Stock Quotes in this Article: BGS, CNS, INTC, TPLM, URI

DELAFIELD, Wis. (Stockpickr) -- 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.

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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 technically very bullish 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 The Street doesn't like the numbers or guidance.

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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, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

Triangle Petroleum

My first earnings short-squeeze play is independent oil and gas player Triangle Petroleum (TPLM), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Triangle Petroleum to report revenue of $84.73 million on earnings of 12 cents per share.

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The current short interest as a percentage of the float for Triangle Petroleum is very high at 16.6%. That means that out of the 74.69 million shares in the tradable float, 10.36 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 22.8%, or by about 1.92 million shares. If the bears get caught pressing their bets into a strong quarter, then shares of TPLM could easily explode sharply higher post-earnings as the bears rush to cover some of their bets.

From a technical perspective, TPLM 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 consolidating and trending sideways for the last month, with shares moving between $7.63 on the downside and $8.48 on the upside. Shares of TPLM are starting to move within range of triggering a breakout trade post-earnings above the upper-end of its recent sideways trading chart pattern.

If you're bullish on TPLM, 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 $8.48 a share to its 200-day moving average of $8.64 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.31 million shares. If that breakout hits, then TPLM will set up to re-test or possibly take out its next major overhead resistance levels at $9.29 to $9.40 a share. Any high-volume move above those levels will then give TPLM a chance to tag $11 to its 52-week high at $11.66 a share.

I would simply avoid TPLM 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 $7.75 to $7.63 share high volume. If we get that move, then TPLM will set up to re-test or possibly take out its next major support levels at $6.96 to $6.37 a share.

Cohen & Steers

Another potential earnings short-squeeze play trade idea is investment manager Cohen & Steers (CNS), which is set to release its numbers on Wednesday after the market close. Wall Street analysts, on average, expect Cohen & Steers to report revenue $72.50 million on earnings of 40 cents per share.

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The current short interest as a percentage of the float for Cohen & Steers is very high at 17.8%. That means that out of the 19.22 million shares in the tradable float, 3.43 shares are sold short by the bears. This is a stock with a big short interest and a very low tradable float. Any bullish earnings news could easily spark a large short-squeeze post-earnings that forces the bears to cover some of their trades.

From a technical perspective, CNS 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 from its low of $34.27 to its recent high of $40.85 a share. During that uptrend, shares of CNS have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of CNS are now starting to trend within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on CNS, 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 $40.85 to $41.38 a share and then once it clears more key resistance levels at $42.43 to its 52-week high at $44.44 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 161,675 shares. If that breakout hits, then CNS will set up to enter new 52-week-high territory above $44.44, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $60 a share.

I would simply avoid CNS 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 $38.50 a share to its 50-day moving average of $38.01 a share with high volume. If we get that move, then CNS will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $36.28 a share to more key support at $34.27 a share.

Intel

Another potential earnings short-squeeze candidate is semiconductor player Intel (INTC), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Intel to report revenue of $12.81 billion on earnings of 37 cents per share.

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Just recently, Pacific Crest upgraded shares of Intel to outperform from sector perform with a $31 price target citing improving corporate PC demand and expectations the company's Grantley server platform will drive spending at traditional IT customers in 2015.

The current short interest as a percentage of the float for Intel is notable at 4.5%. That means that out of the 4.96 billion shares in the tradable float, 221.76 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of INTC could easily rip sharply higher post-earnings as the bears rush to cover some of their trades.

From a technical perspective, INTC 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 and change, with shares moving higher from its low of $23.35 to its recent high of $27.09 a share. During that uptrend, shares of INTC have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of INTC are now starting to move within range of triggering a major breakout trade post-earnings.

If you're bullish on INTC, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 52-week high at $27.12 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 33.22 million shares. If that breakout materializes after earnings, then INTC will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $35 to $40 a share.

I would avoid INTC 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 $25.50 a share to its 50-day moving average of $25.04 a share with high volume. If we get that move, then INTC will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $23.87 a share to its 52-week low of $21.36 a share.

United Rentals

Another earnings short-squeeze prospect is equipment rental player United Rentals (URI), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect United Rentals to report revenue of $1.18 billion on earnings of 71 cents per share.

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The current short interest as a percentage of the float for United Rentals is notable at 6.4%. That means that out of the 92.28 million shares in the tradable float, 5.88 million shares are sold short by the bears. If this company can deliver the earnings news the bulls are looking for, then shares of URI could easily surge sharply higher post-earnings as the bears jump to cover some of their bets.

From a technical perspective, URI is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares soaring higher from its low of under $60 a share to its recent high of $96.72 a share. During that uptrend, shares of URI have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of URI recently pulled back off its $96.72 high to $86.41 a share. This stock has started to bounce off that $86.41 low and it's now moving within range of triggering a near-term breakout trade post-earnings.

If you're bullish on URI, 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 $90 to $92.19 a share with strong volume. Look for volume on that move that hits near or above its three-month average action of 1.77 million shares. If that breakout hits, then URI will set up to re-test or possibly take out its 52-week high at $96.72 a share. Any high-volume move above that level will then give URI a chance to trend north of $100 a share.

I would simply avoid URI 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 $86.41 to $85 a share with high volume. If we get that move, then URI will set up to re-test or possibly take out its next major support levels at $74.32 a share to its 200-day moving average of $69.83 a share.

B&G Foods

My final earnings short-squeeze play is manufacturer, seller and distributor of shelf-stable food and household products B&G Foods (BGS), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect B&G Foods to report revenue of $203.78 million on earnings of 38 cents per share.

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Just recently, RBC Capital upgraded shares of BGS to outperform from sector perform with a $36 price target. The firm also raised its estimates, citing the Specialty Brands acquisitions.

The current short interest as a percentage of the float for B&G Foods sits at 4.8%. That means that out of the 52.19 million shares in the tradable float, 2.52 million shares are sold short by the bears. This is not a huge short interest, but it's more than enough to spark a decent short-covering rally post-earnings if the bears get squeezed out of some of their trades.

From a technical perspective, BGS 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 for the last two months, with shares moving higher from its low of $27.05 to its recent high of $33.62 a share. During that uptrend, shares of BGS have been mostly making higher lows and higher highs, which is bullish technical price action. Shares of BGS are now trending within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on BGS, 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 $32.77 a share and then once it clears more key overhead resistance levels at $33.62 to $34.10 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 371,129 shares. If that breakout gets underway after earnings, then BGS will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high at $37.66 a share. Any high-volume move above that level will then give BGS a chance to trend north of $40 a share.

I would avoid BGS 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 $31.88 a share to its 50-day moving average of $30.23 a share with high volume. If we get that move, then BGS will set up to re-test or possibly take out its next major overhead resistance levels at $29.27 to $28.49 a share, or even $27.05 a share.

To see more potential earnings short squeeze plays, check out the Earnings Short-Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com.

You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.