Accretive Health

My first earnings short-squeeze trade idea is provider of services to health care providers Accretive Health ( AH), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Accretive Health to report revenue of $236.87 million on earnings of 9 cents per share.

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The current short interest as a percentage of the float for Accretive Health is rather high at 19.4%. That means that out of the 51.07 million shares in the tradable float, 11.34 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of AH could spike dramatically higher post-earnings.

From a technical perspective, AH is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped down big from around $12 a share to its low of $8.55 a share with heavy downside volume. Following that move, shares of AH have started to rebound sharply and re-fill a good portion of that gap, since shares are now trading around $10.85 a share. That move is quickly pushing shares of AH within range of triggering a near-term breakout trade post-earnings.

If you're bullish on AH, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 200-day of $11.56 a share and its 50-day at $11.91 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 1.08 million shares. If that breakout triggers, then AH will set up to re-test or possibly take out its next major overhead resistance levels at $13.54 to $14.19 a share. Any high-volume move above $14.19 will then put this stock in play to re-fill some of its previous gap from last May that started near $18 a share.

I would avoid AH or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below $10 a share with high volume. If we get that move, then AH will set up to re-test or possibly take out its next major support levels at $9.50 to $8.55 a share.

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