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 very bullish technically 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.

Dave & Buster's Entertainment

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My first earnings short-squeeze trade play is entertainment and dining venues operator Dave & Buster's Entertainment(PLAY) - Get Report , which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Dave & Buster's Entertainment to report revenue of $216.74 million on earnings of 14 cents per share.

The current short interest as a percentage of the float for Dave & Buster's Entertainment is pretty high at 12.4%. That means that out of the 41.49 million shares in the tradable float, 5.15 million shares are sold short by the bears.

From a technical perspective, Dave & Buster's Entertainment is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last two months, with shares moving higher off its low of $37.60 a share to its intraday high on Monday of $49.05 a share. During that uptrend, shares of Dave & Buster's Entertainment have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a major breakout trade post-earnings above some key resistance levels.

If you're bullish on Dave & Buster's Entertainment, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its all-time high of $49.90 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 1.04 million shares. If that breakout fires off post-earnings, then this stock will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $60, or even $65 to $70 a share.

I would simply avoid Dave & Buster's Entertainment or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some near-term support levels at $46.20 to its 20-day moving average of $46.83 a share and then below more support at $44.55 a share with high volume. If we get that move, then this stock will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $42.11 a share to $40, or even $39 to $38.50 a share.

Conn's

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Another potential earnings short-squeeze trade idea is electronic stores operator Conn's(CONN) - Get Report , which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Conn's to report revenue of $383.83 million on a loss of 19 cents per share.

The current short interest as a percentage of the float for Conn's is extremely high at 28.4%. That means that out of the 21.79 million shares in the tradable float, 6.20 million shares are sold short by the bears.

From a technical perspective, Conn's 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 off its low of $8.10 a share to its recent high of $12 a share. During that uptrend, shares of Conn's have been making mostly higher lows and higher highs, which is bullish technical price action. That strong move to the upside is now quickly pushing this stock within range of triggering a big breakout trade post-earnings above some key resistance levels.

If you're in the bull camp on Conn's, 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 $12 to $12.41 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 867,357 shares. If that breakout hits post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $14 to $15.77, or even $17.50 a share.

I would simply avoid Conn's or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below both its 200-day moving average of $10.50 a share to its 50-day moving average of $10.18 a share with high volume. If we get that move, then this stock will set up to re-test or possibly take out its next major support levels at $9.25 to $8.50, or even $8.10 to $7.70 a share.

Lululemon Athletica

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Another potential earnings short-squeeze candidate is athletic apparel player Lululemon Athletica(LULU) - Get Report , which is set to release numbers on Wednesday after the market close Wall Street analysts, on average, expect Lululemon Athletica to report revenue of $540.43 million on earnings of 43 cents per share.

The current short interest as a percentage of the float for Lululemon Athletica is very high at 13.5%. That means that out of the 106.86 million shares in the tradable float, 14.50 million shares are sold short by the bears.

From a technical perspective, Lululemon Athletica is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been consolidating and trending sideways over the last two months, with shares moving between $54 on the downside and close to $60 on the upside. Any high-volume move above the upper-end of its recent sideways trending price action post-earnings could trigger a major breakout trade for shares of Lululemon Athletica.

If you're bullish on Lululemon Athletica, 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 its 50-day moving average of $57.75 a share to around $60 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 2.27 million shares. If that breakout develops post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $66.14 a share to $67.40, or even $72 a share.

I would avoid Lululemon Athletica 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 $54.27 to $54 a share with high volume. If we get that move, then this stock will set up to re-test or possibly take out its next major support levels at $50 to $48, or even $45 a share.

Greif

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Another earnings short-squeeze prospect is industrial packaging products player Greif(GEF) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Greif to report revenue of $840.83 million on earnings of 68 cents per share.

The current short interest as a percentage of the float for Greif is notable at 6%. That means that out of 28.75 million shares in the tradable float, 1.74 million shares are sold short by the bear. The bears have also been increasing their bets from the last reporting period by 3.2%, or by about 53,000 shares. If the bears get caught pressing their bets into a strong quarter, then this stock could easily rip sharply higher post-earnings as the bears move fast to cover some of their positions.

From a technical perspective, Greif 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 five months, with shares moving higher off its low of $34.69 a share to its recent high of $57.97 a share. During that uptrend, shares of Greif have been making mostly higher lows and higher highs, which is bullish technical price action. That uptrend has now pushed this stock within range of triggering a major breakout trade post-earnings above some key resistance levels.

If you're bullish on Greif, 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 $54.74 to its 52-week high of $57.97 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 221,416 shares. If that breakout kicks off post-earnings, then this stock will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $65 to $70, or even $75 a share.

I would simply avoid Greif or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some near-term support levels at its 20-day moving average of $52.92 a share to its 50-day moving average of $49.75 a share with high volume. If we get that move, then this stock will set up to re-test or possibly take out its next major support levels at $45.54 to $43, or even its 200-day moving average of $39.85 a share.

United Natural Foods

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My final earnings short-squeeze trading opportunity is natural, organic, and specialty foods retailer United Natural Foods(UNFI) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect United Natural Foods to report revenue of $2.32 billion on earnings of 63 cents per share.

The current short interest as a percentage of the float for United Natural Foods is notable at 8.1%. That means that out of the 49.01 million shares in the tradable float, 3.99 million shares are sold short by the bears.

From a technical perspective, United Natural Foods is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last three months, with shares moving higher off its low of $38.52 a share to its recent high of $49.74 a share. During that uptrend, shares of United Natural Foods have been making mostly higher lows and higher highs, which is bullish technical price action. That trend has now pushed the stock within range of triggering a major breakout trade post-earnings above some key resistance levels.

If you're in the bull camp on United Natural Foods 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 $49.74 to its 52-week high of $52.18 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 597,292 shares. If that breakout fires off post-earnings, then this stock will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $56 to $60, or even $65 to $70 a share.

I would avoid United Natural Foods look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some near-term support levels at its 20-day moving average of $46.77 a share to $45.91 a share with high volume. If we get that move, then this stock will set up to re-test or possibly take out its next major support levels at its 50-day moving average of $43.34 a share to its 200-day moving average of $42.03 a share, or even $40 to $39 a share.

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