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Take Your Position: Warnings Season

We’ve noticed you’ve been a tad jump lately. Perhaps it’s because we’re heading into warnings season? Or are you nervous about TXN’s update?

Warnings Season

As the quarter winds down, investors can get a little jittery as they await pre-announcements from companies who want to prepare investors for the next earnings season.

Known as warnings season, these pre-announcements often alert investors to potential storms brewing in their portfolio.

Fortunately – a lot like this year’s hurricane season – it appears the environment is mild.

For next quarter's earnings, so far 67 companies have guided to the downside, while 43 have guided higher. While that may seem bad, it's actually not.

The ratio of negative to positive earnings is currently at 1.6; that's lower than last year's ratio of 3.9, and below the historical average for the S&P.

Warning Season: S&P 500 Q4 2009 To Date
Neg. EPS Preannouncements: 67
Inline EPS Preannouncements: 10
Pos. EPS Preannoucements: 43
Neg./Pos. Preannoun. (N/P Ratio): 1.6
Source: ThomsonReuters

Warning Season: Are Things Getting Better?
N/P Ratio Q4 2009 QTD: 1.6
N/P Ratio Q4 2008 QTD: 3.9
Hist. N/P Ratio for S&P: 2.1
Source: ThomsonReutersTexas Instruments

Signal of Strength?

Does the ratio mentioned above indicate earnings strength ahead? Investors will be looking to answer that question as they sift through the mid-quarter update from Texas Instruments due out Tuesday.

What’s the trade?

FBR analyst Craig Berger is bullish. “I think Texas Instruments will have good things to say. I think they.. raise their earnings and revenue guidance.” (Berger has a $31 price target on the stock.)

Ahead of the update, analysts at Deutsche Bank reiterated their "Hold" rating on Texas Instruments with a price target of $26.

Meanwhile Guy Adami says, valuations in TXN, look fair. I think a long position makes sense.

I own TXN, adds Pete Najarian

----

Elsewhere in the space, Craig Berger has Buy ratings on Fairchild Semi and Marvel which he thinks are undervalued. And he suggests putting National Semi , and Maxim on your radar.

In the space I love Marvel , adds Pete Najarian.

Or look at Taiwan Semi, counsels Tim Seymour.

I like Teradyne and Broadcom, says Joe Terranova.


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Trader disclosure: On December 7th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (BTU), (NUE); Seymour Owns (CHL), (AAPL), (BAC), (GE), (MSFT); Najarian Owns (AAPL) Calls; Najarian Owns (BAC) Calls; Najarian Owns (DD), Owns (DD) Calls Spread; Najarian Owns (GE) Calls; Najarian Owns (INTC), Is Short (INTC) Calls; Najarian Owns (TXN), Is Short (TXN) Calls

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