U.S. Silica

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My final earnings short-squeeze play is silica sand supplier U.S. Silica ( SLCA), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect U.S. Silica to report revenue of $141.28 million on earnings of 41 cents per share.

The current short interest as a percentage of the float for U.S. Silica is extremely high at 37.4%. That means that out of the 35.45 million shares in the tradable float, 13.25 million shares are sold short by the bears. If this company can deliver the earnings news the bulls are looking for, then shares of SLCA could experience a large short-squeeze post-earnings.

From a technical perspective, SLCA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last five months, with shares soaring higher from its low of $19.16 to its recent high of $37.14 a share. During that uptrend, shares of SLCA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SLCA within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on SLCA, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its all-time high at $37.14 a share (or Wednesday's intraday high if higher) with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.28 million shares. If that breakout hits, then SLCA will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $55 a share.

I would avoid SLCA 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 $34 to $33 a share with high volume. If we get that move, then SLCA will set up to re-test or possibly take out its next major support levels at $31.66 to $30.63 a share, or even its 50-day moving average of $28.28 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.


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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.

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