Intuitive Surgical

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One potential earnings short-squeeze candidate is advanced medical equipment maker Intuitive Surgical ( ISRG), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Intuitive Surgical to report revenue of $525.96 million on earnings of $3.40 per share.

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The current short interest as a percentage of the float for Intuitive Surgical is notable at 5%. That means that out of the 39.08 million shares in the tradable float, 1.96 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of ISRG could easily rip sharply higher post-earnings as the shorts rush to cover some of their bets.

From a technical perspective, ISRG is currently trending above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock recently spiked higher back above its 50-day at $381.33 a share with strong upside volume flows. That move is quickly pushing shares of ISRG within range of triggering a big breakout trade post-earnings.

If you're bullish on ISRG, 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 $405.45 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 586,225 shares. If that breakout triggers, then ISRG will set up re-fill its previous gap down zone from July that started just under $430 a share. Any high-volume move above $430 to $432.50 will then give ISRG a chance to re-fill some of an even bigger gap down zone from July that started at $500 a share.

I would avoid ISRG or look for short-biased trades if after earnings it fails to trigger that move and then drops back below its 50-day moving average at $381.34 a share with high volume. If we get that move, then ISRG will set up to re-test or possibly take out its next major support levels at $358.02 to its 52-week low at $357.02 a share.

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