BancorpSouth

My final earnings short-squeeze play is banking player BancorpSouth (BXS), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect BancorpSouth to report revenue of $165.72 million on earnings of 28 cents per share.

Recently, RBC Capital raised its price target on shares of BancorpSouth to $27 from $23. The firm thinks BancorpSouth will look for additional acquisitions after it agreed to buy Ouachita Bancshares.

The current short interest as a percentage of the float for BancorpSouth stands at 8.1%. That means that out of the 83.47 million shares in the tradable float, 6.73 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 14.8%, or by about 870,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of BXS could easily spike sharply higher post-earnings as the bears rush to cover some of their positions.

From a technical perspective, BXS 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 moving higher from its low of 18.84 to its recent high of $25.54 a share. During that uptrend, shares of BXS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BXS within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on BXS, 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 $25.08 to its 52-week high at $25.54 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 733,608 shares. If that breakout hits, then BXS will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $33 to $35 a share.

I would avoid BXS 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 $24.11 a share to more key near-term support levels at $24.07 to $23 a share with high volume. If we get that move, then BXS will set up to re-test or possibly take out its next major support levels at $22 to $21 a share, or even its 200-day moving average of $20.01 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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