Greenbrier

Another potential earnings short-squeeze trade idea is railroad freight car equipment player Greenbrier (GBX), which is set to release its numbers on Thursday before the market open. Wall Street analysts, on average, expect Greenbrier Companies to report revenue $508.69 million on earnings of 60 cents per share.

>>3 Stocks in Breakout Territory With Big Volume

The current short interest as a percentage of the float for Greenbrier Companies is extremely high at 16.2%. That means that out of the 22.79 million shares in the tradable float, 3.71 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.1%, or by about 145,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of GBX could easily spike sharply higher post-earnings as the shorts rush to cover some of their positions.

From a technical perspective, GBX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways over the last month, with shares moving between $43.05 on the downside and $47.33 on the upside. Any high-volume move above the upper-end of its recent range post-earnings could trigger a big breakout trade for shares of GBX.

If you're in the bull camp on GBX, 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 $47.20 a share to its 52-week high at $47.33 a share (or Wednesday's intraday high if greater) with high volume. Look for volume on that move that hits near or above its three-month average action of 479,269 shares. If that breakout materializes, then GBX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $65 a share.

I would simply avoid GBX or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some near-term support levels at $43.05 a share to its 50-day moving average of $40.92 a share with high volume. If we get that action, then GBX will set up to re-test or possibly take out its next major support levels at $36 to $34 a share, or even $32 a share.

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