Under Armour

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Another earnings short-squeeze prospect is Under Armour ( UA), a maker of apparel, footwear and accessories for men, women and youth, which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Under Armour to report revenue of $448.98 million on earnings of 14 cents per share.

Just recently, Corinna Freedman, an analyst at Wedbush Securities started coverage on Under Armour with an outperform rating and a $70 a share price target. She said there are multiple growth drivers within its wholesale arm to support the stock's premium valuation, while Under Armour's direct-to-consumer business should continue to benefit gross margins and brand awareness. Freedman is modeling for modest upside to the second-quarter earnings and sees minimal risk for the full year.

>>3 Stocks Rising on Unusual Volume

The current short interest as a percentage of the float for Under Armour is pretty high at 12.8%. That means that out of the 79.90 million shares in the tradable float, 10.24 million shares are sold short by the bears. This stock sports a big short interest and it has an extremely low float. If the bulls get the earnings news they're looking for, then shares of UA could easily experience a sharp short-covering rally post-earnings.

From a technical perspective, UA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending for the last month and change, with shares soaring higher from its low of $55.63 to its recent high of $62.40 a share. During that move, shares of UA have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of UA within range of triggering a near-term breakout.

If you're bullish on UA, 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 levels at $62.40 a share to its 52-week high at $65.55 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.20 million shares. If that breakout triggers, then UA will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $70 to $80 a share.

I would avoid UA 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 $60.60 a share with high volume. If we get that move, then UA will set up to re-test or possibly take out its next major support levels at $55.63 a share to its 200-day moving average at $53.96 a share. Any high-volume move below its 200-day will then put its next major support levels at $50 to $48 into range for shares of UA.

If you liked this article you might like

These Stocks Are Changing Course

Insiders Are Loading Up on Kite Pharma, Cliffs Natural Resources and More

China Has Enough Iron Ore to Build 13,000 Eiffel Towers, That's Bad News for These Stocks

'Trump Stocks' Charts Are Wilting

Steel Dynamics, Masimo, Canada Goose: 'Mad Money' Lightning Round