Intuitive Surgical

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

Get Adobe Flash player

Another potential earnings short-squeeze play is the da Vinci Surgical Systems maker Intuitive Surgical ( ISRG), which is set to release its numbers on Tuesday after the market close. Wall Street analysts, on average, expect Intuitive Surgical to report revenue of $584.36 million on earnings of $4.04 per share.

This company has beaten Wall Street estimates the last four quarters in a row and is coming off a quarter in which it smashed estimates by 98 cents, after reporting net income of $4.46 per share versus a mean estimate of $3.48 per share. Intuitive Surgical has averaged year-over-year revenue growth of 25.4% over the last four quarters.

The current short interest as a percentage of the float for Intuitive Surgical stands at 6.8%. That means that out of the 39.35 million shares in the tradable float, 2.68 million shares are sold short by the bears.

From a technical perspective, ISRG is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending strong for the last month and change, with shares soaring from its low of $476.25 to its recent high of $517.46 a share. During that move, shares of ISRG have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed ISRG within range of triggering a major breakout trade post-earnings.

If you're in the bull camp on ISRG, then I would wait until after its report and look for long-biased trades if this stock manages to break out back above its 50-day at $518.13 a share and its 200-day at $524.37 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 402,618 shares. If that breakout triggers, then ISRG will set up to re-test or possibly take out its next major overhead resistance level at $553.96 a share.

I would simply avoid ISRG or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some near-term support at $485 a share with heavy volume. If we get that move, then ISRG will set up to re-test or possibly take out its next major support level at $476.25 a share.

If you liked this article you might like

Market Rally Fades as Dow, S&P 500 and Nasdaq Finish Lower

Wall Street Holds Lower as Consumer, Defense Names Decline

Cree Lights Up for a Breakout

Analysts' Actions -- Arconic, Big Lots, Chipotle, Snap and More