Brown Shoe

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Another earnings short-squeeze trade idea is footwear retail player Brown Shoe ( BWS), which is set to release its numbers on Tuesday before the market open. This company's activities include the operation of retail shoe stores and e-commerce Websites, as well as the sourcing and marketing of footwear for women and men. Wall Street analysts, on average, expect Brown Shoe Company to report revenues of $606.31 million on earnings of 3 cents per share.

Brown Shoe has been skyrocketing so far in 2012, with shares up around 70%. The stock hit a new 52-week high today of $15.31 ahead of its earnings report.

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The current short interest as a percentage of the float for Brown Shoe is pretty high at 11.8%. That means that out of the 40.38 million shares in the tradable float, 4.74 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low float. Any bullish news from Brown Shoe Company and this stock could experience a large short-squeeze post-earnings.

From a technical perspective, BWS is currently trading above both its 50-day moving and 200-day moving averages, which is bullish. This stock has been uptrending very strong for the past four months, with shares soaring from a low of $8.23 to its recent 52-week high of $15.31 a share. During that uptrend, shares of BWS have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're in the bull camp on BWS, then I would wait until after they report and look for long-biased trades if this stock manages to trigger a break out to a new 52-week high above $15.31 a share with heavy volume. Look for volume on that move that hits near or above its three-month average action of 531,581 shares. If we get that move, then BWS will have a great chance of re-testing or possibly taking out its next major overhead resistance levels at $17.38 to $18.79 a share post-earnings.

I would simply avoid BWS or look for short-biased trades if after earnings this stock fails to trigger that breakout, and then moves back below some near-term support at $14 to $13.40 a share with heavy volume. If we get that move, then BWS will setup to re-test or possibly take out its next major support levels at $12.89 to $12 a share post-earnings.

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