With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

>>5 Stocks Under $10 Set to Soar


My first earnings short-squeeze trade is communications equipment player Ciena ( CIEN), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Ciena to report revenue of $449.21 million on a loss of 13 cents per share.

Just this morning, Citigroup optical networking technology analyst Kevin Dennean wrote in a letter to clients that an inflection point is approaching for the field, which could give a lift to shares of Ciena in particular.

The current short interest as a percentage of the float for Ciena is very high at 18.7%. That means that out of the 85.45 million shares in the tradable float, 18.33 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 6.1%, or by about 1.05 million shares. If the bears are caught pressing their bets too strong into a bullish quarter, then shares of CIEN could explode higher post-earnings.

From a technical perspective, CIEN 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 trading in consolidation pattern for the last three months, with shares moving between $14.37 on the downside and $16.72 on the upside. A high-volume move above the upper-end of that range could spark a breakout trade for CIEN post-earnings.

If you're bullish on CIEN, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 50-day moving average of $15.58 a share and then once it takes out more resistance at $16.59 to $16.72 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 3.49 million shares. If that breakout triggers, then CIEN will set up to re-test or possibly take out its next major overhead resistance levels at $17.85 to $18.39 a share.

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