Usana Health Sciences

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Another earnings short-squeeze trade candidate is Usana Health Sciences ( USNA), which is set to release numbers on Wednesday before the market open. This company develops and manufactures high-quality, science-based nutritional and personal care products with a focus on promoting long-term health and reducing the risk of chronic degenerative disease. Wall Street analysts, on average, expect Usana to report revenue of $161.63 million on earnings of $1.06 per share.

This stock has been trending very strong so far in 2012, with shares up a whopping 49%%. Shares of USNA are now trading just about five points off its 52-week high of $49.51 a share ahead of its report.

The current short interest as a percentage of the float for USANA Health Sciences is extremely high at 46.5%. That means that out of the 6.40 million shares in the tradable float, 3.06 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 8.2%, or by about 232,000 shares. If the bears are caught pressing their bets into the quarter, then this stock could explode to the upside post-earnings.

From a technical perspective, USNA is currently trading above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been uptrending strong for the past six months, with shares soaring from a low of $36.02 to a recent high of $49.51 a share. During that uptrend, shares of USNA have been consistently making higher lows and higher highs, which is bullish technical price action. That said, shares of USNA recently ran into some tough resistance at around $49 and it has now slid back below its 50-day.

If you're bullish on USNA, then I would wait until after its report and look for long-biased trades if this stock can manage to recapture its 50-day at $46.45 a share, and then break out above some near-term overhead resistance levels at $49.10 to $49.51 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 150,778 shares. If USNA triggers that breakout, then this stock will enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets are $60 to $70 a share post-earnings.

I would avoid USNA or look for short-biased trades if after earnings it fails to trigger that breakout and then drops below some near-term support levels at $44.19 to $42.26 a share with heavy volume. If we get that action, then USNA will setup to re-test or possibly take out its 200-day moving average of $40.44 a share post-earnings.

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