Seagate Technology

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One potential earnings short-squeeze candidate is provider of electronic data storage products Seagate Technology ( STX), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Seagate Technology to report revenue of $3.58 billion on earnings of $1.28 per share.

This company is hoping to snap its streak of missing Wall Street estimates in the past two quarters. During the last quarter, Seagate Technology missed Wall Street estimates after it reported a net income of $1.45 per share versus estimates of $1.69 per share. In the quarter prior to that, it missed estimates by 10 cents per share.

The current short interest as a percentage of the float for Seagate Technology is pretty high at 12.7%. That means that out of the 328.31 million shares in the tradable float, 41.74 million shares are sold short by the bears.

From a technical perspective, STX is currently trending well above both its 50-day and 200-day moving averages, which is bullish. This stock has been on fire during the last two months, with shares soaring from its low of $24.90 to its recent high of $37.94 a share. During that uptrend, shares of STX have been consistently making higher lows and higher highs, which is bullish technical price action. That move has pushed shares of STX within range of triggering a near-term breakout trade post-earnings.

If you're bullish on STX, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its recent high of $37.94 a share, or if it takes out its intraday high today if that's greater than $37.94 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 9 million shares. If that breakout hits, then STX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45 a share.

I would avoid STX or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support levels $36 to $35 a share with high volume. If we get that move, then STX will set up to re-test or possibly take out its next major support levels at $33 to $32 a share. Any move below $32 will then put its 50-day moving average of $30.25 into range for shares of STX.

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