Apollo Education Group

My first earnings short-squeeze play is private education provider Apollo Education Group (APOL), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Apollo Education Group to report revenue of $860.58 million on earnings of 90 cents per share.

The current short interest as a percentage of the float Apollo Education Group is pretty high at 12.2%. That means that out of the 100.24 million shares in the tradable float, 12.08 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of APOL could easily explode higher post-earnings as the bears rush to cover some of their short positions.

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From a technical perspective, APOL is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending a bit for the last month, with shares moving higher from its low of $24.18 to its recent high of $27.45 a share. During that move, shares of APOL have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of APOL within range of triggering a big breakout trade post-earnings.

If youre bullish on APOL, 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 $27.45 to its 52-week high at $29.07 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.47 million shares. If that breakout hits, then APOL will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $35 to $38 a share.

I would simply avoid APOL 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 of $26.27 a share with high volume. If we get that move, then APOL will set up to re-test or possibly take out its next major support levels at $24 to its 200-day moving average of $21.07 a share.

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