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 very bullish technically 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.

Jumei International

My first earnings short-squeeze play is China-based online beauty products retailer Jumei International  (JMEI), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Jumei International to report revenue of $274.78 million on earnings of 12 cents per share.

The current short interest as a percentage of the float for Jumei International is pretty high at 13.5%. That means that out of the 40.35 million shares in the tradable float, 5.48 million shares are sold short by the bears. This is a decent short interest on a stock with relatively low tradable float. Any bullish earnings news could set off a large short-squeeze for shares of Jumei International post-earnings that sends the bears running to cover some of their trades.

From a technical perspective, Jumei International is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been consolidating and trending sideways over the last month and change, with shares moving between $15.77 on the downside and $20.31 on the upside. Any high-volume move above the upper-end of its recent sideways trending chart pattern post-earnings could trigger a big breakout trade for shares of Jumei International.

If you're bullish on Jumei International, 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 its 200-day moving average of $18.30 to $19.44 a share and then above its 50-day moving average of $20.02 to $20.31 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 2.59 million shares. If that breakout triggers post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $24 to $26, or even $28 a share.

I would simply avoid Jumei International 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 $15.99 to $15.77 a share and then below more support at $15.12 a share with high volume. If we get that move, then this stock will set up to re-test or possibly take out its next major support levels at $12.72 to $12.50 a share.

Another potential earnings short-squeeze trade idea is China-based mobile social networking platform player Momo  (MOMO - Get Report), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Momo to report revenue $32 million on a loss of 1 cent per share

The current short interest as a percentage of the float for Momo is very high at 18.8%. That means that out of the 13.12 million shares in the tradable float, 2.46 million shares are sold short by the bears. This is a high short interest and low float situation stock. If this company can produce the earnings news the bulls are looking for, then shares of Momo could easily rip sharply higher post-earnings as the bears scramble to cover some of their trades.

From a technical perspective, Momo is currently trending above both its 50-day and 20-day moving averages, which is bullish. This stock recently formed a major bottoming chart pattern, after shares of Momo found buying interest at $15.18, $15.33 and $15.60 a share. Following that bottom, shares of Momo have started to spike higher and move within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on Momo, 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 $17 to $17.80 a share and then above more resistance at $18.12 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 post-earnings, then this stock will set up to re-test or possibly take out its all-time high at $19.89 a share. Any high-volume move above that level will then give this stock a chance to trend well north of $20 a share.

I would simply avoid Momo 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 $15.60 to $15.18 a share with high volume. If we get that move, then this stock will set up to re-test or possibly take out its next major support levels at $12.80 to $11 a share.

Tuesday Morning

Another potential earnings short-squeeze candidate is upscale decorative home accessories and housewares retailer Tuesday Morning  (TUES - Get Report), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Tuesday Morning to report revenue of $219.58 million on a loss of 2 cents per share.

The current short interest as a percentage of the float for Tuesday Morning is very high at 19.9%. That means that out of the 37.36 million shares in the tradable float, 7.44 million shares are sold short by the bears. This is a large 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 Tuesday Morning could easily explode sharply higher post-earnings sending the bears running to cover some of their positions.

From a technical perspective, Tuesday Morning is currently trending well below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last six months, with shares moving lower from its high of over $19 to its recent low of $9.19 a share. During that downtrend, shares of Tuesday Morning have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on Tuesday Morning, 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 $10.09 to $11.40 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 591,455 shares. If that breakout gets underway post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $13 to $14 a share.

I would avoid Tuesday Morning 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 $9.29 to its 52-week low of $9.19 a share with high volume. If we get that move, then this stock will set up to enter new 52-week-low territory, which is bearish technical price action.

Cyberonics

Another earnings short-squeeze prospect is medical devices player Cyberonics  (CYBX), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Cyberonics to report revenue of $76.78 million on earnings of 62 cents per share.

The current short interest as a percentage of the float for Cyberonics is pretty high at 8.7%. That means that out of 20.10 million shares in the tradable float, 1.74 million shares are sold short by the bear. If this company can deliver the earnings news the bulls are looking for, then shares of Cyberonics could easily rip sharply higher post-earnings as the bears move fast to cover some of the trades.

From a technical perspective, Cyberonics is currently trending below both its 50-day and 20-day moving averages, which is bearish. This stock has been downtrending over the last three months, with shares moving lower from its high of $69.88 to its recent low of $56.15 a share. During that downtrend, shares of Cyberonics have been making mostly lower highs and lower lows, which is bearish technical price action. That said, this stock has now started to rebound off that $56.15 low and it's beginning to move within range of triggering a near-term breakout trade post-earnings.

If you're bullish on Cyberonics, 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 $59.79 and its 50-day moving average of $60.66 a share and then above more key resistance levels at $62.88 to $63.41 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 321,095 shares. If that breakout develops post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $69.88 to $72 a share.

I would simply avoid Cyberonics 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 $57.90 to $56.15 a share with high volume. If we get that move, then this stock will set up to re-test or possibly take out its next major support levels at $53.50 to $48.19 a share.

eHi Car Services

My final earnings short-squeeze trading opportunity is China-based car rental and car services player eHi Car Services  (EHIC), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect eHi Car Services to report revenue of $52.47 million.

The current short interest as a percentage of the float for eHi Car Services is pretty high at 8.9%. That means that out of the 16.13 million shares in the tradable float, 1.44 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 22.6%, or by about 266,000 shares. If bears get caught pressing their bets into a bullish quarter, then this stock could easily soar sharply higher post-earnings as the bears run to cover some of their positions.

From a technical perspective, eHi Car Services is currently trending below both its 50-day and 20-day moving averages, which is bearish. This stock has been downtrending badly over the last three months, with shares falling lower from its high of $19 its recent low of $10.14 a share. During that downtrend, this stock has been making mostly lower highs and lower lows, which is bearish technical price action.

If you're in the bull camp on eHi Car Services, 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 its 20-day moving average of $11.57 to $12.18 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 371,450 shares. If that breakout kicks off post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $13.40 to its 50-day moving average of $13.76 a share, or even $15 a share.

I would avoid eHi Car Services or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some major support levels at $10.14 to $9.12 a share with high volume. If we get that move, then this stock will set up to re-test or possibly take out its next major support level at $8 a share.

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