Science Applications International
My final earnings short-squeeze idea is scientific, engineering and technology applications player Science Applications International (SAIC), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Science Application International to report revenue of $945.16 million on earnings of 65 cents per share.
The current short interest as a percentage of the float for Science Application International sits at 3.4%. That means that out of the 48.54 million shares in the tradable float, 1.70 million shares are sold short by the bears. This is not a huge short interest, but it's more than enough to spark a decent short-covering rally post-earnings if the bulls get the earnings news they're looking for.
From a technical perspective, SAIC is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern at $34.28 to $34.04 a share, right above its 200-day moving average. This stock has now started to spike modestly higher off those support levels and it's starting to move within range of triggering a big breakout trade post-earnings.
If you're in the bull camp on SAIC, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 50-day moving average of $36.72 a share and then once it takes out more overhead resistance levels at $38.75 to its all-time high at $39.88 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 250,085 shares. If that breakout hits, then SAIC will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $55, or even $60 a share.
I would avoid SAIC 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 $34.04 a share to its 200-day moving average of $33.46 a share with high volume. If we get that move, then SAIC will set up to re-test or possibly take out its 52-week low at $29.40 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.