Acuity Brands

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My first earnings short-squeeze play is Acuity Brands ( AYI), which is set to release numbers on Tuesday before the market open. This company is a provider of lighting fixtures, control devices, components, systems and services for commercial and institutional, industrial, infrastructure and residential applications for various markets throughout North America and select international markets. Wall Street analysts, on average, expect Acuity Brands to report revenue of $522.09 million on earnings of 92 cents per share.

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This stock has been uptrending pretty strong so far in 2012, with shares up around 20%. Shares of Acuity Brands are currently trading about six points off its 52-week high of $69.46 a share ahead of its report. The current short interest as a percentage of the float for Acuity Brands is notable at 5.5%. That means that out of the 41.15 million shares in the tradable float, 2.32 million shares are sold short by the bears.

From a technical perspective, AYI is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last three months, with shares soaring from a low of $48 to its recent high of $69.46 a share. During that uptrend, shares of AYI have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're bullish on AYI, then I would wait until after its report and look for long-biased trades as long as this stock is trending above its 50-day moving average at $63.72 a share, and then once it takes out some near-term overhead resistance at $66 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 340,461 shares. If that breakout triggers, then AYI will have a great chance to re-test or possibly take out its 52-week high of $69.46 a share.

I would simply avoid AYI or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below some near-term support at $61.14 a share with heavy volume. If we get that move, then AYI will setup to re-test or possibly take out its 200-day moving average of $58.48 a share.

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