Nuance Communications Inc. (NUAN) is scheduled to report earnings on Monday and it looks like the stock could be poised for some volatility. While a big move on earnings isn't exactly "news" I think the sentiment profile here shows a couple of conflicting camps are at odds and this point is worth noting. Let's start with short interest.

The chart to the right shows the total number of shares sold short on Nuance Communications. As you can see, the number of bearish bets has been steadily rising since October. According to data collected by our Quantified Analysis department, short interest now stands at 26% of the stock's float. With that bearish contingent in mind, lets take a look at how analysts view the stock.

According to Zacks, 11 of 13 analysts (85 percent) rank Nuance with a "buy" rating. In a post back in February I noted the enthusiasm from analysts and said it was something to keep in the back of your mind.

Based on the two data points above it seems we have short sellers and analysts with markedly different opinions of the stock. A situation like this can persist for a while but at some point I have to think that one side will be forced to admit defeat. An event like earnings is the type of situation that can quickly cause that realignment of opinion.

When we look to the weekly chart below we see that the stock is at a fairly critical level as it sits just below its all-time high. A positive report could spur short covering and a push it to new highs. A disappointing report could spur downgrades and give us a rejection at those highs. If that is the case, the recent bottom near 14 would be the next major level of support.

Chart Courtesy of Thomson Financial

In some situations we see the sentiment indicators line up in one direction and give a hint where the bigger move (edge) may be. However, that is not the case here as we have what appears to be strong conflicting opinions. At some point one of these groups will be proven wrong. Monday's release should be a very interesting situation to watch.