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17 stocks traders are shorting ahead of earnings

Short sellers are hoping that a pair of semiconductor companies' earnings will fall flat this week.

GT Advanced Technologies and Rubicon Technology are among the five most shorted stocks reporting earnings this week, according to data from Markit Equities Research.

GTAT is the most shorted stock on this week's Markit list with nearly 40 percent of its outstanding shares on loan. And the bears keep piling in: Short interest in the company had popped 29 percent in the past four weeks, according to the financial information firm.

Fuse | Getty Images

Although Apple signed a $578 million deal with GTAT for sapphire glass in November, analysts have noted the "slowing pace" of Apple shipments, according to Markit analyst Simon Colvin.

Rubicon, which actually specializes in sapphire products unlike the multifaceted GTAT, has 26.9 percent of its outstanding shares on loan, according to Markit. Part of the bear case for Rubicon is that GTAT's Apple deal has taken away major opportunities for sapphire glass manufacturers, said Andrew Uerkwitz, an executive director and senior analyst at Oppenheimer & Co. who covers the company.

Read More Apple slips on a ring of blue glass

But short sellers are also betting that Rubicon's Asian competitors can quickly increase capacity and drive prices down, said Uerkwitz, who has a "hold" rating on the stock according to FactSet. Still, opinions on the stock are "bifurcated to the extreme," he said, explaining that bulls are excited about the resurgence of LEDs with the GTAT-Apple deal, and anticipate that Rubicon may announce some new clients.

Uerkwitz, however, said he is not anticipating much from Rubicon's earnings report this week.

"We're not expecting fireworks," he said.

Another area with several components on the most shorted list is biotechnology and pharmaceuticals: Celldex, Mallinckrodt and Ariad Pharmaceuticals all have more than 20 percent of outstanding shares on loan.

Mallinckrodt, Colvin noted, is acquiring heavily shorted Questcor Pharmaceuticals, so shorts are switching positions to the purchaser.

Read MoreBiotechs, social stocks weak after Yellen warning

Short sellers are not the only ones seeing some weakness in biotech firms. In a July policy report, Fed Chair Janet Yellen said that valuations "appear substantially stretched" for smaller biotechnology companies, "despite a notable downturn in equity prices for such firms early in the year."

Here's Markit's full list:

Name
Ticker
% Shares Outstanding on Loan
1 Month % Change
Industry
Earnings Date
Gt Advanced Technologies GTAT 39.6 29% Semiconductors & Semiconductor Equipment 8/4/2014
Allied Nevada Gold ANV 34.4 3% Metals & Mining 8/4/2014
Approach Resources AREX 29.2 -1% Oil, Gas & Consumable Fuels 8/4/2014
Textura TXTR 27.2 15% Internet Software & Services 8/6/2014
Rubicon Technology RBCN 26.9 11% Semiconductors & Semiconductor Equipment 8/7/2014
Ebix EBIX 26.0 0% Software 8/8/2014
Emerald Oil EOX 24.1 3% Oil, Gas & Consumable Fuels 8/4/2014
Air Methods AIRM 24.0 2% Health Care Providers & Services 8/7/2014
Celldex Therapeutics CLDX 23.3 19% Biotechnology 8/6/2014
Mallinckrodt MNK 23.1 -10% Pharmaceuticals 8/7/2014
Conversant CNVR 22.8 6% Internet Software & Services 8/6/2014
Encore Capital Group ECPG 22.7 4% Consumer Finance 8/7/2014
Fleetmatics Group FLTX 22.5 13% Software 8/6/2014
Magicjack Vocaltec CALL 21.5 -9% Diversified Telecommunication Services 8/8/2014
Endeavour International END 21.1 3% Oil, Gas & Consumable Fuels 8/5/2014
Mcdermott International MDR 20.9 2% Energy Equipment & Services 8/4/2014
Ariad Pharmaceuticals ARIA 20.3 -1% Biotechnology 8/6/2014
Markit Equities Research

Going into this week, just over three quarters of the S&P 500 have already reported quarterly earnings. So far 69 percent have beat estimates, 10 percent have met and 21 percent of missed, according to Thomson Reuters I/B/E/S.

Energy firms have seen the most earnings growth so far this quarter compared with the previous year, boasting a 15.5 percent gain. Financials have fared the worst with sectorwide blended earnings decreasing about 7 percent, according to Reuters.

—By CNBC's Everett Rosenfeld

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