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Trading Warnings Season


Citigroup (C) announced earnings will fall 60% this quarter and eBay (EBAY) recorded a $1.4 billion charge for its Skype acquisition two years ago. Warnings season has officially begun. How do you play the run-up to Q3 earnings announcements?

Jeff Macke tells investors to expect bad news from companies over the next 10 days or so. He feels it’s important for an investor to know their warnings and shows the following chart:

Warnings Season

When To Stay Away

1)     Company blames forces not affecting competitors

2)     Analysts caught with pants down (warning more than 10% below estimates)

3)     No quick fix available

Macke says Walgreen’s (WAG) warning Monday fit all 3 criteria and consequently he says the stock is a sell.

Karen Finerman tells the panel to also look at competitors in the space for added info.

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Trader disclosure: On Oct. 1 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (HAS), (ATVI), (INTC), (SWY); Najarian Owns (GS) Options; Finerman's Firm And Finerman Own (FLS); Web Caller Roger Nesham Owns (DE), (AGU)