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.

Jakks Pacific

My first earnings short-squeeze trade idea is toy and game maker Jakks Pacific (JAKK) - Get Report, which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Jakks Pacific to report revenue of $103.43 million on a loss of 46 cents per share.

The current short interest as a percentage of the float for JAKKS Pacific is extremely high at 58.5%. That means that out of the 12.20 million shares in the tradable float, 7.14 million shares are sold short by the bears. This stock sports a monster short interest and a very low tradable float. Any bullish earnings news could easily set off a large short-squeeze that sends the bears scrambling to cover their positions post-earnings.

From a technical perspective, JAKK is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last month and change, with shares moving higher from its low of $6.11 to its recent high of $7.28 a share. During that uptrend, shares of JAKK have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of JAKK within range of triggering a big breakout trade post-earnings.

If you're bullish on JAKK, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $7.28 to $7.30 a share and then above $7.57 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 478,327 shares. If that breakout triggers post-earnings, then shares of JAKK will set up to re-test or possibly take out its next major overhead resistance levels at $8.25 to $9 a share, or even $10 a share.

I would simply avoid JAKK or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day moving average of $6.71 a share and below some near-term support at $6.63 a share with high volume. If we get that move, then JAKK will set up to re-test or possibly take out its next major support levels at $6.11 to $5.84 a share, or even $5.70 to $5.45 a share.

VMware

Another potential earnings short-squeeze play is virtualization and infrastructure software solutions provider VMware (VMW) - Get Report, which is set to release its numbers on Tuesday after the market close. Wall Street analysts, on average, expect VMware to report revenue $1.50 billion on earnings of 84 cents per share.

The current short interest as a percentage of the float for VMware is pretty high at 10.5%. That means that out of the 76.68 million shares in the tradable float, 8.07 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of VMW could easily rip sharply higher post-earnings as the bears rush to cover some of their positions.

From a technical perspective, VMW is currently trending just above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending a bit over the last few weeks, with shares moving higher from a low of $79.93 to a recent high of $86.19 a share. During that uptrend, shares of VMW have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of VMW within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on VMW, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $86.19 to $86.91 a share and then above its 200-day at $87.89 and above more past resistance at $89 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.80 million shares. If that breakout kicks off post-earnings, then VMW will set up to re-test or possibly take out its next major overhead resistance levels at $95 to $100 a share, or even $105 to $110 a share.

I would simply avoid VMW or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day moving average of $83.08 a share with high volume. If we get that move, then VMW will set up to re-test or possibly take out its next major support levels at $79.93 to $77 a share, or even $76 a share.

Skechers USA

Another potential earnings short-squeeze candidate is footwear company Skechers USA (SKX) - Get Report, which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Skechers to report revenue of $705.16 million on earnings of $1.01 per share.

The current short interest as a percentage of the float for Skechers USA is pretty high at 14.3%. That means that out of the 41.97 million shares in the tradable float, 6 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.1%, or by about 234,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of SKX could easily spike sharply higher post-earnings as the bears move fast to cover some of their trades.

From a technical perspective, SKX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending very strong over the last six months, with shares moving higher from its low of $49.49 to its recent high of $74.37 a share. During that uptrend, shares of SKX have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SKX within range of triggering a big breakout trade post-earnings.

If you're bullish on SKX, 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 $74.37 a share (or above Wednesday's intraday high if greater) with high volume. Look for volume on that move that registers near or above its three-month average action of 870,179 shares. If that breakout materializes post-earnings, then SKX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $80 to $85 a share, or even $90 to $95 a share.

I would avoid SKX or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some near-term support at $70 a share to its 50-day moving average of $68.99 a share with high volume. If we get that move, then SKX will set up to re-test or possibly take out its next major support levels at $65 to $63 a share, or even its 200-day moving average of $59.28 a share.

Marinemax

Another earnings short-squeeze prospect is recreational boat and yacht retailer Marinemax (HZO) - Get Report, which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Marinemax to report revenue of $173.25 million on earnings of 13 cents per share.

The current short interest as a percentage of the float for Marinemax is notable at 8.2%. That means that out of 23.67 million shares in the tradable float, 1.94 million shares are sold short by the bear. The bears have also been increasing their bets from the last reporting period by 35.4%, or by about 509,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of HZO could easily soar sharply higher post-earnings as the bears jump to cover some of their short bets.

From a technical perspective, HZO is currently trending above its 200-day moving average and right below its 50-day moving average, which is neutral trendwise. This stock has been uptrending a bit over the last few weeks, with shares moving higher from its low of $23.17 to its recent high of $25.72 a share. That small uptrend has now pushed shares of HZO right into its 50-day moving average and right into range of triggering a big breakout trade post-earnings.

If you're bullish on HZO, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 50-day at $25.80 and then above more key overhead resistance at $27.09 to $27.68 a share and above its 52-week high of $28.69 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 289,629 shares. If that breakout develops post-earnings, then HZO will set up to enter new 52-week-high territory above $28.69, which is bullish technical price action. Some possible upside targets off that move are $35 to $40 a share.

I would simply avoid HZO 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 at $23.17 a share with high volume. If we get that move, then HZO will set up to re-test or possibly take out its next major support levels at $21 to its 200-day moving average of $20.26 a share.

Mellanox Technologies

My final earnings short-squeeze trade idea is fabless semiconductor player Mellanox Technologies (MLNX) - Get Report, which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Mellanox Technologies to report revenue of $142.66 million on earnings of 48 cents per share.

The current short interest as a percentage of the float for Mellanox Technologies is notable at 8.2%. That means that out of the 35.01 million shares in the tradable float, 2.89 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 1.8%, or by about 51,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of MLNX could easily jump sharply higher post-earnings as the bears move fast to cover some of their positions.

From a technical perspective, MLNX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways for the last two months, with shares moving between $44.28 on the downside and $48.92 on the upside. Shares of MLNX held up well last Friday during the market meltdown and the stock is now moving within range of triggering a big breakout trade above the upper-end of its recent sideways trending chart pattern post-earnings.

If you're in the bull camp on MLNX, 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 $49.82 a share (or above Monday's intraday high if greater) with high volume. Look for volume on that move that registers near or above its three-month average action of 387,868 shares. If that breakout takes place post-earnings, then MLNX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $60 a share, or even $65 a share.

I would avoid MLNX or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average of $46.10 a share and then below more near-term support at $44.28 a share with volume. If we get that move, then MLNX will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $43.41 a share to $41 to $40 a share, or even $39 to $38 a share.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.