With awful earnings expected, bulls spot opportunity

It's that time again. Second-quarter earnings season is just getting started, and many traders are trying to find ways to play off the low earnings expectations.

Analysts are awfully pessimistic, projecting that the S&P 500 will report a year-over-year earnings decline of 4.7 percent, according to FactSet. However, plunging oil prices play a large part in that shocking-sounding number, and if energy earnings are excluded, analysts expect to see growth of 2 percent.

"Energy headwinds notwithstanding, expectations for the S&P 500 profits are manageable and should be surpassed," Oppenheimer's head of institutional portfolio strategy, Andrew Burkly, wrote to CNBC on Thursday. "Profit carnage in the Energy sector shouldn't be sufficient to prevent the S&P 500 from exceeding another quarter characterized by overly conservative analyst estimates."

Burkly expects earnings expectations to be surpassed by 3 percent to 5 percent, "which should carry the equity market to new highs."

Read MoreIs the big money getting nervous about stocks?

David Seaburg, head of equity sales trading at Cowen & Co., is of a similar mind.

"Given the people have baked in [disappointing] numbers, earnings season is a buying opportunity," Seaburg told CNBC. "I think it's OK for long-term investors to scoop up some bargains."

An Alcoa aluminum plant in Alcoa, Tennessee
Wade Payne | Reuters
An Alcoa aluminum plant in Alcoa, Tennessee

In fact, that appears to be a relatively common view on Wall Street. As Neil Azous of advisory firm Rareview Macro wrote in a Thursday note to clients, "The majority [of hedge funds] believe that the earnings bar going into this reporting season is so low that you can crawl over it on your knees."

That has some traders looking the other way.

"I'm going to be a little contrarian on this. I think everyone is looking for growth, but I think the key thing in this earnings season is going to be safety and yield," Boris Schlossberg of BK Asset Management said in a Wednesday "Trading Nation" interview.

Schlossberg favors that risk-off stalwart, the Utilities sector, though he adds that left-for-dead energy stocks could make an interesting play.

Alcoa, whose results have traditionally been seen as kicking off earnings season, missed on earnings but beat revenue expectations in their Wednesday afternoon results.

Read MoreAlcoa kicks off earnings season with mixed results

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