DELAFIELD, Wis. (Stockpickr) -- 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 technically very bullish 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.

Barrett Business Services

My first earnings short-squeeze play is business management solutions provider Barrett Business Services  (BBSI - Get Report) , which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Barrett Business Services to report revenue of $912 million on earnings of $1.04 per share.

The current short interest as a percentage of the float for Barrett Business Services is pretty high at 14.5%. That means that out of the 6.54 million shares in the tradable float, 950,000 shares are sold short by the bears. This is a big short interest on a stock with a very low tradable float. Any bullish earnings news could easily set off a large short-squeeze for shares of BBSI post earnings if the bears get forced to cover some of their bets.

From a technical perspective, BBSI is currently trending above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $18.08 to its recent high of $34.03 a share. During that uptrend, shares of BBSI have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BBSI within range of triggering a major breakout trade post-earnings.

If you're bullish on BBSI, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance at $34.03 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 283,066 shares. If that breakout hits post-earnings, then shares of BBSI will set up to re-fill some of its previous gap-down-day zone from last October that started near $45 a share.

I would simply avoid BBSI 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 $27.95 to its 50-day moving average of $26.19 a share and then below more support at $25.21 a share high volume. If we get that move, then BBSI will set up to re-test or possibly take out its next major support levels at $20.85 to $20.05 a share.

NeuStar

Another potential earnings short-squeeze trade idea is real-time information services and analytics provider NeuStar  (NSR) , which is set to release its numbers on Tuesday after the market close Wall Street analysts, on average, expect NeuStar to report revenue $252.78 million on earnings of $1.06 per share.

The current short interest as a percentage of the float for NeuStar is extremely high at 44.1%. That means that out of the 48.51 million shares in the tradable float, 21.41 million shares are sold short by the bears. This stock sports a monster short interest with a reasonably low tradable float. If the bulls get the earnings news they're looking for, then shares of NSR could easily surge sharply higher post-earnings as the bears scramble to cover some of their positions.

From a technical perspective, NSR is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending a bit for the last four months, with shares moving higher from its low of $24.11 to its recent high of $28.30 a share. During that uptrend, shares of NSR have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of NSR within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on NSR, then I would wait until after its report and look for long-biased trades if this stock manages to break out above both its 200-day moving average of $26.85 a share and its 50-day moving average of $27.02 a share and then above more key resistance at $28.30 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 692,231 shares. If that breakout triggers post-earnings, then NSR will set up to re-test or possibly take out it next major overhead resistance levels at $32.74 to $34.74 a share, or even $36.75 a share.

I would simply avoid NSR 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 26.06 to $25 a share and then below more support at $24.65 to $24.11 a share with high volume. If we get that move, then NSR will set up to re-test or possibly take out its next major support levels at its 52-week low of $23.82 a share. Some possible downside targets off that move are $20 to $18 a share.

GoPro

Another potential earnings short-squeeze candidate is mountable and wearable camera player GoPro  (GPRO - Get Report) , which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect GoPro to report revenue of $580.33 million on earnings of 70 cents per share.

The current short interest as a percentage of the float for GoPro is extremely high at 28.6%. That means that out of the 49.91 million shares in the tradable float, 14.29 million shares are sold short by the bears. This is a massive short interest on a stock with a relatively low tradable float. If the bulls get the earnings news they're looking for, then shares of GPRO could easily rip sharply higher post-earnings as the bears move fast to cover some of their positions.

From a technical perspective, GPRO is currently trending below its 50-day moving average, which is bearish. This stock has been downtrending badly for the last two months and change, with shares moving lower from its high of $86 to its recent low of $45.36 a share. During that downtrend, shares of GPRO have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on GPRO, 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 $54.13 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 7.54 million shares. If that breakout develops post-earnings, then GPRO will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $62.34 to around $70 a share.

I would avoid GPRO 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 $45.36 a share with high volume. If we get that move, then GPRO will set up to re-test or possibly take out its next major support levels at $37.24 to $36.10 a share, or even $30 a share.

Rent-A-Center

Another earnings short-squeeze prospect is rent-to-own operator Rent-A-Center  (RCII - Get Report) , which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Rent-A-Center to report revenue of $804.83 million on earnings of 63 cents per share.

The current short interest as a percentage of the float for Rent-A-Center is pretty high at 11.1%. That means that out of 51.47 million shares in the tradable float, 5.75 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of RCII could easily rip sharply higher post-earnings as the bears move fast to cover some of their short positions.

From a technical perspective, RCII is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $23.20 to its new 52-week high at $37.49 a share. During that uptrend, shares of RCII have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of RCII within range of triggering a near-term breakout trade post-earnings.

If you're bullish on RCII, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $37.23 to its 52-week high of $37.49 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 628,148 shares. If that breakout materializes post-earnings, then RCII will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45 a share, or even $50 a share.

I would simply avoid RCII 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 its 50-day moving average of $33.94 a share to $32.93 a share with high volume. If we get that move, then RCII will set up to re-test or possibly take out its next major support levels at $30.17 to its 200-day moving average of $29.48 a share, or even $27.82 to $26 a share.

Gilead Sciences

My final earnings short-squeeze play is biotechnology player Gilead Sciences  (GILD - Get Report) , which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Gilead Sciences to report revenue of $6.73 billion on earnings of $2.20 per share.

The current short interest as a percentage of the float for Gilead Sciences is notable at 3.6%. That means that out of the 1.50 billion shares in the tradable float, 55.25 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.5%, or by about 2.39 million shares. If the bears get caught pressing their bets into a bullish quarter, then shares of GILD could easily surge sharply higher post-earnings as the bears move fast to cover some of their trades.

From a technical perspective, GILD is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last month and change, with shares moving higher from its low of $85.95 to its recent high of $107.77 a share. During that uptrend, shares of GILD have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of GILD within range of triggering a near-term breakout trade post-earnings above some key overhead resistance levels.

If you're in the bull camp on GILD, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $107.77 to $109.49 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 17.20 million shares. If that breakout gets set off post-earnings, then GILD will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $116.83 a share. Any high-volume move above that level will then give GILD a chance to tag or take out $120 a share.

I would avoid GILD 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 $101.07 a share to its 50-day moving average of $100.99 a share with high volume. If we get that move, then GILD will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $95.24 back to that recent low of $85.95 a share.

-- Written by Roberto Pedone in Delafield, Wis.

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At the time of publication, author had no positions in stocks mentioned. Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.