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.

TubeMogul

My first earnings short-squeeze play is enterprise software player TubeMogul  (TUBE), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect TubeMogul to report revenue of $29.41 million on a loss of 18 cents per share.

The current short interest as a percentage of the float for TubeMogul is extremely high at 31.5%. That means that out of the 9.08 million shares in the tradable float, 2.86 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 10.2%, or by about 264,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of TUBE could easily spike sharply higher post-earnings as the bears move fast to cover some of their trades.

From a technical perspective, TUBE is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending a bit over the last few weeks, with shares moving higher from its low of $13.78 to its current intraday high on Monday of $15.94 a share. During that uptrend, shares of TUBE have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of TUBE within range of triggering a major breakout trade post-earnings.

If you're bullish on TUBE, 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 $15.95 to $16 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 343,392 shares. If that breakout gets set off post-earnings, then shares of TUBE will set up to re-fill some of its previous gap-down-day zone from February that started at $19 a share. Any high-volume move above $19.09 will then give TUBE a chance to tag or take out $21 a share.

I would simply avoid TUBE or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 200-day moving average of $14.54 and then below more key near-term support at $13.78 a share with high volume. If we get that move, then TUBE will set up to re-test or possibly take out its next major support levels at $12.82 to $11.60 a share.

Care.com

Another potential earnings short-squeeze trading opportunity is Care.com  (CRCM - Get Report), which operates an online marketplace for finding and managing family care. Care.com is set to release its numbers on Tuesday before the market open. Wall Street analysts, on average, expect it to report revenue $34.19 million on a loss of 31 cents per share.

The current short interest as a percentage of the float for Care.com is very high at 16.6%. That means that out of the 12.02 million shares in the tradable float, 1.99 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.5%, or by about 49,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of CRCM could easily jump sharply higher post-earnings as the bears rush to cover some of their trades.

From a technical perspective, CRCM is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last three months and change, with shares dropping from its high of $8.50 to its new 52-week low of $6.23 a share. During that downtrend, shares of CRCM have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're in the bull camp on CRCM, 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 $6.75 to $7.13 a share and then above its 50-day moving average of $7.15 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 111,170 shares. If that breakout begins post-earnings, then CRCM will set up to re-test or possibly take out its next major overhead resistance levels at $8 to $8.50 a share, or even $9 to $9.45 a share.

I would simply avoid CRCM or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its all-time low of $6.23 a share with high volume. If we get that move, then CRCM will set up to enter new all-time-low territory, which is bearish technical price action. Some possible downside targets off that move are $5 to $4.50 a share.

Opower

Another potential earnings short-squeeze candidate is Opower  (OPWR), which provides cloud-based software to the utility industry in the U.S. and is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Opower to report revenue of $32.71 million on a loss of 16 cents per share.

The current short interest as a percentage of the float for Opower is very high at 19.88%. That means that out of the 26 million shares in the tradable float, 5.16 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.7%, or by about 233,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of OPWR could easily soar sharply higher post-earnings as the bears scramble to quickly cover some of their positions.

From a technical perspective, OPWR is currently trending just above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been consolidating and trending sideways over the last two months, with shares moving between $9.65 on the downside and $11.19 on the upside. Any high-volume move above the upper-end of its recent range post-earnings could trigger a major breakout trade for shares of OPWR.

If you're bullish on OPWR, 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 $10.80 to $11.19 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 260,678 shares. If that breakout develops post-earnings, then OPWR will set up to re-test or possibly take out its next major overhead resistance level at around $13 a share. Any high-volume move above $13 will then give OPWR a chance to re-fill some of its previous gap-down-day zone from March that started near $15.50 a share.

I would avoid OPWR 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 $10.35 a share to more key support at $9.65 a share with high volume. If we get that move, then OPWR will set up to re-test or possibly take out its next major support level at its all-time low of $8.70 a share.

Sphere 3D

Another earnings short-squeeze prospect is virtualization technology and data management solutions player Sphere 3D  (ANY), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Sphere 3D to report revenue of $20 million on a loss of 15 cents per share.

The current short interest as a percentage of the float for Sphere 3D is pretty high at 8.2%. That means that out of the 16.71 million shares in the tradable float, 1.37 million shares are sold short by the bear. The bears have also been increasing their bets from the last reporting period by 8.7%, or by about 109,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of ANY could easily rip sharply higher post-earnings as the bears move fast to cover some of their positions.

From a technical perspective, ANY is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending a bit over the last few weeks, with shares moving higher from its low of $3.11 to its current intraday high on Monday of $3.70 a share. During that uptrend, shares of ANY have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed ANY within range of triggering a near-term breakout trade post-earnings.

If you're bullish on ANY, 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 $3.90 to $4 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 387,184 shares. If that breakout triggers post-earnings, then ANY will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $4.34 to $4.70 a share, or even $5 to $5.50 a share.

I would simply avoid ANY 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 $3.11 to its 52-week low of $2.98 a share with high volume. If we get that move, then ANY will set up to enter new 52-week-low territory below $2.98, which is bearish technical price action. Some possible downside targets off that mover are $2.50 to $2 a share.

Digital Ally

My final earnings short-squeeze trade idea is Digital Ally  (DGLY - Get Report), which produces digital video imaging and storage products for use in law enforcement, security, and commercial applications in the U.S. and internationally. Digital Ally is set to release numbers on Wednesday after the market close. There are currently no Wall Street analysts' estimates available for Digital Ally ahead of this quarter.

The current short interest as a percentage of the float for Digital Ally is extremely high at 22.7%. That means that out of the 3.26 million shares in the tradable float, 740,000 shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 10.8%, or by about 71,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of DGLY could easily explode sharply higher post-earnings as the bears move quick to cover some of their bets.

From a technical perspective, DGLY 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 and change, with shares moving higher from its low of $10 to its recent high of $18.40 a share. During that uptrend, shares of DGLY have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of DGLY within range of triggering a big breakout trade post-earnings above some key near-term overhead resistance levels.

If you're in the bull camp on DGLY, 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 $17 to $18.40 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 584,676 shares. If that breakout materializes post-earnings, then DGLY will set up to re-test or possibly take out its next major overhead resistance levels at $23.75 to$25 a share, or even $27 a share.

I would avoid DGLY 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 $15.62 at $14.40 a share with high volume. If we get that move, then DGLY will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $13.26 to $12.78 a share, or even $12.13 to $11 a share.

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