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My first earnings short-squeeze play is social networking player Facebook ( FB), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Facebook to report revenue of $1.53 billion on earnings of 15 cents per share.

Stern Agee analyst Arvind Bhatia issued a note on Monday predicting that Facebook "will likely post strong fourth-quarter results, including 75% mobile revenue growth sequentially." Bhatia said Facebook is well-positioned to benefit from two ad trends: the shift from off-line to on-line advertising, and the increasing importance of a social context for online ads.

The current short interest as a percentage of the float for Facebook stands at 5.4%. That means that out of the 1.32 billion shares in the tradable float, 25.47 million shares are sold short by the bears. If Facebook gives investors the earnings news they're looking for, then this stock could rally hard as the shorts rush to cover some of their bearish bets.

From a technical perspective, FB is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong during the last five months, with shares soaring from its low of $17.55 a share to its recent high of $32.51 a share. During that uptrend, shares of FB have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed FB within range of triggering a near-term breakout trade post-earnings.

If you're bullish on FB, 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 of $32.51 to $33.45 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 69.1 million shares. If that breakout triggers, then FB will set up to re-test or possibly take out its all-time high of $45 a share.

I would simply avoid FB 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 $29.27 a share with heavy volume. If we get that move, then FB will set up to re-test or possibly take out its 50-day moving average of $27.84 a share.

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