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.

Short-squeeze candidates are something that I tweet about on a regular basis. These are also the exact type of stocks that I love to trade and alert to my subscribers in real-time.

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.

Qiwi

My first earnings short-squeeze play is electronic online payment systems player Qiwi  (QIWI - Get Report) , which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Qiwi to report revenue of $2.21 billion on earnings of $16.23 per share.

The current short interest as a percentage of the float for Qiwi is notable at 7.7%. That means that out of the 11.88 million shares in the tradable float, 920,000 shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 11.5%, or by about 94,000 shares. If the bears get caught pressing their bets into a strong quarter, then this stock could easily rip sharply higher post-earnings as the bears rush to cover some of their positions.

From a technical perspective, Qiwi is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently formed a double bottom chart pattern, after shares found some buying interest at $10.15 to $10.42 a share. Following that potential bottom, this stock has now started to spike a bit higher and it's beginning to move within range of triggering a near-term breakout trade post-earnings.

If you're bullish on Qiwi, 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 $11.50 to $11.80 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 455,889 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 its 20-day moving average of $12.49 to its 50-day moving average of $13.20, or even $14.50 to $15 a share.

I would simply avoid Qiwi 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 $10.42 to its all-time low of $10.15 a share with high volume. If we get that move, then this stock will set up to enter new all-time-low territory, which is bearish technical price action.

Take-Two Interactive Software

Another potential earnings short-squeeze trade idea is interactive entertainment player Take-Two Interactive Software  (TTWO - Get Report) , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Take-Two Interactive Software to report revenue $305.95 million on earnings of 26 cents per share.

The current short interest as a percentage of the float for Take-Two Interactive Software is very high at 15.9%. That means that out of the 77.75 million shares in the tradable float, 12.36 million shares are sold short by the bears.

From a technical perspective, Take-Two Interactive Software 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 five months, with shares moving higher off its low of $31.36 to its recent high of $38.52 a share. During that uptrend, shares of Take-Two Interactive Software 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 Take-Two Interactive Software, then I would wait until after its report and look for long-biased trades if this stock manages to break above some near-term resistance levels at $37.50 to its 52-week high of $38.52 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.24 million shares. If that breakout develops post-earnings, then this stock will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $45 to $50 a share.

I would simply avoid Take-Two Interactive Software 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 $35.73 a share to its 20-day moving average of $35.46 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 its 200-day moving average of $33.47 to $31.36 a share.

Akorn

Another potential earnings short-squeeze candidate is specialty generic pharmaceutical player Akorn  (AKRX - Get Report) , which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Akorn to report revenue of $267.56 million on earnings of 54 cents per share.

The current short interest as a percentage of the float for Akorn is very high at 17.2%. That means that out of the 57.70 million shares in the tradable float, 9.95 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of Akorn could easily spike sharply higher post-earnings as the bears move fast to cover some of their positions.

From a technical perspective, Akorn is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending over the last few weeks, with shares moving higher off its low of $19.18 a share to its recent high of $28.49 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 Akorn within range of triggering a big breakout trade post-earnings.

If you're bullish on Akorn, 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 $28.49 to $28.67 a share to some more key resistance around $30 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.01 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 $34 to $38, or even around $40 a share.

I would avoid Akorn or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below both its 20-day moving average of $25.91 a share to its 50-day moving average of $24.67 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 $22 to $19.18 a share.

Steris

Another earnings short-squeeze prospect is healthcare player Steris  (STE - Get Report) , which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Steris to report revenue of $701.92 million on earnings of $1.04 per share.

The current short interest as a percentage of the float for Steris is notable at 5.6%. That means that out of 84.65 million shares in the tradable float, 4.74 million shares are sold short by the bear. If the bulls get the earnings news they're looking for, then shares of Steris could easily rip sharply higher post-earnings as the bears scramble to cover some of their positions.

From a technical perspective, Steris is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways and consolidating over the last two months, with shares moving between $66.48 on the downside and $74.10 on the upside. Any high-volume move above the upper-end of its recent sideways trending chart pattern post-earnings could easily trigger a major breakout trade for shares of Steris.

If you're bullish on Steris, 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 $72.64 to $74.10 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 611,464 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 $78.47 to its 52-week high of $78.77 a share. Any high-volume move above those levels will then give this stock a chance to make a run at $80 a share.

I would simply avoid Steris 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 $70.38 a share to its 200-day moving average of $68.98 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 $66 to $64, or even $63 to $61.40 a share.

MakeMyTrip

My final earnings short-squeeze trading opportunity is online travel player MakeMyTrip  (MMYT - Get Report) , which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect MakeMyTrip to report revenue of $37.53 million on a loss of 50 cents per share.

The current short interest as a percentage of the float for MakeMyTrip is pretty high at 7.1%. That means that out of the 27.51 million shares in the tradable float, 1.95 million shares are sold short by the bears.

From a technical perspective, MakeMyTrip is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been downtrending over the last few weeks, with shares moving lower off its high of $20.20 a share to its recent low of $16.94 a share. During that downtrend, shares of MakeMyTrip have been making mostly lower highs and lower lows, which is bearish technical price action. That said, this stock has now started to bounce some off that $16.94 low with decent upside volume flows.

If you're in the bull camp on MakeMyTrip 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 $17.97 to its 50-day moving average of $18.33 a share and then above more key resistance at $19 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 159,598 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 $20 to $20.20, or even $21.50 to its 52-week high of $22.99 a share.

I would avoid MakeMyTrip 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 $16.94 a share to its 200-day moving average of $16.68 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 $15.31 to $14.88, or even $14.86 to $14.50 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.