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Earnings Season: What Should You Expect?

Friday, 9 Apr 2010 | 5:49 PM ET

It’s that time of year - flowers are blossoming and birds are chirping. Yes, it looks and sounds like the spring earnings season.

The Expectations

By and large the Street expects earnings to top forecasts.

"We're going to see a healthy number of positive earnings surprises," says Fred Dickson, chief market strategist at D.A. Davidson. "We're seeing stronger economic data than what we expected, and that should translate into a little bit better revenue growth."

Early Returns
The best plays ahead of earnings.

Pre-announcements heading into the reporting period show more positive outlooks than average and fewer negative ones, indicating company executives feel confident about results and analysts' estimates.

But don’t get too giddy yet - strong earnings don’t necessarily mean strong stock market performance.

What’s Baked In The Cake?

Many strategists say much of the enthusiasm for quarterly profits may already be factored into lofty stock prices.

Stocks could be in danger of repeating the previous earnings period, when investors would sell even after strong reports. The S&P 500 lost roughly 3 percent during last earnings season.

“We need absolutely exceptional results during earnings season or we pull back,” muses OptionMonster Jon Najarian on Thursday’s Halftime Report.

Also, historically, the market performs better in the off-earnings season than during earnings, according to Bespoke.

"I don't think (earnings) will move the needle," says Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.

However, if the market does pull back Fast Money trader Steve Grasso sees opportunity.

“I think we may see a head fake sell-off on the back of Alcoa earnings,” he says. "With forward earnings at 14 times I think there’s plenty of room to go higher.”

What do you think? We want to know?




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Trader disclosure: On April 9, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns (HES), (TER), (AXP), (YHOO), (APA),; Terranova Is Short (LCC), (XLY); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM): Finerman's Firm Is Long S&P Puts: Finerman Owns (AAPL), (USO); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC) Preferred, (BAC), (BAC) Calls; Finerman's Firm Owns (CASY); Finerman's Firm And Finerman Own (JPM); Finerman's Firm And Finerman Own (BBY); Finerman's Firm And Finerman Own (WFC) Preferred; Grasso Owns (LPX), (ASTM), (ABK), (AAPL), (BAC), (BGP), (C), (CVGI), (COST), (JPM), (NEM), (PRST), (WMT), (PFE), (BA), (T); Iuorio Owns (AAPL), (WMT), (FXA), (FXC); Iuorio Owns (SPY) Calls; Iuorio Owns (QQQQ) Calls; Iuorio Owns (USO) Puts; Iuorio Owns (GLD), (GLD) calls; Iuorio Owns (FXE) Puts; Jon Najarian Owns (PALM); Jon Najarian Owns (JPM) Preferred; Jon Najarian Owns (GOOG) Put Spreads, Owns (AAPL) Call Spreads; Kelly Owns (NBG), (FRE); Karabell Owns (FCX); Seymour Owns (AAPL), (AA), (BAC), (BP), (INTC), (MSFT)

For Tim Seymour
Seygem Asset Management Owns (POT)

For JoeTerranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLI)

For Steve Grasso
Stuart Frankel And Its Partners Own (LPX)
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (CVGI)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (HSPO)
Stuart Frankel And Its Partners Own (MERC)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NXST)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PFE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (CL)
Stuart Frankel And Its Partners Are Short (AAPL)

For Brian Kelly
Kanundrum Capital Owns (MS)
Kanundrum Capital Owns (FRE)
Kanundrum Capital Owns (FNM)
Kanundrum Capital Owns (VMC)
Kanundrum Capital Owns (POT)
Kanundrum Capital Owns (GOOG)
Kanundrum Capital Owns (NBG)
Kanundrum Capital Is Long Dollar
Kanundrum Capital Is Long Treasuries
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Franc


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