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.

Cal-Maine Foods

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My first earnings short-squeeze trade idea is shell egg producer Cal-Maine Foods (CALM) - Get Report , which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Cal-Maine Foods to report revenue of $262.83 million on a loss of 48 cents per share.

The current short interest as a percentage of the float for Cal-Maine Foods is extremely high at 37.7%. That means that out of the 29.21 million shares in the tradable float, 11.02 million shares are sold short by the bears.

From a technical perspective, Cal-Maine Foods 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 over the last two months, with shares moving higher off its low of $35.65 a share to its recent high of $43.65 a share. During that uptrend, shares of Cal-Maine Foods have been making mostly higher lows and higher highs, which is bullish technical price action. This strong uptrend has now pushed this stock within range of triggering a major breakout trade post-earnings above some key overhead resistance levels.

If you're bullish on Cal-Maine 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 $43.65 to its 200-day moving average of $43.93 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 507,652 shares. If that breakout fires off post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $46.50 to $49, or even $51 to $53 a share.

I would simply avoid Cal-Maine Foods or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 20-day moving average of $40.83 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 $39.38 a share to $38.85, or even $36 to $35.65 a share.

Finish Line

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Another potential earnings short-squeeze play is athletic shoes specialty retailer Finish Line (FINL) , which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Finish Line to report revenue of $411.61 million on a loss of 18 cents per share.

The current short interest as a percentage of the float for Finish Line is extremely high at 27.1%. That means that out of the 39.78 million shares in the tradable float, 10.81 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 13.3%, or by about 1.26 million shares. If the bears get caught pressing their bets into a bullish quarter, then this stock could easily rip sharply higher post-earnings as the bears scramble to cover some of their trades.

From a technical perspective, Finish Line is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently formed a double bottom chart pattern, after shares found some buying interest at $21.82 to $21.62 a share over the last two months. Following that potential bottom, this stock has now started to uptrend and flirt with its 20-day moving average of $23.28 a share. That move is now quickly pushing shares of Finish Line within range of triggering a big breakout trade post-earnings above some key overhead resistance levels.

If you're in the bull camp on Finish Line, 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 $24 to $24.50 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.20 million 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 $28 to $29, or even $30.68 a share.

I would simply avoid Finish Line or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below those recent double bottom support levels and below its 200-day moving average of $20.87 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 $19.50 to $19, or even $17.50 a share.

CalAmp

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Another potential earnings short-squeeze candidate is wireless communications player CalAmp (CAMP) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect CalAmp to report revenue of $83.93 million on earnings of 26 cents per share.

The current short interest as a percentage of the float for CalAmp is pretty high at 12.7%. That means that out of the 35.03 million shares in the tradable float, 4.44 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 1.1%, or by about 48,000 shares. If the bears get caught pressing their bets into a strong quarter, then this stock could easily jump sharply higher post-earnings as the bears move fast to cover some of their positions.

From a technical perspective, CalAmp 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 recent low of $12.12 a share to its recent high of $15.99 a share. During that uptrend, shares of CalAmp 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 near-term breakout trade post-earnings above some key overhead resistance levels.

If you're bullish on CalAmp, 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 $15.99 to $16.67 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 555,045 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 $18 to $19.70, or even $20.50 to $21.35 a share.

I would avoid CalAmp or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below both its 20-day moving average of $15.33 a share to its 200-day moving average of $15.10 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 $14.31 a share to $13.75, or even $13 to $12.50 a share.

Micron Technology

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Another earnings short-squeeze prospect is semiconductor systems provider Micron Technology (MU) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Micron Technology to report revenue of $3.96 billion on earnings of 28 cents per share.

The current short interest as a percentage of the float for Micron Technology is notable at 5.7%. That means that out of 1.03 billion shares in the tradable float, 60.01 million shares are sold short by the bear. The bears have also been increasing their bets from the last reporting period by 2.8%, or by about 1.65 million shares. If the bears get caught pressing their bets into a bullish quarter, then this stock could easily rip sharply higher post-earnings as the bears run to cover some of their positions.

From a technical perspective, Micron Technology 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 six months, with shares moving higher off its low of $11.50 a share to its recent high of $21 a share. During that uptrend, shares of Micron Technology have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on Micron Technology, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its new 52-week high of $21 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 26.37 million shares. If that breakout takes hold 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 $25 to $26, or even $28 to $29 a share.

I would simply avoid Micron Technology or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 20-day moving average of $19.85 a share to $19.50 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 $18.40 a share to $18.20, or even $17 to $16.45 a share.

AAR Corp.

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My final earnings short-squeeze trading opportunity is industrial goods player AAR (AIR) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect AAR to report revenue of $448.60 million on earnings of 35 cents per share.

The current short interest as a percentage of the float for AAR stands at 3.4%. That means that out of the 31.38 million shares in the tradable float, 1.08 million shares are sold short by the bears.

From a technical perspective, AAR 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 six months, with shares moving higher off its low of $21.66 a share to its recent high of $38.75 a share. During that uptrend, this stock has been consistently making higher lows and higher highs, which is bullish technical price action. That uptrend has now pushed shares of AAR Corp. within range of triggering a big breakout trade post-earnings above some key overhead resistance levels.

If you're in the bull camp on AAR then I would wait until after its report and look for long-biased trades if this stock manages to break out above $38.70 to its 52-week high of $38.75 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 259,827 shares. If that breakout materializes 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 $45 to $50, or even $55 a share.

I would avoid AAR 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 $35.96 to its 50-day moving average of $34.82 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 $31 to $30, or even $29 to its 200-day moving average of $27.07 a share.

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