Bank of the Ozarks

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One potential earnings short-squeeze candidate in the regional banking complex is Bank of the Ozarks ( OZRK), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Bank of the Ozarks to report revenue of $59.33 million on earnings of 55 cents per share.

The current short interest as a percentage of the float for Bank of the Ozarks is pretty high at 11.8%. That means that out of the 30.93 million shares in the tradable float, 3.65 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low tradable float. If the bulls get the earnings news they're looking for, then shares of OZRK could rip higher post-earnings.

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From a technical perspective, OZRK is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently sold off from its 52-week high of $45.16 to its low of $41.23 a share. So far, the 50-day moving average of $40.17 for OZRK has not been broken off that recent pullback.

If you're bullish on OZRK, then I would wait until after its report and look for long-biased trades as long as this stock is trending above its 50-day at $40.17, and then once it breaks out above some near-term overhead resistance levels at $44 to $45.16 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 156,533 shares. If we get that breakout, then OZRK will set up to enter new 52-week-high territory above $45.16, which is bullish technical price action. Some possible upside targets off that move are $50 to $52.

I would avoid OZRK 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 at $41.23 a share and then below its 50-day at $40.17 a share with high volume. If we get that move, then OZRK will set up to re-test or possibly take out its next major support levels $38 to $36 a share.

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