Key Energy Services

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My final earnings short-squeeze candidate today is Key Energy Services ( KEG), which is set to release numbers on Thursday after the close. This company provides a range of well services to major oil companies, foreign national oil companies and independent oil and natural gas production companies. Wall Street analysts, on average, expect Key Energy Services to report revenue of $523.22 million on earnings of 31 cents per share.

The current short interest as a percentage of the float for Key Energy Services is decent at 7.5%. That means that out of the 129.02 million shares in the tradable float, 10.67 million shares are sold short by the bears.

From a technical perspective, KEY is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently moved back above those key moving averages on monster upside volume. The stock is now within range of triggering a big breakout post-earnings.

If you're bullish on KEY, I would look for long-biased trades on the stock after it reports earnings if it manages to break out above $16.28 to $16.71 on high volume. Look for volume that's tracking in close to or above its three-month average action of 2,793,650 shares. If we get that high-volume breakout, then look for KEY to make a run at its next significant overhead resistance level at $20.77 a share in the near future.

I would avoid KEY or look for short biased trades if after earnings the stock fails to break out and then trades below $14.92 (its 50-day) and $14.83 (its 200-day) on high-volume. Target a drop back towards its $12.86 to $12.33 a share if the bears hammer this lower post-earnings.

To see more potential earnings short squeeze plays, including ( BIDU), K-Swiss ( KSWS) and Rovi ( ROVI), check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to and maintains the website, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.

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