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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.

Enanta Pharmaceuticals

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My short-squeeze play is biotechnology player Enanta Pharmaceuticals (ENTA) - Get Enanta Pharmaceuticals, Inc. Report

The short interest as a percentage of the float for Enanta Pharmaceuticals has been very high at 35.5%. That means that out of the 11.2 million shares in the tradable float, about 4 million shares were sold short by the bears. If the bears get caught pressing their bets into a strong quarter, then this stock could easily surge sharply higher post-earnings as the bears rush to cover some of their positions.

From a technical perspective, Enanta Pharmaceuticals had been trending below both its 50-day and 20-day moving averages, which is bearish. This stock had been uptrending recently, with shares moving higher off its low of $28.91 to its intraday high this past Monday of $32.58 a share. During that uptrend, shares of Enanta Pharmaceuticals had been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a big breakout trade post-earnings.

If you're bullish on Enanta Pharmaceuticals, I would look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $33.86 to $33.92 a share and then above its 50-day moving average of $34.45 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 361,780 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 its 200-day moving average of $38.29 to $40, or even $42 to $43 a share.

I would simply avoid Enanta Pharmaceuticals or look for short-biased trades if it fails to trigger that breakout and then drops back its 20-day moving average of $30.55 a share to some more near-term support at $28.91 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 $25 to $22.50 a share.

Veeva Systems

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Another potential short-squeeze trade idea is health care information services player Veeva Systems (VEEV) - Get Veeva Systems Inc Class A Report

The recent short interest as a percentage of the float for Veeva Systems is very high at 18.6%. That means that out of the 64.04 million shares in the tradable float, 11.95 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.1%, or by about 249,000 shares. If the bears get caught pressing their bets into a bullish quarter, then this stock could easily spike sharply higher post-earnings as the bears move fast to cover some of their trades.

From a technical perspective, Veeva Systems recently was trending above both its 200-day and 50-day moving averages, which is bullish. This stock has been uptrending strong over the last two months, with shares moving higher off its low of $22.48 to its recent high of $27.68 a share. During that uptrend, shares of Veeva Systems had been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a near-term breakout trade.

If you're in the bull camp on Veeva Systems, then I would look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $27.68 to $28 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 910,212 shares. If that breakout kicks off, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $29.19 a share. Any high-volume move above $29.19 a share will then give this stock a chance to re-fill some of its previous gap-down-day zone from March that started at $33.10 a share.

I would simply avoid Veeva Systems or look for short-biased trades if it fails to trigger that breakout and then drops back below both its 200-day moving average of $26.66 to its 20-day moving average of $26.54 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 its 50-day moving average of $25.65 to $25, or even $24 to $23 a share.

Cracker Barrel Old Country Stores

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Another potential short-squeeze candidate is China-based car rental and car services player Cracker Barrel Old Country Stores  (CBRL) - Get Cracker Barrel Old Country Store, Inc. Report .

The recent short interest as a percentage of the float for Cracker Barrel Old Country Stores was very high at 23.7%. That means that out of the 19.04 million shares in the tradable float, 4.51 million shares are sold short by the bears. This stock sports a high short-interest with a very low tradable float. Any bullish earnings news could easily trigger a monster short-squeeze for shares of Cracker Barrel Old Country Stores post-earnings that sends the bears scrambling to cover some of their positions.

From a technical perspective, Cracker Barrel Old Country Stores was recently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently formed a double bottom chart pattern, after shares found some buying interest at $132.70 to $131.65 a share. Following that bottom, this stock has now started to spike higher back above its 20-day moving average and it's quickly moving within range of triggering a near-term breakout trade post-earnings.

If you're bullish on Cracker Barrel Old Country Stores, then I would look for long-biased trades if this stock manages to break out above its 50-day moving average of $141.38 a share and its 200-day moving average of $141.91 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 372,597 shares. If that breakout fires off, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $143.90 to $144.50 a share. Any high-volume move above those levels will then give this stock a chance to tag its next major overhead resistance levels at $147 to $152, or even $155 to $156 a share.

I would avoid Cracker Barrel Old Country Stores or look for short-biased trades if it fails to trigger that breakout and then drops back below its 20-day moving average of $136.97 to $135 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 level at $131.65 a share.

SeaDrill

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Another short-squeeze prospect is offshore drilling contractor SeaDrill (SDRL) - Get Seadrill Ltd. Report

The recent short interest as a percentage of the float for SeaDrill was pretty high at 12.9%. That means that out of 455.30 million shares in the tradable float, 58.76 million shares were sold short by the bear. If this company can produce news the bears are looking for, then shares of SeaDrill could easily rip sharply higher post-earning as the bears rush to cover some of their trades.

From a technical perspective, SeaDrill has been recently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently formed a double bottom chart pattern, after shares found some buying interest at $6.06 to $5.90 a share. Shares of SeaDrill have now started to spike modestly higher off those support levels, and it's beginning to move within range of triggering a major breakout trade post-earnings above some near-term overhead resistance levels.

If you're bullish on SeaDrill, then I would look for long-biased trades if this stock manages to break out above both its 20-day moving average of $6.45 a share and its 50-day moving average of $6.68 a share and then above more resistance at $7 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 11.97 million shares. If that breakout develops, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $7.27 to $7.69, or $7.93 to $8.22 a share.

I would simply avoid SeaDrill or look for short-biased trades if it fails to trigger that breakout and then drops back below some key near-term support levels at $5.90 to its 52-week low of $5.60 a share with high volume. If we get that move, then this stock will set up to enter new 52-week-low territory, which is bearish technical price action.

Baozun

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My final short-squeeze trading opportunity is China-based e-commerce solutions provider Baozun (BZUN) - Get Baozun Inc. Report

The recent short interest as a percentage of the float for Baozun was pretty high at 18.2%. That means that out of the 3.67 million shares in the tradable float, 670,000 shares were sold short by the bears. The bears have also been increasing their bets recent by 61.1%, or by about 254,000 shares. If the bears get caught pressing their bets into a bullish quarter, then this stock could easily soar sharply higher post-earnings as the bears scramble to cover some of their positions.

From a technical perspective, Baozun was recently trending above both its 20-day and 50-day moving averages, which is bullish. This stock has been uptrending a bit over the last few weeks, with shares moving higher off its low of $6.05 to its intraday high on Monday of $8.17 a share. During that uptrend, shares of Baozun has 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 big breakout trade.

If you're in the bull camp on Baozun, then I would look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $8.65 to $9.44 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 306,443 shares. If that breakout gets started, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $11 to $12, or even $13 a share.

I would avoid Baozun or look for short-biased trades if it fails to trigger that breakout, and then drops back below its 20-day moving average of $7.37 a share to more near-term support at $7 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 $6.25 to $6.05 a share, or even $5.50 to $5 a share.

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