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Vail Resorts

My final earnings short-squeeze play is resorts player Vail Resorts ( MTN), which is set to release numbers on Wednesday before the market open. This company, through its subsidiaries, engages in the operation of resorts in the U.S. Wall Street analysts, on average, expect Vail Resorts to report revenue of $417.43 million on earnings of $2.19 per share.

Just this morning, KeyBanc initiated coverage on Vail Resorts with a buy rating and a $60 price target. A KeyBanc analyst said, "Our positive disposition on MTN is premised upon our belief that the risk/reward dynamic appears compelling at current valuation levels. With MTN coming off one of the worst snowfall seasons in history and investor expectations grounded, we view several opportunities as attractive both near-term and longer-term that should drive meaningfully improved profitability in the coming years."

The current short interest as a percentage of the float for Vail Resorts is notable at 9.7%. That means that out of the 35.68 million shares in the tradable float, 3.46 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 6.5%, or by about 211,000 shares. If the bears are caught leaning too hard into this quarter, then this stock could easily spike significantly higher off a short-covering rally.

From a technical perspective, MTN is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been trading range-bound for the past month and change, between $44.87 on the upside and $39.94 on the downside. A move outside of that range post-earnings should setup the next major trend for shares of MTN.

If you're in the bull camp on MTN, I would wait until after they report and look for long-biased trades if this stock triggers a break out above some near-term overhead resistance at $44.07-to-$44.87 a share with high-volume. Look for volume on that move that's near or above its three-month average volume of 379,036 shares. If we get that move, then look for MTN to re-test and possibly take out its next major resistance levels at $46.56-to-$47.76 a share.

I would simply avoid MTN or look for short-biased trades if it fails to trigger that breakout and then drops back below its 50-day at $42.36, and then its 200-day at $41.80 a share with high volume. If we get that move, I would target a drop toward $40-to-$38 a share if the bears slam this stock down post-earnings.

To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

At the time of publication, the author had no position in any of the 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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