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.

Tesla Motors

My first earnings short-squeeze trade idea is electric car maker Tesla Motors(TSLA) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Tesla Motors to report revenue of $1.23 billion on earnings of 31 cents per share.

The current short interest as a percentage of the float for Tesla Motors is extremely high at 26.3%. That means that out of the 96.49 million shares in the tradable float, 25.38 million shares are sold short by the bears. This is a large 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 TSLA could easily rip sharply higher post-earnings as the bears move fast to cover some of their short positions.

From a technical perspective, TSLA is currently just above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending over the last month, with shares moving higher from its low of $185 to its recent high of $225.49 a share. During that uptrend, shares of TSLA have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of TSLA within range of triggering a big breakout trade post-earnings.

If you're bullish on TSLA, then I would wait until after its report and look for long-biased trades if this stock manages to break out some key near-term overhead resistance levels at $225.49 to $228.50 a share and then above its 200-day moving average of $229.11 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 5.02 million shares. If that breakout triggers post-earnings, then shares of TSLA will set up to re-test or possibly take out its next major overhead resistance levels at $250 to around $260 a share, or even $265 a share.

I would simply avoid TSLA 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 $214.06 a share to more near-term support at $210 a share with high volume. If we get that move, then TSLA will set up to re-test or possibly take out its next major support levels at $196.50 to $185 a share, or even its 52-week low of $177.22 a share.

King Digital Entertainment

Another potential earnings short-squeeze play is mobile interactive entertainment player King Digital Entertainment (KING) , which is set to release its numbers on Thursday after the market close. Wall Street analysts, on average, expect King Digital Entertainment to report revenue of $519.93 million on earnings of 47 cents per share.

The current short interest as a percentage of the float for King Digital Entertainment is extremely high at 24.3%. That means that out of the 60.86 million shares in the tradable float, 14.83 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 15.6%, or by about 1.99 million shares. If the bears get caught pressing their bets into a bullish quarter, then shares of KING could easily spike sharply higher post-earnings as the bears scramble to cover some of their trades.

From a technical perspective, KING is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending a bit over the last few weeks, with shares moving higher from its low of $11.96 to its recent high of $13.90 a share. During that uptrend, shares of KING have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of KING within range of triggering a major breakout trade above some key near-term overhead resistance levels post-earnings.

If you're in the bull camp on KING, 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 overhead resistance levels at $13.86 to $13.90 a share and then above both its 50-day at $14.75 and its 200-day at $15.16 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 1.85 million shares. If that breakout hits post-earnings, then KING will set up to re-test or possibly take out its next major overhead resistance levels at $16.77 to $17.56 a share, or even $19.26 to $20.45 a share.

I would simply avoid KING 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 $13.06 to $12.58 a share and then below more support at $11.96 a share with high volume. If we get that move, then KING will set up to re-test or possibly take out its next major support levels at $10.99 to its 52-week low at $10.68 a share.

FireEye

Another potential earnings short-squeeze candidate is cybersecurity software player FireEye(FEYE) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect FireEye to report revenue of $141.49 million on a loss of 49 cents per share.

The current short interest as a percentage of the float for FireEye is very high at 14.6%. That means that out of the 117.10 million shares in the tradable float, 17.16 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 8.7%, or by about 1.37 million shares. If the bears get caught pressing their bets into a strong quarter, then shares of FEYE could easily trend sharply higher post-earnings as the bears jump to cover some of their short positions.

From a technical perspective, FEYE 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 $27.50 to its recent high of $36.75 a share. During that uptrend, shares of FEYE have been making mostly higher lows and higher highs, which is bullish technical price action. This strong trend to the upside has now pushed shares of FEYE within range of triggering a major breakout trade post-earnings.

If you're bullish on FEYE, 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 $36.85 to $37.39 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 5.37 million shares. If that breakout materializes post-earnings, then FEYE will set up to re-test or possibly take out its next major overhead resistance levels at $41.82 to $42 a share, or even $50 a share.

I would avoid FEYE or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below both its 200-day at $32.78 and its 50-day at $32.31 a share with high volume. If we get that move, then FEYE will set up to re-test or possibly take out its next major support levels at $29.25 to $27.50 a share, or even its 52-week low of $24.81 a share.

Hornbeck Offshore Services

Another earnings short-squeeze prospect is energy-related offshore supply vessels and multi-purpose support vessels player Hornbeck Offshore Services(HOS) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Hornbeck Offshore Services to report revenue of $167.66 million on earnings of 59 cents per share.

The current short interest as a percentage of the float for Hornbeck Offshore Services is very high at 17.6%. That means that out of 26.17 million shares in the tradable float, 4.61 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.9%, or by about 129,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of HOS could easily jump sharply higher post-earnings as the bears move fast to cover some of their short positions.

From a technical perspective, HOS is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently formed a double bottom chart pattern at $19.16 to $19.47 a share. Following that bottom, shares of HOS have started to uptrend, with this stock moving higher from $19.47 to its recent high of $24.56 a share. During that uptrend, shares of HOS have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of HOS within range of triggering a major breakout trade above some key near-term overhead resistance levels post-earnings.

If you're bullish on HOS, 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 $24.56 to $25.77 share with high volume. Look for volume on that move that hits near or above its three-month average volume of 820,805 shares. If that breakout gets started post-earnings, then HOS will set up to re-test or possibly take out its next major overhead resistance levels at $30 to $33 a share.

I would simply avoid HOS 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 $20.18 to $19.47 a share and then below its 52-week low of $19.16 a share with high volume. If we get that move, then HOS will set up to enter new 52-week-low territory below $19.16 a share, which is bearish technical price action. Some possible downside targets off that move ware $17 to $15 a share.

Skechers USA

My final earnings short-squeeze play is performance footwear player Skechers USA(SKX) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Skechers USA to report revenue of $541.34 million on earnings of 42 cents per share.

The current short interest as a percentage of the float for Skechers USA is very high at 19.7%. That means that out of the 40.85 million shares in the tradable float, 8.05 million shares are sold short by the bears. This is a relatively low float high short interest situation stock. Any bullish earnings news could easily set off a decent short-covering rally for shares of SKX post-earnings as the bears get forced into covering 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 strong over the last two months, with shares moving higher from its low of $53.89 to its recent high of $62.98 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 major breakout trade post-earnings above some key overhead resistance levels.

If you're in the bull camp on SKX, 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 $62.89 a share to its 52-week high of $64.69 with high volume. Look for volume on that move that hits near or above its three-month average action of 885,950 shares. If that breakout kicks off 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 breakout are $70 to $75 a share, or even $80 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 key near-term support levels at $59.51 a share and then below its 50-day moving average of $58.74 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 $55.71 to $53.89 a share, or even its 200-day moving average of $53.05 a share. Any high-volume move below its 200-day moving average will then give SKX a chance to tag its next major support levels at $50 to $47 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.