Hansen Medical

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My first earnings short-squeeze trade idea is medical equipment and supplies player Hansen Medical ( HNSN), which is set to release its numbers on Wednesday after the market close. Wall Street analysts, on average, expect Hansen Medical to report revenue of $6.09 million on a loss of 17 cents share.

The current short interest as a percentage of the float for Hansen Medical is extremely high at 21.9%. That means that out of the 34.57 million shares in the tradable float, 8.66 million shares are sold short by the bears. This stock has a monster short interest and a very low float. A strong earnings report and bullish guidance should easily set this stock off on a large short squeeze.

From a technical perspective, HNSN is currently trading above both its 50-day and 200-day moving averages, which is bullish. That said, the stock did move below its 200-day moving average briefly today but has since rebounded back above it. Shares of HNSN have making lower highs and lower lows for the past few weeks, which is bearish price action.

If you're bullish on HNSN, I would wait until after its report and look for long-biased trades if this stock breaks out above $3.83 to $4.03 a share with high volume. Look for volume that's near or well above its three-month average action of 544,015 shares. If we get that action, then look for HNSN to make a run at its next significant overhead resistance levels of $4.46 to $5 a share.

I would simply avoid this stock from the long side if HNSN fails to breakout post-earnings, and then moves back below its 200-day at $3.15 and its 50-day at $2.93 with heavy volume.

I also featured Hansen recently in " 8 Stocks Under $10 Moving Higher."

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