Entropic Communications

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One possible earnings short-squeeze trade in the semiconductor complex is Entropic Communications ( ENTR), which is set to release numbers on Wednesday after the market close. This company designs, develops and markets systems solutions to enable connected home entertainment. Wall Street analysts, on average, expect Entropic Communications to report revenue of $79.41 million on earnings of 8 cents per share.

If you're looking for a heavily-shorted small cap technology stock heading into its earnings report this week, then make sure to check out shares of Entropic Communications. This stock has been on fire during the last three months, with shares soaring over 40%. Despite that monster move, shares of Entropic are still trading well off its 52-week high of $7.38 a share ahead of its quarter.

The current short interest as a percentage of the float for Entropic Communications is pretty high at 13.3%. That means that out of the 87.99 million shares in the tradable float, 11.11 million shares are sold short by the bears.

From a technical perspective, ENTR is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock gapped up big in late June from around $4 to over $5 a share with monster volume. Following that move, shares of ENTR have started to trend sideways between $5.50 and $5.98 a share. A move outside of that range post-earnings will likely setup ENTR for its next major trend.

If you're in the bull camp on ENTR, then I would look for long-biased trades after earnings if this stock manages to trigger a near-term break out above overhead resistance at $5.98 to $6.45 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.1 million shares. If we get that move, then ENTR could re-test and possibly take out its next major overhead resistance levels at $7.25 to $7.38 a share.

I would simply avoid ENTR or look for short-biased trades after earnings the stock fails to trigger that breakout, and then moves back below some near-term support at $5.43 to $5.40 a share, and then below its 200-day moving average of $5.26 a share with high volume. If we see that move, then ENTR could fill that previous gap and possibly trade down toward $4 a share.

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