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.

TimkenSteel

My first earnings short-squeeze trading opportunity is steel products player TimkenSteel (TMST) , which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect TimkenSteel to report revenue of $200.79 million on a loss of 40 cents per share.

The current short interest as a percentage of the float for TimkenSteel is very high at 14.8%. That means that out of the 37.45 million shares in the tradable float, 5.54 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 5.1%, or by about 270,000 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, TimkenSteel 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 and change, with shares moving higher off its low of $14.26 a share to its recent high of $17.49 a share. During that uptrend, this stock has been making mostly higher lows and higher highs, which is bullish technical price action. That uptrend is now quickly pushing shares of TimkenSteel within range of triggering a major breakout trade post-earnings above some near-term overhead resistance levels.

If you're bullish on TimkenSteel, 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 $17.49 to $17.61 a share and then above its 52-week high of $18.63 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 605,144 shares. If that breakout triggers 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 breakout are $20 to $25 a share.

I would simply avoid TimkenSteel 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 $16.19 a share and then below some more near-term support levels at $16.31 to $16 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 $14.26 to $14, or even its 200-day moving average of $11.99 a share.

Globant S.A.

Another potential earnings short-squeeze trade idea is software solutions developer Globant S.A. (GLOB) , which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Globant S.A. to report revenue of $85.95 million on earnings of 31cents per share.

The current short interest as a percentage of the float for Globant S.A. is pretty high at 10.3%. That means that out of the 23.58 million shares in the tradable float, 2.44 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 19.5%, or by about 397,000 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 move fast to cover some of their trades.

From a technical perspective, Globant S.A. 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 recent low of $32.11 a share to its high of $35.24 a share. During that uptrend, shares of Globant S.A. have been making mostly higher lows and higher highs, which is bullish technical price action. That uptrend has now pushed this stock within range of triggering a near-term breakout trade post-earnings above some key resistance levels.

If you're in the bull camp on Globant S.A., 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 $35.24 to $35.53 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 338,406 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 its 200-day moving average of $38.66 a share to $40, or even $42 a share.

I would simply avoid Globant S.A. 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 $34.01 a share and its 50-day moving average of $33.38 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 $32.11 to $30.90 a share, or even $28.50 to $25 a share.

PBF Energy

Another potential earnings short-squeeze candidate is oil and gas refining and marketing player PBF Energy (PBF) , which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect PBF Energy to report revenue of $4.16 billion on a loss of 49 cents per share.

The current short interest as a percentage of the float for PBF Energy is very high at 15.6%. That means that out of the 83.12 million shares in the tradable float, 13.01 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 5.7%, or by about 699,000 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 scramble to cover some of their positions.

From a technical perspective, PBF Energy 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 uptrending over the last few weeks, with shares moving higher off its low of $22.53 a share to its recent high of $24.75 a share. During that uptrend, shares of PBF Energy have been making mostly higher lows and higher highs, which is bullish technical price action. That bump to the upside is now quickly pushing this stock within range of triggering a big breakout trade above some key overhead resistance levels.

If you're bullish on PBF Energy, 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 $24.75 to its 50-day moving average of $25.53 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.40 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 $27 to $28, or even $29 a share.

I would avoid PBF Energy or look for short-biased trades if after earnings it fails to trigger that breakout and then drops below some near-term support levels at its 20-day moving average of $23.90 a share to $23 a share and then below more key support at $22.53 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 $21.50 to $21, or even $20.50 to $19.50 a share.

Himax Technologies

Another earnings short-squeeze prospect is fabless semiconductor player Himax Technologies (HIMX) , which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Himax Technologies to report revenue of $202.60 million on earnings of 7 cents per share.

The current short interest as a percentage of the float for Himax Technologies is pretty high at 12.3%. That means that out of 122.44 million shares in the tradable float, 15.11 million shares are sold short by the bear. The bears have also been increasing their bets from the last reporting period by 32.5%, or by about 3.70 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 run to cover some of their positions.

From a technical perspective, Himax Technologies is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock is ripping sharply higher on Tuesday right off its 20-day moving average of $5.33 a share with strong upside volume flows. This high-volume jump to the upside is now quickly pushing shares of Himax Technologies within range of triggering a big breakout trade post-earnings above some key overhead resistance levels.

If you're bullish on Himax Technologies, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 50-day moving average of $5.98 a share and then above more key resistance levels at $6.25 to $6.40 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 3.64 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 $7 to $7.70, or even $8 to its 200-day moving average of $8.22 a share.

I would simply avoid Himax Technologies 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 $5.33 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 new 52-week low of $4.88 a share. Any high-volume move below that level will then give this stock a chance to tag $4 a share.

Molina Healthcare

My final earnings short-squeeze play is healthcare player Molina Healthcare (MOH) , which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Molina Healthcare to report revenue of $4.55 billion on earnings of 75 cents per share.

The current short interest as a percentage of the float for Molina Healthcare is extremely high at 21.8%. That means that out of the 42.98 million shares in the tradable float, 9.37 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 9%, or by about 772,000 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 move fast to cover some of their positions.

From a technical perspective, Molina Healthcare 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 three months and change, with shares moving higher off its low of $46.97 a share to its recent high of $59.99 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 strong uptrend has now pushed this stock within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp 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 $60 to $60.66 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 855,056 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 level at its 52-week high of $67.87 a share to $70, or even $75 a share.

I would avoid Molina Healthcare 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 $57.95 a share to $57 a share and then below its 50-day moving average of $56.32 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 $54.03 a share to $52, or even $51 to $50 a share.

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

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