Netflix

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My first earnings short-squeeze play is Internet subscription service streaming television shows and movies player Netflix ( NFLX), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Netflix to report revenue of $1.02 billion on earnings of 18 cents per share.

Andy Hargreaves, of Pacific Crest Securities, recently said he expects solid first-quarter results from Netflix, including the addition of 1.74 million U.S. streaming subscribers, and another 1.1 million additional subscribers in the company's international markets. Hargreaves has an outperform rating on the stock and $225 price target.

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The current short interest as a percentage of the float for Netflix is pretty high at 13.7%. That means that out of the 49.18 million shares in the tradable float, 7.49 million shares are sold short by the bears. If Netflix can deliver the earnings news the bulls are looking for, then we could easily see a monster short-squeeze for this stock post-earnings.

From a technical perspective, NFLX is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has been trending sideways for the last month, with shares moving between $182.35 on the upside and $159 on the downside. A high-volume move above the upper-end of its recent range could easily trigger a major breakout trade for NFLX.

If you're bullish on NFLX, then I would wait until after its report and look for long-biased trades if this stock manages to take out its 50-day moving average of $180.11 a share and then once it breaks out above some more near-term overhead resistance at $182.35 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 5.63 million shares. If that breakout triggers, then NFLX will set up to re-test or possibly take out its next major overhead resistance levels at $197.06 to $197.62 a share. Any move above $197.62 would then push NFLX into new 52-week-high territory, which is bullish price action.

I would simply avoid NFLX 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 $161.80 to $159 a share with high volume. If we get that move, then NFLX will set up to re-test or possibly take out its gap up day high from January at around $150 a share. Any high-volume move below $140 would then push NFLX into that gap up zone that started around $100 a share.

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