Synnex

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

Get Adobe Flash player

Another earnings short-squeeze prospect is business process services player Synnex ( SNX), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Synnex to report revenue of $2.44 billion on earnings of 88 cents per share.

The current short interest as a percentage of the float for Synnex is rather high at 14.2%. That means that out of the 26.36 million shares in the tradable float, 3.76 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 7%, or by about 245,000 shares. If the bears are caught pressing their bets into a strong quarter, then shares of SNX could easily rip higher post-earnings.

From a technical perspective, SNX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last five months, with shares soaring higher from its low of $30.70 to its intraday high of $40.67 a share. During that uptrend, shares of SNX have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SNX within range of triggering a near-term breakout trade post-earnings.

If you're bullish on SNX, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its intraday high of $40.67 a share or its intraday high (if greater) on Wednesday with high volume. Look for volume on that move that hits near or above its three-month average action of 167,275 shares. If that breakout triggers, then SNX will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $44.25 a share. Any high-volume move above $44.25 will then put $50 into range for shares of SNX.

I would avoid SNX 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 $39 a share with high volume. If we get that move, then SNX will set up to re-test or possibly take out its next major support levels at its 50-day moving average of $37.70 to $37.56 a share. If those levels get taken out with volume, then SNX could re-test or take out its 200-day moving average at $34.59 a share.

If you liked this article you might like

The CEO That Leads the King of Foam Mattresses Wants to Run the Business 'Sloppy' for a Little While

How to Trade Monday's Most Active Stocks -- Rite Aid, BofA, Fitbit, More

Mattress Firm Posts Earnings and Revenue Below Analysts' Estimates

Jim Cramer: Mattress Firm's Sale Part of Bigger Furniture Trend