Bank of the Ozarks

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Another short-squeeze play today is regional banking player Bank of the Ozarks ( OZRK), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Bank of the Ozarks to report revenue of $60 million on earnings of 55 cents per share.

This stock has been trending modestly strong so far in 2012, with shares up around 14% so far. Shares of OZRK are now trading very close to its 52-week high of $34.98 a share ahead of its earnings report.

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The current short interest as a percentage of the float for Bank of the Ozarks is rather high at 11.2%. That means that out of the 29.32 million shares in the tradable float, 3.35 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.7%, or by about 87,000 shares. If the bears are pressing too hard here, then we could easily see a sizable short-squeeze develop post-earnings.

From a technical perspective, OZRK is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending very strong for the last four months, with shares soaring from a low of $27.71 to its recent high of $34.93 a share. During that sharp move higher, shares of OZRK have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed OZRK within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on OZRK, then I would wait until after its earnings report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $34.50 to $34.93 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 148,663 shares. If we get that move, then OZRK will enter new 52-week-high territory post-earnings, which will be bullish technical price action. Some possible upside targets are $40 to $45.

I would simply avoid OZRK or look for short-biased trades if after earnings it fails to trigger that breakout, and then moves back below its 50-day at $33.07 a share with high volume. If we get that move, then OZRK will setup to re-test or possibly take out its next major support levels at $32 to $31.30 a share, or possible even its 200-day at $30.78 a share.

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