Another potential earnings short-squeeze candidate is social media player Twitter (TWTR), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Twitter to report revenue of $241.47 million on a loss of 3 cents per share.
The current short interest as a percentage of the float for Twitter is very high at 18%. That means that out of the 331.44 million shares in the tradable float, 45.76 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.1%, or by about 983,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of TWTR could easily soar sharply higher post-earnings as the bears rush to cover some of their positions.
From a technical perspective, TWTR is currently trending below its 50-day moving average, which is bearish. This stock has been downtrending badly over the last four months, with shares moving lower from its high of $74.73 to its recent low of $39.68 a share. During that downtrend, shares of TWTR have been making mostly lower highs and lower lows, which is bearish technical price action.
If you're bullish on TWTR, 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 $45 to $47 a share and then once it clears its 50-day moving average of $49.33 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 13.03 million shares. If that breakout materializes after earnings, then TWTR will set up to re-test or possibly take out its next major overhead resistance levels at $55 to $60 a share.
I would avoid TWTR 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 $39.68 to its 52-week low of $38.80 a share with high volume. If we get that move, then TWTR will set up to enter new 52-week-low territory, which is bearish technical price action. Some possible downside targets off that move are $30 to $25 a share.