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.

Natural Health Trends

My first earnings short-squeeze play is personal products provider Natural Health Trends  (NHTC - Get Report) , which is set to release numbers on Wednesday before the market open. There are currently no Wall Street analysts' estimates available for Natural Health Trends.

The current short interest as a percentage of the float for Natural Health Trends is extremely high at 50.4%. That means that out of the 5.95 million shares in the tradable float, 3 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 3.6%, or by about 103,000 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 move fast to cover some of their trades.

From a technical perspective, Natural Health Trends is currently trending above its 50-day moving average and just 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 $25.32 a share to its recent high of $33.20 a share. During that uptrend, shares of Natural Health Trends 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 Natural Health Trends, 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 $33.20 to its 200-day moving average of $34.24 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 153,451 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 $35.85 to $39 or even $40 to $45 a share.

I would simply avoid Natural Health Trends 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 $31 a share and then below both its 50-day moving average of $29.94 a share to its 20-day moving average of $29.48 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 $27 to $25.32, or even $24 a share.

Natural Grocers by Vitamin Cottage

Another potential earnings short-squeeze trade idea is natural and organic grocery stores player Natural Grocers by Vitamin Cottage  (NGVC - Get Report) , which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Natural Grocers by Vitamin Cottage to report revenue $179.15 million on earnings of 12 cents per share.

The current short interest as a percentage of the float for Natural Grocers by Vitamin Cottage is very high at 14%. That means that out of the 14.59 million shares in the tradable float, 2.04 million shares are sold short by the bears.

From a technical perspective, Natural Grocers by Vitamin Cottage is currently trending above its 50-day moving average and well below its 200-day moving average , which is neutral trendwise. This stock has been trending sideways and consolidating over the last three months, with shares moving between $12.29 on the downside and $14.21 on the upside. Any high-volume move above the upper-end of Natural Grocers by Vitamin Cottage's recent sideways trending chart pattern post-earnings could trigger a big breakout trade for the stock.

If you're in the bull camp on Natural Grocers by Vitamin Cottage, 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 $14 to $14.21 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 106,389 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 level at its gap-down-day high from April just under $16.50 a share.

I would simply avoid Natural Grocers by Vitamin Cottage 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 $13.41 to $13 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 new all-time low of $12.29 a share.

Marriott International

Another potential earnings short-squeeze candidate is worldwide hotels and timeshare properties operator Marriott International  (MAR - Get Report) , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Marriott International to report revenue of $3.90 billion on earnings of 98 cents per share.

The current short interest as a percentage of the float for Marriott International is very high at 27.2%. That means that out of the 210.65 million shares in the tradable float, 57.34 million shares are sold short by the bears.

From a technical perspective, Marriott International 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 month and change, with shares moving higher off its low of $60.87 a share to its recent high of $71.55 a share. During that uptrend, shares of Marriott International 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 Marriott 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 $71.55 to $73.56 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 3.34 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 $77.83 to its 52-week high of $79.88, or even $82 to $85 a share.

I would avoid Marriott International 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 20-day moving average of $68.56 a share to its 50-day moving average of $67.35 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 $63 to $61 a share.

Molina Healthcare

Another earnings short-squeeze prospect is Medicaid-related solutions provider Molina Healthcare  (MOH - Get Report) , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Molina Healthcare to report revenue of $4.35 billion on earnings of 50 cents per share.

The current short interest as a percentage of the float for Molina Healthcare is extremely high at 17.9%. That means that out of 42.65 million shares in the tradable float, 7.65 million shares are sold short by the bear.

From a technical perspective, Molina Healthcare is currently trending above its 50-day moving average and well 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 $47.81 a share to its recent high of $53.56 a share. During that uptrend, shares of Molina Healthcare 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 Molina Healthcare, 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 $53 to $53.56 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.30 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 level at its gap-down-day high from April at around $56 a share. Any high-volume move above $56 will then give this stock a chance to re-fill some of its previous gap-down-day zone that started near $65 a share.

I would simply avoid Molina Healthcare 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 $50.93 a share to its 50-day moving average of $49.97 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 $46, or even its new 52-week low of $44.50 a share.

Mobileye

My final earnings short-squeeze trading opportunity is autonomous driving application software player Mobileye  (MBLY) , which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Mobileye to report revenue of $77.31 million on earnings of 15 cents per share.

The current short interest as a percentage of the float for Mobileye is very high at 23.2%. That means that out of the 172.75 million shares in the tradable float, 40.16 million shares are sold short by the bears.

From a technical perspective, Mobileye 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 six months, with shares moving higher off its low of $23.57 a share to its recent high of $50.18 a share. During that uptrend, shares of Mobileye 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 above some near-term overhead resistance levels.

If you're in the bull camp on Mobileye 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 $50.18 to $50.35 a share and then above $52 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 3.37 million 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 $57.50 to its all-time high of $64.50 a share.

I would avoid Mobileye 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 20-day moving average of $46.23 a share to $45 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 50-day moving average of $41.29 a share to its 200-day moving average of $38.83 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.