PMFG

My final earnings short-squeeze trade idea today is scientific and technical instrument player PMFG ( PMFG), which is set to release numbers on Wednesday before the market open. This company is a provider of custom-engineered systems and products designed to help ensure that the delivery of energy is safe, efficient and clean. Wall Street analysts, on average, expect PMFG to report revenue of $38.56 million on earnings of 6 cents per share.

The current short interest as a percentage of the float for PMFG is decent at 5.8%. That means that out of the 14.73 million shares in the tradable float, 846,000 are sold short by the bears. Due to the extremely low float and decent short interest for PMFG, we could get a big short-squeeze post-earnings if it can deliver what the bulls are looking for.

From a technical perspective, PMFG is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock recently plunged from its April high of $14.71 to its July low of $7.26 a share. During that sharp move lower, shares of PMFG were consistently making lower highs and lower lows, which is bearish technical price action. That said, this stock has started to trend sideways during the last month between $6.90 on the downside and $9.33 on the upside. A move outside of that range post-earnings will likely setup the next major trend for PMFG.

If you're bullish on PMFG, then I would wait until after it reports earnings and look for long-biased trades if it can manage to trigger a break out above some near-term overhead resistance at $7.22 to $8.07 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 93,372 shares. If we get that action, then PMFG will have a great chance of re-testing or possibly taking out its next major overhead resistance levels at $8.71 to $9.33 a share post-earnings. Any high-volume move above $9.33 could setup PMFG to head well north of $10 a share.

I would simply avoid PMFG or look for short-biased trades after earnings if it fails to trigger that breakout, and then moves back below major near-term support at $6.90 a share with heavy volume. If we get that move, then PMFG will enter new 52-week low territory, which is bearish technical price action. This stock could hit $6 to $5 a share if it starts to print new 52-week lows 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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At the time of publication, author had no positions in 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 Beconequity.com and maintains the website Maddmoney.net, 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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