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.

Synaptics

My first earnings short-squeeze play is application software player Synaptics  (SYNA - Get Report) , which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Synaptics to report revenue of $472.6 million on earnings of $1.47 per share.

The current short interest as a percentage of the float for Synaptics is pretty high at 13.6%. That means that out of the 36.26 million shares in the tradable float, 4.95 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 29.3%, or about 1.12 million 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 trades.

From a technical perspective, Synaptics is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the month or so, with shares moving higher from its low of $62.68 to its recent high of $88.30 a share. During that uptrend, shares of Synaptics 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 Synaptics, 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 $87.50 to $88.30 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.04 million shares. If that breakout takes hold post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $97.50 to its 52-week high of $102.50 a share.

I would simply avoid Synaptics 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 its 200-day moving average of $81.20 to $79.93 a share and then below its 20-day moving average of $79.31 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 50-day moving average of $74.67 to possibly $70 a share.


Flotek Industries

Another potential earnings short-squeeze trade idea is oil and gas equipment and services player Flotek Industries  (FTK - Get Report) , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Flotek Industries to report revenue $95.60 million on earnings of 5 cents per share.

The current short interest as a percentage of the float for Flotek Industries is extremely high at 30.3%. That means that out of the 37.68 million shares in the tradable float, 11.42 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of Flotek Industries could easily spike sharply higher post-earnings as the bears rush to cover some of their positions.

From a technical perspective, Flotek Industries 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 or so, with shares moving higher off its low of $16.51 to its recent high of $21.15 a share. During that uptrend, shares of Flotek Industries 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 in the bull camp on Flotek Industries, 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 $20.24 to $21.15 a share and then above more resistance at $21.72 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.38 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 its 52-week high of $25.20 to $28, or even $30 a share.

I would simply avoid Flotek Industries 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 $18.67 to more support at $18.50 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 levels at $16.51 to its 200-day moving average of $15.79 a share.

Adeptus Health

Another potential earnings short-squeeze candidate is independent emergency rooms network operator Adeptus Health  (ADPT) , which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Adeptus Health to report revenue of $90.45 million on earnings of 24 cents per share.

The current short interest as a percentage of the float for Adeptus Health is extremely high at 89.7%. That means that out of the 3.04 million shares in the tradable float 2.72 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 27.6%, or by about 589,000 shares. If the bears get caught pressing their bets into a strong quarter, then this stock could easily trend sharply higher post-earnings as the bears scramble to cover some of their positions.

From a technical perspective, Adeptus Health is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has been uptrending over the last few weeks, with shares moving higher from its low of $73.30 to its intraday high on Tuesday of $90.71 a share. During that uptrend, shares of Adeptus Health 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 major breakout trade post-earnings.

If you're bullish on Adeptus Health, 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 $95 to its 50-day moving average of $97.54 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 471,734 shares. If that breakout gets set off post-earnings, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $110 to $115, or even $121.76 a share.

I would avoid Adeptus Health 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 $85.77 a share to more near-term support at $80 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 $75 to its 200-day moving average of $72.11, or even $70 to $66 a share.


Basic Energy Services

Another earnings short-squeeze prospect is oil and natural gas well site services provider Basic Energy Services  (BAS - Get Report) , which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Basic Energy Services to report revenue of $187.90 million on a loss of $1.18 per share.

The current short interest as a percentage of the float for Basic Energy Services is extremely high at 47%. That means that out of 31.25 million shares in the tradable float, 14.70 million shares are sold short by the bear. The bears have also been increasing their bets from the last reporting period by 19.6%, or by about 2.4 million shares. If the bears get caught pressing their bets into a strong quarter, then this stock could easily jump sharply higher post-earnings as the bears rush to cover some of their positions.

From a technical perspective, Basic Energy Services 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 six months, with shares moving sharply lower off its high of over $10 a share to its recent low of $2.96 a share. During that downtrend, shares of Basic Energy Services have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on Basic Energy Services, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 20-day moving average of $4.11 to its 50-day moving average of $4.48 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 3.84 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 $5.16 to $5.59, or even its 200-day moving average of $6.63 to $7.20 a share.

I would simply avoid Basic Energy Services or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some near-term support at $3.50 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 52-week low of $2.96 a share.

Spectranetics

My final earnings short-squeeze trading opportunity is medical devices player Spectranetics  (SPNC) , which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Spectranetics to report revenue of $59.87 million on a loss of 26 cents per share.

The current short interest as a percentage of the float for Spectranetics is pretty high at 16.3%. That means that out of the 41.73 million shares in the tradable float, 6.83 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 1.4%, or by about 96,000 shares. If the bears get caught pressing their bets into a bullish quarter, then this stock could easily spike sharply higher post-earnings as the bears hurry to cover some of their positions.

From a technical perspective, Spectranetics 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 four months, with shares dumping off its high of $18.39 to its recent low of $10.65 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 Spectranetics, 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 $11.71 to its 20-day moving average of $11.90 a share and then above more resistance at $12 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 964,969 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 around $13 to $13.34, or even its 50-day moving average of $14.35 to $16 a share.

I would avoid Spectranetics or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 52-week low of $10.65 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.

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