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 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.

Viggle

My first earnings short-squeeze play is mobile and Web-based entertainment marketing platform player Viggle (VGGL) , which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Viggle to report revenue of $6.9 million on a loss of 37 cents per share.

The current short interest as a percentage of the float for Viggle is extremely high at 32.2%. That means that out of the 7.67 million shares in the tradable float, 2.46 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 10.3%, or by about 229,000 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 rush to cover some of their trades.

From a technical perspective, Viggle is currently trending 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 few weeks, with shares moving higher from its low of $1.11 to its intraday high on Monday of $1.59 a share. During that uptrend, this stock has been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of Viggle within range of triggering a big breakout trade post-earnings.

If you're bullish on Viggle, 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 $1.62 to $1.81 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 614,286 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 $2.10 to $2.30, or even $2.50 a share.

I would simply avoid Viggle 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 $1.47 to its 20-day moving average of $1.34 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 $1.25 to its recent low of $1.11 a share.

FactSet Research Systems

Another potential earnings short-squeeze trade idea is integrated financial information and analytical applications player FactSet Research Systems (FDS) - Get FactSet Research Systems Inc. Report , which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect FactSet Research Systems Store to report revenue $261.76 million on earnings of $1.47 per share.

The current short interest as a percentage of the float for FactSet Research Systems is notable at 6.9%. That means that out of the 40.44 million shares in the tradable float, 2.82 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of FactSet Research Systems could easily spike sharply higher post-earnings as the bears scramble to cover some of their positions.

From a technical perspective, FactSet Research Systems is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last few weeks, with shares moving higher from its low of $153 to its recent high of $167.68 a share. During that uptrend, shares of FactSet Research Systems 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 big breakout trade post-earnings.

If you're in the bull camp on FactSet Research Systems, 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 $167.68 to its 52-week high of $174.03 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 269,519 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 $180 to $190 a share.

I would simply avoid FactSet Research Systems 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 $164.07 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 $156.21 to $153 a share.

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CarMax

Another potential earnings short-squeeze candidate is used cars retailer CarMax (KMX) - Get CarMax, Inc. Report , which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect CarMax to report revenue of $3.98 billion on earnings of 76 cents per share.

The current short interest as a percentage of the float for CarMax sits at 6.2%. That means that out of the 206.84 million shares in the tradable float, 12.83 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 15.3%, or by around 1.70 million shares. If bears get caught pressing their bets into a strong quarter, then this stock could easily jump sharply higher post-earnings as the bears run to cover some of their trades.

From a technical perspective, CarMax 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 lower from its low of $55.26 to its recent high of $62.96 a share. During that uptrend, shares of CarMax 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 big breakout trade post-earnings.

If you're bullish on CarMax, 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 $62.96 to $64.07 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.72 million shares. If that breakout materializes 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 $66.27 to $69, or even $72 to $74 a share.

I would avoid CarMax 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 $60 and below more key support at $58.28 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 $55.26 to $50, or even $45 a share.

For another take on CarMax, check out "CarMax Still Has Plenty of Gas Left In the Tank."

HB Fuller

Another earnings short-squeeze prospect is specialty chemicals player HB Fuller (FUL) - Get H.B. Fuller Company Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect HB Fuller to report revenue of $537.78 million on earnings of 70 cents per share.

The current short interest as a percentage of the float for HB Fuller is stands at 4%. That means that out of 49.91 million shares in the tradable float, 2.03 million shares are sold short by the bear. The bears have also been increasing their bets from the last reporting period by 3%, or by around 58,000 shares. If bears get caught pressing their bets into a bullish quarter, then this stock could easily trend sharply higher post-earnings as the bears move fast to cover some of their positions.

From a technical perspective, HB Fuller 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 few weeks, with shares moving between $34.16 on the downside and $36.71 on the upside. Any high-volume move above the upper-end of its recent sideways trending chart pattern post-earnings could easily trigger a big breakout trade for shares of HB Fuller.

If you're bullish on HB Fuller, 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 $36.71 to its 50-day moving average of $37.83 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 267,950 shares. If that breakout gets started post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at around $40 to its 200-day moving average of $41.22, or even $43 to $44 a share.

I would simply avoid HB Fuller 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 its 52-week low of $34.16 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 $30 to $28.50 a share.

Darden Restaurants

My final earnings short-squeeze trading opportunity is full-service restaurants player Darden Restaurants (DRI) - Get Darden Restaurants, Inc. Report , which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Darden Restaurants to report revenue of $1.67 billion on earnings of 57 cents per share.

The current short interest as a percentage of the float for Darden Restaurants is notable at 5.7%. That means that out of the 104.45 million shares in the tradable float, 6.03 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a decent short-covering rally post-earnings if Darden Restaurants can produce the earnings news the bulls are looking for.

From a technical perspective, Darden Restaurants is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been utprending over the last few weeks, with shares moving higher from its low of $65.93 to its recent high of $71.38 a share. During that uptrend, shares of Darden Restaurants have 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 in the bull camp on Darden Restaurants, 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 $71.13 to $71.38 and then above more resistance at $73.13 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.64 million 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 $75.49 to its 52-week high of $75.60 a share. Any high-volume move above those levels will then give this stock a chance to make a run at $80 to $85 a share.

I would avoid Darden Restaurants 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 its 20-day moving average of $69.02 to $68 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 $65.93 to its 200-day moving average of $65.09, or even $63 to $61 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.