SLM

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

Get Adobe Flash player

My final earnings short-squeeze play is persona loan player SLM ( SLM), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect SLM Corp to report revenue of $673.67 million on earnings of 59 cents per share.

The current short interest as a percentage of the float for SLM Corp sits at 3.3%. That means that out of the 407.72 million shares in the tradable float, 14.22 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 35.2%, or by about 3.70 million shares. If the bears get caught pressing their bets into a bullish quarter, then shares of SLM could easily spike sharply higher post-earnings as the bears rush to cover some of their bets.

From a technical perspective, SLM is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong over the last four months and change, with shares moving higher from its low of $21.76 to its recent high of $25.49 a share. During that uptrend, shares of SLM have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SLM within range of triggering a major breakout trade post-earnings. If you're in the bull camp on SLM, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $25.49 to $25.84 a share and then once it clears its 52-week high at $26.17 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 2.90 million shares. If that breakout triggers, then SLM will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that move are $30 to $35 a share.

I would avoid SLM 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 $24.68 a share, and then below more key near-term support levels at $23.93 to $23.68 a share with high volume. If we get that move, then SLM will set up to re-test or possibly take out its next major support levels at $21.76 to its 200-day moving average at $21.59 a share.

To see more potential earnings short-squeeze plays, check out the Earnings Short-Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:



Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

If you liked this article you might like

Watch Out For the Dominoes That Fall: Cramer's 'Mad Money' Recap (Wed 9/20/17)

Tesla Close to Unveiling Autonomous Driving Chips With AMD

Microsoft's New Xbox One X Shows It's Done Trying to Please Everyone

Caterpillar Leads Dow to Records, S&P 500 Also at All-Time Highs

Cramer: Nvidia Is More Than Just a Pet Name