Greenbrier

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One potential earnings short-squeeze candidate is designer, manufacturer and marketer of railroad freight car equipment Greenbrier ( GBX), which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Greenbrier to report revenue of $503.08 million on earnings of 55 cents per share.

The current short interest as a percentage of the float for Greenbrier is pretty high at 15.1%. That means that out of the 20.67 million shares in the tradable float, 3.70 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4%, or by about 140,000 shares. If the bears are caught pressing their bets into a strong quarter, then shares of GBX could easily see a solid short-squeeze post-earnings.

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From a technical perspective, GBX 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 six months, with shares soaring higher from its low of $17.15 to its recent high of $25.33 a share. During that uptrend, shares of GBX have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of GBX within range of triggering a near-term breakout trade post-earnings.

If you're bullish on GBX, then I would wait until after its report and look for long-biased trades if this stock manages to break out above is 52-week high at $25.33 and above some past overhead resistance at $26.66 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 459,223 shares. If we get that breakout, then GBX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $30 to $35 a share.

I would avoid GBX or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average at $23.60 a share and then below some key near-term support at $22.05 a share with high volume. If we get that move, then GBX will set up to re-test or possibly take out its next major support level at its 200-day moving average of $19.95 a share to $18 a share.

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