If you're in the bull camp on SAFM, then I would wait until after its report and look for long-biased trades once it breaks out above some near-term overhead resistance at $50.46 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 227,973 shares. If that breakout hits, then SAFM will set up to re-test or possibly take out its next major overhead resistance levels at $54 to $55.40 a share.

I would simply avoid SAFM if after its report the stock fails to trigger that breakout, and then drops back below some key near-term support levels at $49 to $48 a share with heavy volume. If we get that move, then SAFM will set up to re-test or possibly take out its 50-day at $46.70 and its 200-day at $47.06 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 technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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