Another potential earnings short-squeeze play is mobile Internet services player NQ Mobile (NQ), which is set to release its numbers on Thursday after the market close. Wall Street analysts, on average, expect NQ Mobile to report revenue $62.83 million on earnings of 32 cents per share.
NQ Mobile has beaten revenue estimates during the last eleven quarters and the firm has beaten analyst expectations on both the top and bottom lines during the last five quarters.
The current short interest as a percentage of the float for NQ Mobile is extremely high at 50.3%. That means that out of the 26.28 million shares in the tradable float, 13.24 million shares are sold short by the bears. This is an enormous short interest on a stock with a very low tradable float. If the bulls get the earnings news they're looking for, then shares of NQ could easily explode sharply higher post-earnings as the bears rush to cover some of their bets.
From a technical perspective, NQ is currently trending just above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has been downtrending over the last month, with shares dropping from its high of $22.33 to its recent low of $15.03 a share. During that downtrend, shares of NQ have been consistently making lower highs and lower lows, which is bearish technical price action.
If you're in the bull camp on NQ, 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 $17 a share to its 50-day moving average of $18.36 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 3.28 million shares. If that breakout kicks off, then NQ will set up to re-test or possibly take out its next major overhead resistance levels at $20.85 to $22.33 a share. Any high-volume move above those levels will then give NQ a chance to tag or take out $25 a share.
I would simply avoid NQ 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 $15.03 to $14.28 share with high volume. If we get that move, then NQ will set up to re-test or possibly take out its next major support levels at $13.40 to $12 a share.