With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.
Pep Boys-Manny, Moe & Jack
My first earnings short-squeeze trade idea is Pep Boys-Manny, Joe & Jack (PBY - Get Report), which is set to release numbers on Monday after the market close. This company is engaged mainly in automotive repair and maintenance and in the sale of automotive tires, parts and accessories through a chain of stores. Wall Street analysts, on average, expect Pep Boys-Manny, Moe & Jack to report revenue of $527.68 million on earnings of 15 cents per share.If you're looking for a heavily-shorted stock that's trending up decent head into its report, then make sure to check out shares of Pep Boys-Manny, Moe & Jack. This stock has risen by 15% during the last three months. The current short interest as a percentage of the float for Pep Boys-Manny, Moe & Jack is rather high at 12.8%. That means that out of the 50.80 million shares in the tradable float, 6.48 million shares are sold short by the bears. This is more than enough shorts in stock with a relatively low float. Any bullish earnings news could easily spark a solid short-covering rally post-earnings. From a technical perspective, PBY is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong for the last four months, with shares moving from a low of $8.70 to a recent high of $10.95 a share. During that uptrend, shares of PBY have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed PBY within range of triggering a major breakout trade post-earnings. If you're bullish on PBY, then I would wait until after its report and look for long-biased trades once this stock manages to break out above some key overhead resistance levels at $10.95 to $11.86 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 538,505 shares. If that breakout hits, then PBY will set up to re-fill some of its previous gap down zone from May that started near $15 a share.