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Another stock with the potential to see an earnings short squeeze is clean energy solutions provider Renetech ( RTK), which is set to release results on Thursday before the market open. Wall Street analysts, on average, expect Renetech to report revenue of $36.78 million.

If you're looking for a penny stock that's setting up for a big breakout ahead of its quarter, then take a look at shares of Renetech. This stock has been a stronger performer in 2011 with shares up over 30%. Now the stock is nearing a major breakout if the company can manage to report bullish earnings and forward guidance.

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The current short interest as a percentage of the float for Renetech sits at 4.8%. That means that out of the 215.78 million shares in the tradable float, 10.42 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 15.1%, or by about 1.4 million shares. If the bears are caught pressing to hard into the quarter, then RTK could zoom to the upside as they cover some of their short bets.

From a technical standpoint, RTK is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock hit a low in October at 72 cents a share, and since then it has been uptrending strong making mostly higher highs and higher lows. The stock now sets up to breakout above some near-term overhead resistance levels if the company can deliver what the bulls are looking for.

If you're bullish on RTK, I would look to buy this stock after earnings if it manages to break out above $1.65 and $1.70 a share on high-volume. Look for volume that's tracking in close to or above its three-month average volume of 2.8 million shares. If we get that action, then look for RTK to tag $1.98 a share. If $1.98 gets taken out with volume, then look for an even bigger spike higher in this stock post-earnings.

I would avoid RTK from the long side after its earnings report if the stock drops back below its 50-day moving average of $1.43 a share on heavy volume. A high-volume move below that level could easily set this stock up to re-test $1.30 to $1.20 a share or possibly much lower if the bears hammer this name down post-earnings.

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