DELAFIELD, Wis. (Stockpickr) -- Short-sellers hate being caught short a stock that reports a blowout quarter. When this happens, we often see a tradable short squeeze develop as the bears rush to cover their positions to avoid big losses. Even the best short-sellers know that it's never a great idea to stay short once a bullish earnings report sparks a big short-covering rally.

This is why I scan the market for heavily shorted stocks that are about to report earnings. You only need to find a few of these stocks in a year to help enhance your portfolio returns -- the gains become so outsized in such a short time frame that your profits add up quickly.

That said, let's not forget that stocks are heavily shorted for a reason, so you have to use trading discipline and sound money management when playing earnings short-squeeze candidates. It's important that you don't go betting the farm on these plays and that you manage your risk accordingly. Sometimes the best play is to wait for the stock to break out following the report before you jump in to profit off a short squeeze. This way, you're letting the trend emerge after the market has digested all of the news.

Of course, sometimes the stock is going to be in such high demand that you risk missing a lot of the move by waiting. That's why it can be worth betting prior to the report -- but only if the stock is acting technically very bullish and you have a very strong conviction that it is going to rip higher. Just remember that even when you have that conviction and have done your due diligence, the stock can still get hammered if Wall Street doesn't like the numbers or guidance.

If you do decide to bet ahead of a quarter, then you might want to use options to limit your capital exposure. Heavily shorted stocks are usually the names that make the biggest post-earnings moves and have the most volatility. I personally prefer to wait until all the earnings-related news is out for a heavily shorted stock and then jump in and trade the prevailing trend.

With that in mind, let's take a look at several stocks that could experience big short squeezes when they report earnings this week.

Carbo Ceramics

My first earnings short-squeeze trade idea is oilfield services technology player Carbo Ceramics (CRR) - Get Report , which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Carbo Ceramics to report revenue of $155.41 million on earnings of 65 cents per share.

The current short interest as a percentage of the float for Carbo Ceramics is extremely high at 33.6%. That means that out of the 19.72 million shares in the tradable float, 6.63 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 7.4%, or by about 455,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of CRR could easily trend sharply higher post-earnings as the shorts scramble to cover some of their positions.

From a technical perspective, CRR is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last six months, with shares plunging lower from over $140 to its new 52-week low of $31.64 a share. During that downtrend, shares of CRR have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of CRR have been trying to put in a bottom over the last two months, since buyers have stepped in whenever its trade below $34 a share. Shares of CRR are now starting to bounce off its new 52-week low of $31.64 and it's beginning to move within range of triggering a near-term breakout trade post-earnings.

If you're bullish on CRR, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $36.50 to $36.76 a share and then above its 50-day moving average of $39.41 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.04 million shares. If that breakout triggers post-earnings, then shares of CRR will set up to re-test or possibly take out its next major overhead resistance levels at $40.87 to $41.61 a share. Any high-volume move above those levels will then give CRR a chance to re-test or possibly take out its next major overhead resistance levels at $51.66 to $53 a share.

I would simply avoid CRR or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back its new 52-week low of $31.64 a share with high volume. If we get that move, then CRR will set up to enter new 52-week-low territory, which is bearish technical price action. Some possible downside targets off that move are $25 to $20 a share.

Cimpress

Another potential earnings short-squeeze play is online business services player Cimpress (CMPR) - Get Report , which is set to release its numbers on Wednesday after the market close Wall Street analysts, on average, expect Cimpress to report revenue $431.62 million on earnings of $1.62 per share.

The current short interest as a percentage of the float for Cimpress is very high at 17.7%. That means that out of the 22.48 million shares in the tradable float, 3.98 million shares are sold short by the bears. This stock sports a large short interest with a low tradable float. Any bullish earnings news could easily set off a monster short-covering rally post-earnings that forces the bears to cover some of their trades.

From a technical perspective, CMPR is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending incredibly strong for the last six months, with shares moving higher from under $40 to its new 52-week high of $76.68 a share. During that uptrend, shares of CMPR have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CMPR within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on CMPR, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $76.04 to its new 52-week high of $76.68 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 334,911 shares. If that breakout hits post-earnings, then CMPR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $85 to $90 a share, or even $95 a share.

I would simply avoid CMPR 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 its 50-day moving average of $71.27 a share to $68.85 and $67.41 a share with high volume. If we get that move, then CMPR will set up to re-test or possibly take out its next major support levels at $63 to $55 a share, or even its 200-day moving average of $53.10 a share.

Tuesday Morning

Another potential earnings short-squeeze candidate is upscale decorative home retailer Tuesday Morning (TUES) - Get Report , which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Tuesday Morning to report revenue of $306.34 million on earnings of 58 cents per share.

The current short interest as a percentage of the float for Tuesday Morning is extremely high at 29%. That means that out of the 41.73 million shares in the tradable float, 12.11 million shares are sold short by the bears. This is a monster 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 TUES could easily rip sharply higher post-earnings as the bears move fast to cover some of their bets.

From a technical perspective, TUES is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern, since buyers stepped in two support the stock at $19.28 a share. Following that bottom, shares of TUES are now started to spike higher and it's beginning to move within range of triggering a major breakout trade post-earnings.

If you're bullish on TUES, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $21.50 to its 52-week high of $22.88 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 513,556 shares. If that breakout materializes post-earnings, then TUES will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $30 to $35 a share.

I would avoid TUES 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 $19.28 to its 200-day moving average of $18.31 a share with high volume. If we get that move, then TUES will set up to re-test or possibly take out its next major support levels at $17.50 to $17 a share, or even $16 to $13 a share.

Alibaba Group

Another earnings short-squeeze prospect is China-based online and mobile commerce player Alibaba Group (BABA) - Get Report , which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Alibaba Group to report revenue of $4.45 billion on earnings of 75 cents per share.

The current short interest as a percentage of the float for Alibaba Group is notable at 4.3%. That means that out of 1.01 billion shares in the tradable float, 43.51 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a decent short-covering rally post-earnings if Alibaba Group can report the earnings numbers that the bulls are looking for.

From a technical perspective, BABA is currently trending just below its 50-day moving average, which is bearish. This stock has been uptrending a bit over the last few weeks, with shares moving higher from its low of $95.52 to its recent high of $105.20 a share. During that uptrend, shares of BABA have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BABA within range of triggering a near-term breakout trade post-earnings.

If you're bullish on BABA, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $105.20 to $105.34 a share and then above its 50-day moving average of $106.67 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 23.89 million shares. If that breakout develops post-earnings, then BABA will set up to re-test or possibly take out its next major overhead resistance levels at $110 to $111.20 a share. Any high-volume move above those levels will then give BABA a chance to tag or take out its next major overhead resistance levels at $115.17 to its all-time high of $120 a share.

I would simply avoid BABA 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 $100 to $95.52 a share with high volume. If we get that move, then BABA will set up to re-test or possibly take out its next major support levels at $90 to $85 a share, or even its all-time low of $82.81 a share.

Flotek Industries

My final earnings short-squeeze play is asset management player Flotek Industries (FTK) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Flotek Industries to report revenue of $123 million on earnings of 28 cents per share.

The current short interest as a percentage of the float for Flotek Industries is very high at 14.9%. That means that out of the 43.95 million shares in the tradable float, 6.55 million shares are sold short by the bears. If this company can produce the earnings news that the bulls are looking for, then shares of FTK could easily jump sharply higher post-earnings as the shorts move fast to cover some of their trades.

From a technical perspective, FTK is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last six months, with shares sliding sharply lower from over $30 to its new 52-week low of $15.15 a share. During that downtrend, shares of FTK have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of FTK have now started to bounce off that $15.15 low and it's beginning to trend within range of triggering a major breakout trade post-earnings.

If you're in the bull camp on FTK, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $17.04 to its 50-day moving average of $18.46 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1 million shares. If that breakout kicks off post-earnings, then FTK will set up to re-test or possibly take out its next major overhead resistance levels at $19.32 to $22 a share, or even $23.31 a share.

I would avoid FTK or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its new 52-week low of $15.15 a share with high volume. If we get that move, then FTK will set up to enter new 52-week-low territory, which is bearish technical price action. Some possible downside targets off that move are $13 to $12 a share.

-- Written by Roberto Pedone in Delafield, Wis.

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At the time of publication, author had no positions in stocks mentioned. Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.