I would simply avoid JOY or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below both its 50-day at $54.77 and its 200-day at $54.05 a share high volume. If we get that move, then JOY will set up to re-test or possibly take out its next major support levels at $51 to $50 a share. Any high-volume move below those levels will then give JOY a chance to tag $48 to $47.50 a share.

HD Supply

My final earnings short-squeeze play is home improvement retailer HD Supply ( HDS), which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect HD Supply to report revenue of $2.29 billion on earnings of 36 cents per share.

The current short interest as a percentage of the float for HD Supply is very high at 12.2%. That means that out of the 61.19 million shares in the tradable float, 6.65 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 13%, or by 866,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of HDS could soar sharply higher post-earnings as the bears jump to cover some of their short positions.

From a technical perspective, HDS is currently trending above its 50-day moving average, which is bullish. This stock has been uptrending for the last month, with shares moving higher from its low of $19.55 to its intraday high of $21.73 a share. During that uptrend, shares of HDS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of HDS within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on HDS, 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 $22.71 to $22.84 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.48 million shares. If that breakout hits, then HDS will set up to re-test or possibly take out its next major overhead resistance levels at $23.78 to its all-time high of $25.06 a share. Any high-volume move above $25.06 will then give HDS a chance to tag $60 a share.

If you liked this article you might like

Photronics (PLAB) Stock Retreats After Q3 Earnings Miss, Downbeat Outlook

Trade These 7 Stocks Under $10 for Huge Profits

Insider Trading Alert - PLAB, FFIN And UAL Traded By Insiders

Insider Trading Alert - PLAB, ACTG And CP Traded By Insiders

Insider Trading Alert - QTWO, GME And PLAB Traded By Insiders