Bank of the Ozarks

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Another potential earnings short-squeeze play is banking player Bank of the Ozarks ( OZRK), which is set to release its numbers on Thursday after the market close. Wall Street analysts, on average, expect Bank of the Ozarks to report revenue of $63.04 million on earnings of 57 cents per share.

The current short interest as a percentage of the float for Bank of the Ozarks is pretty high at 12%. That means that out of the 30.96 million shares in the tradable float, 3.72 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 8%, or by about 276,000 shares. If the bears are caught pressing their bets into a strong quarter, then shares of OZRK could experience a notable short-squeeze 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 has been uptrending very strong for the last three months, with shares moving higher from its low of $39.44 to its recent high of $46.85 a share. During that uptrend, shares of OZKR have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of OZRK within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on OZRK, then I would wait until after its report and look for long-biased trades if this stock manages to break out to a new 52-week high above $46.85 a share with high volume. If OZRK takes out $46.85 a share before it reports earnings, then readjust to the new breakout price. Look for volume on that move that registers near or above its three-month average action of 163,259 shares. If that breakout triggers, then OZRK will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $55 a share, or even $60 a share.

I would simply 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 levels at $45 to its 50-day at $43.40 a share with high volume. If we get that move, then OZRK will set up to re-test or possibly take out its next significant support levels at $42.36 to around $40 a share.

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