Imax

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My final earnings short-squeeze play toay is motion pictures player Imax ( IMAX), which is set to release numbers on Thursday before the market open. This entertainment technology company specializes in motion picture technologies and large-format motion picture presentations. Wall Street analysts, on average, expect Imax to report revenue of $76.06 million on earnings of 21 cents per share.

On Monday, Hudson Square Research initiated coverage on Imax with a buy rating and a price target of $28 per share. Recent new movie releases like Dark Knight Rises, Resident Evil: Retribution, and The Amazing Spiderman, are expected to give a decent boost to revenue for the current quarter.

The current short interest as a percentage of the float for Imax is extremely high at 23.9%. That means that out of the 55.34 million shares in the tradable float, 13.20 million shares are sold short by the bears. This is a very large short interest on a stock with a relatively low tradable float. If the bulls get the news they're looking for, then this stock could skyrocket higher post-earnings.

From a technical perspective, IMAX is currently trading above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending slightly for the last two months, with shares rising from a low of $18.85 to its recent high of $22.46 a share. During that uptrend, shares of IMAX have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed IMAX within range of triggering a near-term breakout trade.

If you're in the bull camp on IMAX, 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 $22.46 to $22.50 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 1 million shares. If we get that move, then IMAX will setup to re-test or possibly take out its next major overhead resistance levels at $23.95 to $25.99 a share post-earnings.

I would simply avoid IMAX or look for short-biased trades if after earnings it fails to trigger that breakout, and then moves back below some key near-term support levels at $20.67 to $20.10 a share with high volume. If we get that move, then IMAX will setup to re-test or possibly take out its next major support levels at $18.85 to $18.29 a share.

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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