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.

Fastenal

My first earnings short-squeeze trading opportunity is industrial and construction supplies player Fastenal (FAST) - Get Report , which is set to release numbers on Friday before the market open. Wall Street analysts, on average, expect Fastenal to report revenue of $922.03 million on earnings of 40 cents per share.

The current short interest as a percentage of the float for Fastenal is pretty high at 14.2%. That means that out of the 287.44 million shares in the tradable float, 40.98 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of Fastenal could easily rip sharply higher post-earnings as the bears rush to cover some of their positions.

From a technical perspective, Fastenal is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways over the last two months and change, with shares moving between $38.44 on the downside and $41.96 on the upside. Any high-volume move above the upper-end of its recent sideways trending chart pattern post-earnings could easily trigger a major breakout trade for shares of Fastenal.

If you're bullish on Fastenal, 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 $40.50 to $41.96 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.68 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 $43 to $45, or even its 52-week high of $47.03 a share.

I would simply avoid Fastenal 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 $38.51 to $38.44 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 $36.40 to $34.20 a share.

HB Fuller

Another potential earnings short-squeeze play is specialty chemical products player HB Fuller (FUL) - Get Report , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect HB Fuller to report revenue $541.90 million on earnings of 69 cents per share.

The current short interest as a percentage of the float for HB Fuller is notable at 4.1%. That means that out of the 50 million shares in the tradable float, 2.08 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 1.5%, or by about 30,000 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 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 downtrending over the last month and change, with shares moving lower off its high of $40.39 to its recent low of $32.49 a share. During that downtrend, shares of HB Fuller have been making mostly lower highs and lower lows, which is bearish technical price action. That said, this stock has now entered oversold territory, and it could easily bounce back post-earnings and triggering a near-term breakout trade above some key overhead resistance levels.

If you're in the bull camp 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 $34 to its 20-day moving average of $35.70 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 267,298 shares. If that breakout triggers off post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $37.63 to its 200-day moving average of $38.96, or even $40.50 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 levels at $32.49 to its 52-week low of $30.72 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.

Clarcor

Another potential earnings short-squeeze candidate is filtration products and filtration systems and services provider Clarcor (CLC) , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Clarcor to report revenue of $379.22 million on earnings of 72 cents per share.

The current short interest as a percentage of the float for Clarcor stands at 4.4%. That means that out of the 49.59 million shares in the tradable float, 2.21 million shares are sold short by the bears.

From a technical perspective, Clarcor is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last month, with share falling off its recent high of $50.88 to its low of $44.74 a share. During that downtrend, shares of Clarcor have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on Clarcor, 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 at around $46.50 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 333,454 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 20-day moving average of $48.18 to its 50-day moving average of $49.55, or even $50.88 a share.

I would avoid Clarcor or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 52-week low of $44.74 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.

Bank of the Ozarks

Another earnings short-squeeze prospect is regional banking player Bank of the Ozarks (OZRK) , which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Bank of the Ozarks to report revenue of $128.72 million on earnings of 56 cents per share.

The current short interest as a percentage of the float for Bank of the Ozarks is pretty high at 8.5%. That means that out of 79.73 million shares in the tradable float, 6.79 million shares are sold short by the bear. If this company can deliver the earnings news the bulls are looking for, then shares of Bank of the Ozarks could easily rip sharply higher post-earnings as the bears scramble to cover some of their positions.

From a technical perspective, Bank of the Ozarks is currently trending below its 50-day moving average and just above its 200-day moving average, which is neutral trendwise. This his stock has been downtrending over the last month and change, with shares moving lower off its high of $54.90 to its recent low of $45.64 a share. During that downtrend, shares of Bank of the Ozarks have been making mostly lower highs and lower lows, which is bearish technical price action. That said, this stock has now started to rebound off that low of $45.64 and it's beginning to trend within range of triggering a near-term breakout trade post-earnings.

If you're bullish on Bank of the Ozarks, 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 $47.50 and then above its 20-day moving average of $48.92 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 810,260 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 its 50-day moving average of $51.18 to $52.50, or even $55 a share.

I would simply avoid Bank of the Ozarks 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 $45.64 to its 200-day moving average of $45.28 and then below more key support levels at $43.36 to $41.58 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 $38.98 to $37.84 a share.

Supervalu

My final earnings short-squeeze trade idea is grocery store player Supervalue (SVU) , which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Supervalue to report revenue of $4.16 billion on earnings of 16 cents per share.

The current short interest as a percentage of the float for Supervalu is notable at 5.4%. That means that out of the 247.60 million shares in the tradable float, 13.55 million shares are sold short by the bears. This stock doesn't sport a huge short interest, but it's more than enough to spark a decent short-covering rally post-earnings if the bulls get the news they're looking for.

From a technical perspective, Supervalu is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last six months, with shares falling sharply off its high of $9.35 a share to its recent low of $5.83 a share. During that downtrend, this stock has been making mostly lower highs and lower lows, which is bearish technical price action.

If you're in the bull camp on Supervalu, 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 $6.15 to $6.25 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 3.57 million shares. If that breakout takes hold post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $6.64 to $7.17, or even $7.22 to $7.85 a share.

I would avoid Supervalu or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its new 52-week low of $5.84 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.

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