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.

Werner Enterprises

My first earnings short-squeeze play is transportation and logistics player Werner Enterprises  (WERN) , which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Werner Enterprises to report revenue of $549.31 million on earnings of 43 cents per share.

The current short interest as a percentage of the float for Werner Enterprises is pretty high at 11.5%. That means that out of the 44.47 million shares in the tradable float, 5.14 million shares are sold short by the bears.

From a technical perspective, Werner Enterprises is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last two months, with shares moving higher from its low of $37.87 to its recent high of $46.97 a share. During that uptrend, shares of Werner have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a big breakout trade post-earnings.

If you're bullish on Werner Enterprices, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its all-time high of $46.97 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 723,838 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 breakout are $55 to $60, or even $65 a share.

I would simply avoid Werner Enterprises 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 $44 to both its 20-day moving average of $43.17 and its 50-day moving average of $42.50 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 200-day moving average of $38.79 a share.

Tile Shop

Another potential earnings short-squeeze trade idea is home improvement stores player Tile Shop  (TTS) , which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Tile Shop to report revenue $69.44 million on earnings of 6 cents per share.

The current short interest as a percentage of the float for Tile Shop is extremely high at 25.6%. That means that out of the 23.73 million shares in the tradable float, 6.09 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of Tile Shop could easily rip sharply higher post-earnings as the bears rush to cover some of their positions.

From a technical perspective, Tile Shop is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly over the last three months and change, with shares falling sharply lower off its high of $91.63 to its recent low of $64.99 a share. During that downtrend, shares of Tile Shop 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 $64.99 low and it's quickly moving within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on Tile Shop, 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 $72 to $73.07 and then above its 50-day moving average of $75.09 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 420,348 shares. If that breakout gets started post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $77.34 to its 200-day moving average of $80.05, or even $82 to $85 a share.

I would simply avoid Tile Shop 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 $68 to its 52-week low of $64.99 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.

Angie's List

Another potential earnings short-squeeze candidate is local services and consumer review site operator Angie's List  (ANGI) , which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Angie's List to report revenue of $89.65 million on a loss of 5 cents per share.

The current short interest as a percentage of the float for Angie's List is extremely high at 20.4%. That means that out of the 50.04 million shares in the tradable float, 10.23 million shares are sold short by the bears.

From a technical perspective, Angie's List 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 two months, with shares moving higher from its low of $21.03 to its recent high of $44.93 a share. During that uptrend, shares of Angie's List have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a big breakout trade post-earnings.

If you're bullish on Angie's List, 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 $42.26 to its all-time high of $44.93 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 905,266 shares. If that breakout develops 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 breakout are $50 to $55, or even $60 to $65 a share.

I would avoid Angie's List or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 20-day moving average of $39.14 to $39.07 and then below more support at $36.98 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 $33.57 to its 50-day moving average of $30.76 a share.

Brinker International

Another earnings short-squeeze prospect is casual dining restaurants player Brinker International  (EAT) , which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Brinker International to report revenue of $775.46 million on earnings of 55 cents per share.

The current short interest as a percentage of the float for Brinker International is pretty high at 11.5%. That means that out of 59.45 million shares in the tradable float, 6.88 million shares are sold short by the bear.

From a technical perspective, Brinker International 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 $8.99 to its recent high of $9.93 a share. During that uptrend, shares of Brinker have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a near-term breakout trade post-earnings.

If you're bullish on Brinker 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 $9.93 to its 200-day moving average of $10.12 and then above its 50-day moving average of $10.16 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.17 million shares. If that breakout fires off post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $10.45 to $10.63, or even $11 to $11.75 a share.

I would simply avoid Brinker International or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 20-day moving average of $9.63 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 $8.99 to $8.50, or $8 to its 52-week low of $7.27 a share.


iRobot

My final earnings short-squeeze trading opportunity is robot maker iRobot  (IRBT) , which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect iRobot to report revenue of $145.34 million on earnings of 23 cents per share.

The current short interest as a percentage of the float for iRobot is very high at 17.5%. That means that out of the 27.30 million shares in the tradable float, 4.78 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 6.3%, or by about 284,000 shares. If the 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 positions.

From a technical perspective, iRobot 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 $17.80 to its recent high of $20.83 a share. During that uptrend, this stock has been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of Winnebago Industries within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on iRobot, 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 its 50-day moving average of $20.27 to $20.83 and then above its 200-day moving average of $21.18 to $21.33 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 322,337 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 $22.73 to $24, or even $24.63 to its 52-week high of $26.44 a share.

I would avoid iRobot or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 20-day moving average of $19.64 to $19.71 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 $17.80 to $16.44, or even $14 a share.

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