of $46.66 a share to a recent low of $34.73 a share.

The current short interest as a percentage of the float for The Buckle is a rather large 16.8%. That means that out of the 26.43 million shares in the tradable float, 4.53 million are sold short by the bears. This is a huge short interest on a stock with a very low float. If The Buckle can report solid numbers and guidance, then this stock could easily see a big short squeeze.

From a technical standpoint, this stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been in a clear downtrend for the past two months where it was making lower highs and higher lows.

The way I would play this name form the long side would be to wait for BKE to report and then buy the stock if you see it trade above some big overhead resistance at around $39.34 a share -- the 200-day -- on heavy volume. Look for volume that's close to or greater than 518,000 shares. I would add aggressively to any long trades if it then trades above its 50-day moving average of $42.16 a share.

I would short this name only if it drops below its most prominent support zones at $34.73 to $34.20 a share on big volume. I would short BKE if it takes those levels out after its report and look for a target of $30 a share.

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