3D Systems

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Another potential earnings short-squeeze trade is 3D Systems ( DDD), a provider of 3D content-to-print solutions, which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect 3D Systems to report revenue of $87.29 million on earnings of 27 cents per share.

During the last quarter, 3D Systems reported revenue of $83.6 million. GAAP reported sales were 52% higher than the prior year quarter at $55.1 million. Also during the last quarter, earnings per share came in at 16 cents. GAAP earnings per share of 16 cents for the second quarter were 38% lower than the prior-year quarter of 26 cents per share.

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The current short interest as a percentage of the float for 3D Systems is extremely high at 21.1%. That means that out of the 50.36 million shares in the tradable float, 10.62 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.9%, or by about 300,000 shares. This is a huge short interest on a stock with a relative low float. If the bulls get the news they're looking for, then this stock could explode higher post-earnings.

From a technical perspective, DDD 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 slightly for the last month, with shares rising from a low of $32.35 to its recent high of $40.59 a share. During that uptrend, shares of DDD have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed DDD within range of triggering a near-term breakout trade post-earnings.

If you're bullish on DDD, then I would wait until after its report and look for long-biased trades if this stock can manage to break out above some near-term overhead resistance levels at $40.59 to $40.96 a share with high volume. Look for volume on that move that tracks in at near or above its three-month average action of 1.4 million shares. If DDD triggers that breakout, then this stock will setup to re-test or possibly take out its next major overhead resistance level and its 52-week high at $44.80 a share. Any move above $44.80 should setup DD to trend north of $50 a share.

I would avoid DDD or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below some key near-term support levels at $36.18 to $32.35 a share with high volume. If we get that action, then DDD will setup to re-test or possibly take out its 200-day moving average of $30.11 a share post-earnings.

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