Annie's

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My first earnings short-squeeze play is manufacturer and marketer of natural and organic foods Annie's ( BNNY), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Annie's to report revenue of $36.60 million on earnings of 14 cents per share.

If you're looking for a heavily-shorted stock that's been beaten-down pretty bad heading into its earnings report, then make sure to check out shares of Annie's. This stock has dropped 15% during the last six months, with shares currently trading just five points off its 52-week low of $31 a share.

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The current short interest as a percentage of the float for Annie's is extremely high at 23.6%. That means that out of the 9.90 million shares in the tradable float, 2.33 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 7.7%, or by about 165,000 shares. If the bears are caught pressing their bets too hard into a strong quarter, then we could easily see a large short-squeeze develop for BNNY post-earnings.

From a technical perspective, BNNY is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been trending sideways for the last month, with shares moving between $33.95 on the downside and $38.80 on the upside. A high-volume move above the upper end of that recent range will trigger a near-term breakout trade for shares of BNNY.

If you're bullish on BNNY, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $37.50 to $38.80 a share and then once it clears its 200-day moving average at $39.26 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 356,298 shares. If that breakout hits, then BNNY will set up to re-test or possibly take out its next major overhead resistance levels at $42 to $45 a share.

I would simply avoid BNNY 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 at $35.68 to $35.56 a share with heavy volume. If we get that move, then BNNY will set up to re-test or possibly take out its next major support levels at $33.95 to $32.06 a share. Any high-volume move below $32.06 will then put its 52-week low of $31 into range for shares of BNNY.

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