Cisco results are due Wednesday and what CEO John Chambers says could spark the next leg higher or trigger a correction.
We know that sounds pretty theatrical but lately the market has shown a flair for the dramatic.
And the reason we put so much emphasis on Cisco is -- Cisco is one of the first major technology companies involved in enterprise spending to report results.
Typically its performance and outlook are used as a barometer for corporate spending on things like routers and switches - the stuff of technology infrastructure.
For the quarter, on average, analysts expect Cisco to report revenue of $9.4 billion, up from $9.1 billion a year earlier, according to Thomson Reuters.
But as you know it’s not just about profit – it’s about s outlook.
The Street is hoping to hear Cisco customers, especially phone companies and large corporations are making investment in growing wireless and Internet traffic.
What should you anticipate?
Investors seem to believe that Cisco results will reinforce hopes that corporate spending is back after two years of dismal growth.
"Fundamentally, things are strengthening for Cisco, and despite some lingering component shortages, we believe the company closed its January quarter on a positive note," says RBC Capital Markets analyst Mark Sue.
Stronger-than-expected results could jolt the stock, which has languished for the past three months, as well as the broad market.
However, a downbeat outlook – even if it’s just in the tone used by CEO John Chambers – could send the market into a tailspin.
How should you trade?
If the stocks sells off after earnings I think it’s an opportunity, counsels Pete Najarian.
As an investment I like Cisco but as a short term trade the stock is probably in no-man’s land, says Guy Adami.
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Trader disclosure: On February 2nd, 2010, 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), (BTU), (MSFT), (NUE); Najarian Owns (AAPL) Call Spread; Najarian Owns (AA) Calls; Najarian Owns (AKAM) Call Spread; Najarian Owns (CEPH) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (MET) Call Spread; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (PFE); Najarian Owns (SPF) Calls; Najarian Owns (XLF) Calls; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (UNG), (USO), (BKS); Finerman's Firm Is Short SPX Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC) Preferred, (BAC) Leaps; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm And Finerman Own (CVS), (FLS), (GOOG); Finerman's Firm Owns (KFT)
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