Umpqua

Another earnings short-squeeze prospect is banking stock Umpqua (UMPQ), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Umpqua to report revenue of $137.08 million on earnings of 25 cents per share.

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The current short interest as a percentage of the float for Umpqua is extremely high at 23%. That means that out of the 110.56 million shares in the tradable float, 25.45 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 9.2%, or by about 2.15 million shares. If the bears get caught pressing their bets into a bullish quarter, then shares of UMPQ could easily rip sharply higher post-earnings as the bears rush to cover some of their positions.

From a technical perspective, UMPQ 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 four months and change, with shares moving higher from its low of $15.43 to its recent high of $19.50 a share. During that uptrend, shares of UMPQ have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of UMPQ within range of triggering a big breakout trade post-earnings.

If you're bullish on UMPQ, 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 $19.21 to its 52-week high at $19.65 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.17 million shares. If that breakout hits, then UMPQ will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $27 a share.

I would simply avoid UMPQ 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 $18.21 a share to more key near-term support at $18 a share with high volume. If we get that move, then UMPQ will set up to re-test or possibly take out its next major support levels $17 to $16 a share, or even its 200-day moving average at $15.77 a share.

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