Ultra Petroleum

Another earnings short-squeeze prospect is independent oil and gas player Ultra Petroleum (UPL), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Ultra Petroleum to report revenue of $291.57 million on earnings of 66 cents per share.

>>3 Hot Stocks on Traders' Radars

The current short interest as a percentage of the float for Ultra Petroleum is extremely high at 22%. That means that out of the 150.81 million shares in the tradable float, 36 million shares are sold short by the bears. If this company can deliver the earnings news the bulls are looking for, then shares of UPL could easily soar sharply higher post-earnings as the bears jump to cover some of their bets.

From a technical perspective, UPL 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 six months, with shares soaring higher from its low of $18.22 a share to its recent high of $30.95 a share. During that uptrend, shares of UPL have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of UPL are now trending within range of triggering a major breakout trade post-earnings.

If you're bullish on UPL, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 52-week high of $30.95 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 3.77 million shares. If that breakout hits, then UPL will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $40 to $45 a share.

I would simply avoid UPL 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 $29.26 to $28 share with high volume. If we get that move, then UPL will set up to re-test or possibly take out its next major support levels at $27.11 to its 50-day moving average of $26.48 a share. If those levels get taken out with volume, then UPL could easily re-visit its 200-day moving average of $22.45 a share.

If you liked this article you might like

3D Systems Stock Rising on JPMorgan Upgrade

Closing Bell: Another Record for Dow Stretches Streak Into Day Seven; Avon Tumbles

Some of Today's Worst Performing Stocks: Teva, Cheesecake Factory, 3D Systems