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.

KB Home

My first earnings short-squeeze play is homebuilding player KB Home  (KBH - Get Report) , which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect KB Home to report revenue of $747.06 million on earnings of 14 cents per share.

The current short interest as a percentage of the float for KB Home is extremely 27.8%. That means that out of the 72.45 million shares in the tradable float, 20.18 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of KB Home could easily rip sharply higher post-earnings as the bears run to cover some of their positions.

From a technical perspective, KB Home 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 off is low of $12.38 a share to its recent high of $14.89 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 KB Home within range of triggering a big breakout trade post-earnings.

If you're bullish on KB Home, 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 $14.89 to $15.03 a share and then above more resistance at $15.43 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.93 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 $16.66 to its 52-week high of $17.42, or even $18 to $19 a share.

I would simply avoid KB Home 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 $14.10 a share and its 50-day moving average of $13.81 a share and below more key support at $13.66 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 $13.08 to $12.38, or even $11 a share.

Finish Line

Another potential earnings short-squeeze trade idea is athletic shoes and apparel specialty retailer Finish Line  (FINL) , which is set to release numbers on Friday before the market open. Wall Street analysts, on average, expect Finish Line to report revenue $449.72 million on earnings of 22 cents per share.

The current short interest as a percentage of the float for Finish Line is very high at 17.1%. That means that out of the 41.64 million shares in the tradable float, 7.12 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 83.1%, or by about 3.23 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 rush to cover some of their trades.

From a technical perspective, Finish Line 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 $16.71 to $16.79 a share. Following that potential bottom, shares of Finish Line have now started to uptrend a bit and test its 20-day moving average of $17.61 a share. That move is starting to push this stock within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on Finish Line, then I would wait until after its report and look for long-biased trades if this stock manages to break above some near-term overhead resistance levels at its 20-day moving average of $17.61 to $17.89 a share and then above $18 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.19 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 $18.60 to its 200-day moving average of $18.68, or even $19.50 to $20 a share.

I would simply avoid Finish Line or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below those recent double bottom support levels with high volume. If we get that move, then this stock will set up to re-test or possibly take out its 52-week low of $15.37 a share.

BlackBerry

Another potential earnings short-squeeze candidate is smartphones and other devices developer BlackBerry  (BBRY) , which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect BlackBerry to report revenue of $470.94 million on a loss of 8 cents per share.

The current short interest as a percentage of the float for BlackBerry sits at 11.4%. That means that out of the 519.58 million shares in the tradable float, 59.58 million shares are sold short by the bears.

From a technical perspective, BlackBerry is currently trending just above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern, after shares found some buying interest at $6.50 to $6.67 a share. Following that potential bottom, shares of BlackBerry have now started to trend above its 50-day moving average of $7.01 a share, and it's quickly moving within range of triggering a big breakout trade post-earnings.

If you're bullish on BlackBerry, 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 $7.19 a share to its 200-day moving average of $7.39 a share and then above more key resistance at $7.50 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 4.46 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 $8.20 to $8.36 or even $9 a share.

I would avoid BlackBerry 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 $6.67 to $6.50 a share and then below more key support levels at $6.39 to $6.33 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 $5.96 a share.

Bed Bath & Beyond

Another earnings short-squeeze prospect is home furnishing stores operator Bed Bath & Beyond  (BBBY - Get Report) , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Bed Bath & Beyond to report revenue of $2.78 billion on earnings of 86 cents per share.

The current short interest as a percentage of the float for Bed Bath & Beyond is notable at 10%. That means that out of 149.07 million shares in the tradable float, 15.01 million shares are sold short by the bear.

From a technical perspective, Bed Bath & Beyond 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 $41.67 to $41.76 a share. Following that potential bottom, shares of Bed Bath & Beyond have now started to spike higher and flirt with its 20-day moving average of $43.95 a share. That bump to the upside is now quickly pushing this stock within range of triggering a near-term breakout trade post-earnings.

If you're bullish on Bed Bath & Beyond, 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 $45.03 a share to its 50-day moving average of $45.12 a share and then above more key resistance levels at $45.74 to $46 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 2.16 million 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 $50 to its 200-day moving average of $50.37 a share, or even $52.18 to $52.56 a share.

I would simply avoid Bed Bath & Beyond or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below those recent double bottom support levels and then below its 52-week low of $41.26 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.

Synnex

My final earnings short-squeeze trading opportunity is business services player Synnex  (SNX - Get Report) , which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Synnex to report revenue of $3.28 billion on earnings of $1.31 per share.

The current short interest as a percentage of the float for Synnex is notable at 7.5%. That means that out of the 28.89 million shares in the tradable float, 2.17 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 5.8%, or by about 119,000 shares. If the bears get caught pressing their bets into a strong quarter, then this stock could easily spike sharply higher post-earnings as the bears scramble to cover some of their positions.

From a technical perspective, Synnex 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 off its low of $77.54 a share to its recent high of $96.21 a share. During that uptrend, shares of SYNNEX 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 Synnex 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 $94 to $96.21 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 302,733 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 $102.59 to its 52-week high of $102.83, or even $105 to $110 a share.

I would avoid SYNNEX 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 $88.87 a share to its 50-day moving average of $86.68 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 $80 to $77.50 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.