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BEHIND THE MONEY: Traders Fret Earnings Can't Keep Up Record-Breaking Beat Pace

With just 61 members of the S&P 500 reporting, it certainly is early in this earnings season. But at this moment in time, it is the best earnings season ever on record. You heard that right. Of the companies that have reported, 79 percent of them have put out profits that surpassed analyst estimates, according to the good folks at Thomson Reuters. If that figure holds up when the rest of the index members report, it will pass the previous 'beat' record for a quarter of 73 percent. That record occurred during two previous earnings seasons since Thomson started keeping the data in 1994: the second quarter of this year and first quarter of 2004.

It's quite impressive that the third quarter results are surpassing expectations by this magnitude, considering that the S&P 500 has jumped 17 percent since the quarter began and that the Dow has now surpassed the 10,000 milestone that makes TV producers like me and closet-indexing money managers tingle with joy inside. One would have thought it would be tougher to surprise analysts again in this already bullish environment.

But before you buy that Dow 10,000 hat currently being sold on the NYSE's web site and start buying more of this market, consider that this record-breaking beat figure has market seers like Pete Najarian of Optionmonster.com and Louis Navellier of Navellier.com more concerned than happy.

"It worries me that we've seen the best already report just about," said Najarian. "The beats we've seen have been legitimate for sure, but now the bar has been raised." The Fast Money trader also points to the CBOE Options Volatility Index, the so-called fear gauge, which has fallen to its lowest level of the year. The VIX, which measures the amount of protective puts being purchased vs. the number of bullish call options, is showing that investors have become far too complacent with this market and perhaps are setting themselves up for some negative surprises the rest of the season, according to Najarian.

Pete is getting flat in many of his trades and buying puts to protect himself in stocks he still wants to own for the long haul like Lazard .

So with Apple , Microsoft and Pfizer among the 439 other companies left to report in the S&P 500, when will we have seen the best?

Navellier, a widely-followed growth investor and observer of earnings season, said this week that you typically get the best market reaction out of companies that report early. He recommended this week buying Apple, which reports Monday after the bell. As one of the few companies illustrating true revenue growth, Apple should still make investors happy, according to Navellier, but the rest of earnings season may struggle to live up to the Dow 10,000 euphoria.

So it's on pace to be the best earnings season ever. Sit back and enjoy it this weekend. But after Apple reports, you may want to buy some puts for protection in case the rest of the index can't live up to the earnings bar raised by the likes of Goldman Sachs and Intel this week.

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Trader disclosure: On Oct. 16th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (HGSI) Call Spread; Najarian Owns (XLF) Calls; Najarian Owns (YHOO) Call Spread; Najarian Owns (BAC); Najarian Owns (WFT) Calls; Grasso Owns (ASTM), (BAC), (C), (COST), (PRST), (V), (WMT), (FAZ), (XLF), (AAPL); Terranova Owns (SUN), (OIH), (HOC), (HES), (POT); Terranova Is Short (GRMN), (CCL)

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