My final earnings short-squeeze play is technology player Silicon Graphics (SGI), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Silicon Graphics to report revenue of $131.33 million on a loss of 16 cents per share.
The current short interest as a percentage of the float for Silicon Graphics is pretty high at 13.8 %. That means that out of the 32.17 million shares in the tradable float, 4.41 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low tradable float. If the bulls get the earnings news they're looking for, then shares of SGI could easily rip sharply higher post-earnings as the bears rush to cover some of their trades.
From a technical perspective, SGI is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways for the last three months, with shares moving between $11.57 on the downside and $13.69 on the upside. Any high-volume move above the upper-end of its recent range post-earnings could trigger a breakout trade for shares of SGI.
If you're in the bull camp on SGI, 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 overheard resistance levels at $12.86 to $13.69 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 366,922 shares. If that breakout hits after earnings, then SGI will set up to re-test or possibly take out its next major overhead resistance levels at $14 to $14.43 a share. Any high-volume move above those levels will then give SGI a chance to tag $16 to $18 a share.
I would avoid SGI 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 $11.57 to its 52-week low of $11.46 a share with high volume. If we get that move, then SGI will set up to enter new 52-week-low territory, which is bearish technical price action. Some possible downside targets off that move are $10 to $9 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.