Sturm Ruger

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Another potential earnings short-squeeze trade is Sturm Ruger ( RGR), which is set to release numbers on Wednesday after the market close. This company is engaged in the design, manufacture and sale of firearms to domestic customers. Wall Street analysts, on average, expect Sturm Ruger to report revenue of $112.10 million on earnings of 80 cents per share.

The current short interest as a percentage of the float for Sturm Ruger is gigantic at 41.4%. That means that out of the 17.49 million shares in the tradable float, 7.69 million shares are sold short by the bears. This is a stock with a very low float and extremely high short interest. Any bullish earnings news could easily send shares of RGR soaring higher post-earnings.

From a technical perspective, RGR 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 trending sideways for the last month, with shares moving between $44.06 on the downside and $50 on the upside. A move outside of that trading range post-earnings will likely setup the next major trend for RGR.

If you're bullish on RGR, 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 $48.42 to $50 a share with high volume. Look for volume on that move that tracks in at near or above its three-month average volume of 463,141 shares. If RGR triggers that breakout, then this stock will set up to re-test or possibly take out its next major overhead resistance level at $52.03 a share. Any high-volume move above $52.03 will then put $57.53 into focus for RGR.

I would avoid RGR 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 $44.69 to $44.06 a share with high volume. If we get that action, then RGR will set up to re-test or possibly take out its next major support levels at $42.64 to $42.56 a share post-earnings.

If you liked this article you might like

It's Cyber Monday and Blue Nile Sees Millennials Out There Shopping for Diamonds

In Case You Missed It Nov. 7: The Final Countdown

Closing Bell: Gold Endures Worst Day in Weeks; S&P 500 Snaps Losing Streak

Stocks Hold Big Gains as Polls Forecast a Clinton Win, Crude Climbs