Children's Place Retail Stores

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An earnings short-squeeze play in the retail apparel complex is pure-play children's specialty apparel retailer Children's Place Retail Stores ( PLCE), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Children's Place Retail Stores to report revenue of $469.09 million on earnings of $1.27 per share.

This is another stock that's trading in a tight sideways pattern as we get closer to its quarterly report. A move outside of that pattern between $50 and $45 will set this stock up for a big move post-earnings. If that move is above $50, then we are going to see a big short-squeeze since this stock is so heavily shorted.

The current short interest as a percentage of the float for Children's Place Retail Stores is massive at 23.7%. That means that out of the 21.34 million shares in the tradable float, 5.85 million are sold short by the bears. This is a low float high short interest situation. Any bullish earnings news and this stock is going to spike big.

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From a technical standpoint, this stock is currently trading right at its 200-day moving average and above its 50-day moving average, which is neutral trendwise. This stock plunged from its July high of $49.93 to a recent low of $36.96 a share. Since marking that low, the stock rebounded big and in early October hit $49.96. The stock is now trading in a sideways pattern as it gets ready to enter its next big trend.

If you want to play Children's Place for an earnings short-squeeze play, I would look to be a buyer after it reports if we see a breakout above $50 a share on heavy volume. Look for volume that's tracking in close to or above its three-month average action of 671,800 shares. If we get that breakout post-earnings, then I would target a run back towards the 52-week high of $55.90.

I would only get short this stock after they have reported earnings if shares drop back below its 50-day moving average of $46.36 on heavy volume. I would then add to any short position if this stock takes out $45 to $44 a share on strong volume. Target a drop back towards $41 to $40 if the bears whack this lower post-earnings.

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