FactSet Research Systems

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My first earnings short-squeeze trade idea is provider of integrated financial information and analytical applications to the global investment community FactSet Research Systems ( FDS), which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect FactSet Research Systems to report revenue of $214.94 million on earnings of $1.15 per share.

The current short interest as a percentage of the float for FactSet Research Systems is pretty high at 10%. That means that out of the 40.73 million shares in the tradable float, 4.08 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of FDS could easily surge higher post-earnings as the bears rush to cover some of their short positions.

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From a technical perspective, FDS 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 two months and change, with shares moving higher from its low of $88.36 to its intraday high of $103.30 a share. During that uptrend, shares of FDS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of FDS within range of triggering a big breakout trade post-earnings.

If you're bullish on FDS, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some past overhead resistance levels at $103.76 to $107.74 a share and then above more resistance at $109.56 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 400,286 shares. If that breakout triggers, then FDS will set up to trend well north of $120 a share.

I would simply avoid FDS 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 $98 to $96.54 a share with high volume. If we get that move, then FDS will set up to re-test or possibly take out its next major support level at its 50-day of $95.54 a share to its 200-day at $93.57 a share. If those levels get taken out with volume, then FDS could trend below $90 a share post-earnings.

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