Synnex

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A potential earnings short-squeeze play in the basic materials complex is Synnex ( SNX), which is set to release numbers on Tuesday after the market close. This is a business process services company, servicing resellers, retailers and original equipment manufacturers, in multiple regions globally. Wall Street analysts, on average, expect Synnex to report revenue of $2.54 billion on earnings of 91 cents per share.

This company has been on a tear as we head closer its latest earnings report, since Synnex is going for its fifth consecutive quarter of topping Wall Street estimates. Synnex's profits have been trending higher year over year by an average of 18% over the past five quarters. This strong earnings trend has helped to push the stock into 52-week-high territory on Monday at $43.99 a share.

The current short interest as a percentage of the float for Synnex is rather high at 11.1%. That means that out of the 26.19 million shares in the tradable float, 2.91 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 10.9%, or by about 285,000 shares. This is another stock with a very low float and high short interest. This is the perfect recipe for a monster short squeeze if Synnex can report a strong quarter and bullish forward guidance.

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From a technical perspective, SNX is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock triggered a breakout trade on Monday after it moved above some near-term overhead resistance at $42.10 with lighter than average volume. That move has also pushed SNX into new 52-week-high and all-time-high territory, which is bullish price action.

If you're bullish on SNX, I would look for long-biased trades after its earnings call if the stock manages to make a new 52-week high and all-time high with heavy volume. Look for volume on that move that's tracking in close to or above its three-month average action of 345,566 shares. If we get that action, I would look for SNX to tag $50 a share or higher in the near future if the bulls spark a short-covering rally.

I would simply avoid this stock or look for short-biased trades in SNX after earnings if it fails to make a new high and then drops below some near-term support at $42 to 40 a share with high-volume. Target a drop back towards its 50-day moving average of $39.39 a share or possibly down to $36 if the bears hammer this lower post-earnings.

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