Jakks Pacific

Another potential earnings short-squeeze candidate is toy and electronics maker Jakks Pacific ( JAKK), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Jakks Pacific to report revenue of $297.88 million on earnings of $1.05 per share.

Just recently, B. Riley initiated shares of Jakks Pacific with a neutral rating and a price target of $4.50 per share.

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The current short interest as a percentage of the float for Jakks Pacific is extremely high at 35.2%. That means that out of the 16.80 million shares in the tradable float, 6.06 million shares are sold short by the bears. This is a high short interest on a stock with a very low tradable float. Any bullish earnings news could easily spark a monster short-squeeze for shares of JAKK post-earnings.

From a technical perspective, JAKK is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last three months and change, with shares plunging lower from its high of $11.75 to its recent low of $4.45 a share. During that move, shares of JAKK have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of JAKK have started to reverse that trend during the last month, and the stock is now moving within range of triggering a near-term breakout trade post-earnings.

If you're bullish on JAKK, 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 $5 to $5.27 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 637,282 shares. If that breakout hits, then JAKK will set up to re-test or possibly take out its next major overhead resistance levels at $5.68 to $6 a share. Any high-volume move above those levels will then give JAKK a chance to tag $7 to $8 a share.

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