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.

Hawaiian Holdings

My first earnings short-squeeze play is regional airline player Hawaiian Holdings  (HA - Get Report), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Hawaiian Holdings to report revenue of $534.13 million on earnings of 31 cents per share.

The current short interest as a percentage of the float for Hawaiian Holdings is very high at 13.5%. That means that out of the 41.82 million shares in the tradable float, 5.67 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 22.2%, or by about 1.03 million shares. If the bears get caught pressing their bets into a strong quarter, then shares of HA could easily spike sharply higher post-earnings as the bears move fast to cover some of their positions.

From a technical perspective, HA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways over the last month, with shares moving between $20.30 on the downside and $22.49 on the upside. Any high-volume move above the upper-end of its recent range post-earnings will possibly trigger a big breakout trade for shares of HA.

If you're bullish on HA, 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 $22.13 to $22.50 a share (or above Thursday's intraday high if greater) with high volume. Look for volume on that move that hits near or above its three-month average action of 1.87 million shares. If that breakout hits post-earnings, then shares of HA will set up to re-fill its previous gap-down-day zone from January that started near $27 a share. If that gap gets filled with volume, then HA could even tag or trend north of $30 a share.

I would simply avoid HA 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 $20.86 to $20.30 a share and then below its 50-day moving average of $20.06 a share with high volume. If we get that move, then HA will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $18.41 to $18.38, or even $18 to $16 a share.

Pandora Media

Another potential earnings short-squeeze trade idea is Internet radio services provider Pandora Media  (P), which is set to release its numbers on Thursday after the market close. Wall Street analysts, on average, expect Pandora Media to report revenue $224.52 million on a loss of 17 cents per share.

The current short interest as a percentage of the float for Pandora Media is pretty high at 15.5%. That means that out of the 199.66 million shares in the tradable float, 31 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of Pandora Media could easily rip sharply to the upside post-earnings as the bears scramble to cover some of their bets.

From a technical perspective, P 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 over the last two months, with shares moving higher from its low of $14.50 to its recent high of $18 a share. During that uptrend, shares of P have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're in the bull camp on P, 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 $18 to $18.90 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 6.65 million shares. If that breakout triggers post-earnings, then P will set up to re-test or possibly take out its next major overhead resistance levels at $20 to its 200-day moving average of $20.50 a share, or even $22 to $25 a share.

I would simply avoid P or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term supports levels at $16.54 to its 50-day moving average of $15.84 and then below more support at $15.44 a share with high volume. If we get that move, then P will set up to re-test or possibly take out its next major support level at its 52-week low of $14.50 a share.

BJ's Restaurants

Another potential earnings short-squeeze candidate is casual dining restaurants player BJ's Restaurants  (BJRI - Get Report), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect BJ's Restaurants to report revenue of $226.63 million on earnings of 28 cents per share.

The current short interest as a percentage of the float for BJ's Restaurants is very high at 15.6%. That means that out of the 19.23 million shares in the tradable float, 3.01 million shares are sold short by the bears. This is a rather large short interest on a stock with a relatively low tradable float. Any bullish earnings news could easily kick off a big short-covering rally for shares of BJRI post-earnings that forces the bears to move on from some of their short positions.

From a technical perspective, BJRI is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been consolidating and trending sideways over the last two months and change, with shares moving between $49.85 on the downside and $55.44 on the upside. If shares of BJRI can manage to take out the upper-end of its recent range post-earnings, then this stock could possibly trigger a big breakout trade.

If you're bullish on BJRI, 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 $52.55 to $54.55 a share and then above its 52-week high of $55.44 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 336,558 shares. If that breakout develops post-earnings, then BJRI will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $60 to $65 a share, or even $70 a share.

I would avoid BJRI 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 $50 to $49.85 a share with high volume. If we get that move, then BJRI will set up to re-test or possibly take out its next major support levels at $46 to its 200-day moving average of $43.32 a share.

Chicago Bridge & Iron

Another earnings short-squeeze prospect is construction and engineering player Chicago Bridge & Iron  (CBI), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Famous Chicago Bridge & Iron to report revenue of $3.36 billion on earnings of $1.14 per share.

The current short interest as a percentage of the float for Chicago Bridge & Iron is rather high at 13.6%. That means that out of 106.44 million shares in the tradable float, 14.47 million shares are sold short by the bear. The bears have also been increasing their bets from the last reporting period by 13.7%, or by about 1.73 million shares. If the bears get caught pressing their bets into a strong quarter, then shares of CBI could easily trend sharply higher post-earnings as the bears jump to cover some of their positions.

From a technical perspective, CBI is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong over the last three months, with shares moving higher from its low of $32.11 to its recent high of $52.13 a share. During that uptrend, shares of CBI have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CBI within range of triggering a big breakout trade post-earnings.

If you're bullish on CBI, then I would wait until after its report and look for long-biased trades if this stock manages to break out above key overhead resistance levels at $52.13 to $55 a share and then above more resistance at $58 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 2.26 million shares. If that breakout materializes post-earnings, then CBI will set up to re-test or possibly take out its next major overhead resistance levels at $65 to $70 a share.

I would simply avoid CBI 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 $48 to $47.24 a share with high volume. If we get that move, then CBI will set up to re-test or possibly take out its next major support level at its 50-day moving average of $45.68 to $43.19 a share, or even $40.29 a share.

iRobot

My final earnings short-squeeze trading opportunity is robot maker iRobot  (IRBT - Get Report), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect iRobot to report revenue of $115.98 million on earnings of 10 cents per share.

The current short interest as a percentage of the float for iRobot is pretty high at 15%. That means that out of the 28.62 million shares in the tradable float, 4.31 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 16.8%, or by about 622,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of IRBT could easily rip sharply higher post-earnings as the bears move quick to cover some of their trades.

From a technical perspective, IRBT 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 $29.92 to its recent high of $34.93 a share. During that uptrend, shares of IRBT have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of IRBT within range of triggering a major breakout trade post-earnings above some key overhead resistance levels.

If you're in the bull camp on IRBT, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $34.93 to $34.99 a share and then above $36.38 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 519,800 shares. If that breakout gets started post-earnings, then IRBT will set up to re-test or possibly take out its next major overhead resistance levels at $38.10 to $38.88 or its 52-week high of $42 a share. Any high-volume move above $42 will then give IRBT a chance to tag or take out $45 a share.

I would avoid IRBT or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average of $32.67 a share and then below more near-term support levels at $32 to $31.55 a share with volume. If we get that move, then IRBT will set up to re-test or possibly take out its next major support levels at $29.92 to its 52-week low of $28.05 a share.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.