I would avoid HOV 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 $4.91 to $4.77 a share, and then below $4.65 a share with high volume. If we get that move, then HOV will set up to re-test or possibly take out its next major support levels $4 to $3.50 a share.

Joy Global

Another earnings short-squeeze prospect is mining equipment manufacturer Joy Global ( JOY), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Joy Global to report revenue of $1.12 billion on earnings of $1.12 per share.

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The current short interest as a percentage of the float for Joy Global is very high at 18.4%. That means that out of the 105.36 million shares in the tradable float, 19.34 million shares are sold short by the bears. If this company can deliver the earnings news the bulls are looking for, then shares of JOY could explode higher post-earning as a sharp short-covering rally takes hold.

From a technical perspective, JOY is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending modestly over the last few weeks, with shares moving higher from its low of $54.32 to its recent high of $57.30 a share. During that move, shares of JOY have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of JOY within range of triggering a big breakout trade post-earnings.

If you're bullish on JOY, 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 $57.30 to $59.17 a share, and then once it takes out some past resistance at $61.15 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.59 million shares. If that breakout hits, then JOY will set up to re-test or possibly take out its next major overhead resistance levels at $65 to $68.33 a share.

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