OpenTable

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My final earnings short-squeeze play is restaurant reservation Website player OpenTable ( OPEN), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect OpenTable to report revenue of $45.58 million on earnings of 43 cents per share.

Just recently, JPMorgan downgraded shares of OpenTable to neutral from overweight. The firm said that first quarter results will be in line with expectations, and thus that the stock is fully valued.

The current short interest as a percentage of the float for OpenTable is extremely high at 21%. That means that out of the 22.42 million shares in the tradable float, 4.71 million shares are sold short by the bears. This is a stock with a high short interest and low float. Any bullish earnings news could easily set off a large short-squeeze for shares of OPEN post-earnings.

From a technical perspective, OPEN is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock recently formed a double bottom at $54.40 to $54.38 a share, and now the stock is quickly moving within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on OPEN, 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 at $57.69 a share and then once it clears its 50-day at $59.06 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 706,784 shares. If that breakout triggers, then OPEN will set up to re-test or possibly take out its next major overhead resistance levels at $62 to $65 a share.

I would simply avoid OPEN 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 $54.40 to $54.38 a share with high volume. If we get that move, then OPEN will set up to re-test or possibly take out its next major support levels at $49 to $48 a share.

To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Madison, Wis.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Madison, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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