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.

Bebe Stores

My first earnings short-squeeze play is women's apparel stores player Bebe Stores  (BEBE), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Bebe Stores to report revenue of $106.33 million on a loss of 4 cents per share.

The current short interest as a percentage of the float for Bebe Stores is pretty high at 13.6%. That means that out of the 30.41 million shares in the tradable float, 4.14 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 8.5%, or by about 322,000 shares. If bears get caught pressing their bets into a bullish quarter, then this stock could easily rip sharply higher post-earnings as the bears move fast to cover some of their trades.

From a technical perspective, Bebe Stores 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 $1.73 on the downside and $1.92 on the upside. Any high-volume move above the upper-end of its recent sideways trending chart pattern post-earnings could trigger a major breakout trade for shares of Bebe Stores.

If you're bullish on Bebe Stores, 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 $1.92 to its 50-day moving average of $1.93 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 317,462 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 $2.15 to $2.16, or even $2.60 to its 200-day moving average of $2.77 a share.

I would simply avoid Bebe Stores 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 $1.73 to is 52-week low of $1.71 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. Some possible downside targets off that move are $1.50 to $1.40 a share.

Aeropostale

Another potential earnings short-squeeze trade idea is casual apparel specialty retailer Aeropostale  (ARO), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Aeropostale to report revenue $335.67 million on a loss of 55 cents per share.

The current short interest as a percentage of the float for Aeropostale is extremely high at 27.5%. That means that out of the 61.67 million shares in the tradable float, 17 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.8%, or by about 464,00 shares. If bears get caught pressing their bets into a strong quarter, then this stock could easily spike sharply higher post-earnings as the bears jump to cover some of their positions.

From a technical perspective, Aeropostale is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last six months, with shares moving sharply lower from over $4 to its intraday low of $1.02 on Monday. During that downtrend, shares of Aeropostale have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're in the bull camp on Aeropostale, 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 $1.30 to $1.40 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 2.32 million shares. If that breakout hits post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $1.55 to its 50-day moving average of $1.59, or even $1.83 to $2 a share.

I would simply avoid Aeropostale or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its new 52-week low of $1.02 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. Some possible downside targets off that move are 80 cents to 70 cents per share.

Qunar Cayman Islands

Another potential earnings short-squeeze candidate is China-based online travel commerce platform player Qunar Cayman Islands  (QUNR), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Qunar Cayman Islands to report revenue of $851.03 million on a loss of $6.19 per share.

The current short interest as a percentage of the float for Qunar Cayman Islands is very high at 13.4%. That means that out of the 50.41 million shares in the tradable float, 6.75 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of Qunar Cayman Islands could easily rip sharply higher post-earnings as the bears move fast to cover some of their positions.

From a technical perspective, Qunar Cayman Islands 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, with shares moving lower from its high of $54.23 to its intraday low of $26.52 a share. During that downtrend, shares of Qunar Cayman Islands have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on Qunar Cayman Islands, 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 $32.50 to its 200-day moving average of $36.70 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 1.53 million 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 $40.15 to its 50-day moving average of $41.11, or even $45 a share.

I would avoid Qunar Cayman Islands 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 $26.52 to its 52-week low of $23.56 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 its all-time low of $21 a share.

Children's Place

Another earnings short-squeeze prospect is Children's Place  (PLCE - Get Report), which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Children's Place to report revenue of $380.57 million on a loss of 33 cents per share.

The current short interest as a percentage of the float for Children's Place is pretty high at 12.4%. That means that out of 20.15 million shares in the tradable float, 2.5 million shares are sold short by the bear. This is a decent short position on a stock with a relatively low tradable float. Any bullish earnings news could easily set off a large short-squeeze for shares of Children's Place post-earnings that sends the bears scrambling to cover some of their short positions.

From a technical perspective, Children's Place is currently trending below both its 50-day and 20-day moving averages, which is bearish. This stock has been moving sideways over the last few weeks, with shares moving between $56.14 on the downside and $62.17 on the upside. Any high-volume move above the upper end of that recent range post-earnings could trigger a big breakout trade for shares of Children's Place.

If you're bullish on Children's Place, 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 $60.60 to $62.17, and then above its 50-day moving average of $62.46 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 322,017 shares. If that breakout materializes post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $66 to $68, or even $69 a share.

I would simply avoid Children's Place or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key past support levels at $54.93 to $52.42 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 $48 to its 52-week low of $46.85 a share.

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Sportsman's Warehouse

My final earnings short-squeeze trading opportunity is outdoor sporting goods retailer Sportsman's Warehouse  (SPWH - Get Report), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Sportsman's Warehouse to report revenue of $171.22 million on earnings of 13 cents per share.

The current short interest as a percentage of the float for Sportsman's Warehouse is pretty high at 15.3%. That means that out of the 18.27 million shares in the tradable float, 2.79 million shares are sold short by the bears. This is a high short-interest and low float situation stock. Any bullish earnings news could easily set of a large short-squeeze for shares of Sportsman Warehouse post-earnings that sends the bears scrambling to cover some of their positions.

From a technical perspective, Sportsman's Warehouse is currently trending below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock has been downtrending some over the last two months, with shares falling from its high of $12.88 its intraday low of $9.92 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 Sportsman's Warehouse, 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 50-day moving average of $11.96 to $12.37, and then above $12.84 to its all-time high of $12.88 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 223,077 shares. If that breakout triggers post-earnings, then this stock will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $15 to $20 a share.

I would avoid Sportsman's Warehouse 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 $9.18 to its 200-day moving average of $9.06 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 $7.33 to $6.81 a share.

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