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Fast Money

Can Stocks Withstand Stormy Earnings Season?

Alcoa kicks off a highly anticipated earnings season Tuesday. With so much at stake this quarter, what should you expect?

As the world’s largest aluminum producer, Alcoa tends to move inline with aluminum prices. “While stabilizing aluminum prices are clearly a positive for Alcoa, the headline numbers are still going to be negative,” writes the website iStockAnalyst.

Analysts polled by Thomson Reuters expect the company to swing to its third consecutive loss, with revenue expected to be nearly halved.

Take Your Position: All Eyes on Alcoa

I also think Alcoa misses, adds analyst David Silver of Wall Street Strategies on Fast Money. Considering shares of Alcoa are down about 69% since this time last year, how should you trade it?

Alcoa is oversupplied and it takes a long time to drive down inventories, says Guy Adami. I think the stock will probably trade lower but at some point it becomes a value play.

I’m long Alcoa, reveals Tim Seymour. I think they’re well positioned to grow in a space with less players.

I can’t bring myself to buy this stock, adds Joe Terranova.

I would not chase this stock either, adds Pete Najarian. They’re a serial dissapointer.


Of course Alcoa only gets things rolling. You’re probably eager to hear from a large number of companies and with good reason. Considering the S&P is still up about 33% since its March lows, you're probably like most investors -- keen to learn if results support current valuations.

In fact, Fast Money producer John Melloy doesn’t think most investors give a hoot about the current quarter. He says, “throw out the second-quarter numbers. Clearly, given the recent market performance, investors don't care about those. Instead, traders will be zoning in on those full-year forecasts.”

Unfortunately, forecasts from both Goldman and JPMorgan aren’t too rosy.

Goldman says Q2, 2009 earnings revisions have now turned positive with the season only a week away, a striking contrast to recent seasons where estimates declined coming into reporting.

That little nugget is making investors cautious.

The view is that (consensus earnings) expectations have moved too far too fast, setting the scene for a disappointment," says JPMorgan.

What do you think? We want to know!

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Trader disclosure: On July 2nd, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Seymour Owns (AA), (AAPL), (BAC), (BX), (EEM), (FCX), (FXI), (FITB); Seymour's Firm Owns (NOK); Seymour's Firm Is Short (PBR); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (XBI), (ABT), (MSFT), (UUP), (RIMM); Najarian Owns (F) Call Spread; Najarian Owns (GS) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (V) & Short (V) Calls; Najarian Owns (PALM) call Spread; Najarian Owns (YHOO) Call Spread; Najarian Owns (WNR) & Short (WNR) Calls