When being bearish is actually a bullish sign

Crystal ball of earnings surprises

In the last four weeks analysts have lowered estimates on 697 companies in the S&P 1500. Bespoke Investment Group's Paul Hickey said that might actually be a good thing for the market.

Hickey told CNBC'S "Fast Money" that sentiment going into an earnings season is usually a contrarian indicator. Since 2009, analyst sentiment heading into earnings season has been inversely correlated to how the market actually performs during the following six weeks of earnings season itself, according to Bespoke Investment Group research.

While analysts lowered estimates for 697 companies, they raised estimates for just 305 in the S&P 1500, the data shows.

A number of factors have contributed to the magnitude of analyst downgrades and revisions in the last month. The weather, low energy prices and currency headwinds from the have thrown a wrench in analysts' tabulations. Putting aside the reasoning for analysts' negative sentiment, Hickey suggested that setting the bar low might be exactly what the market needs to perform well.

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Hickey broke out the 17 quarters when analyst sentiment was negative since 2009, and found that the S&P 500 actually averaged a gain of 2.40 percent, and traded positively 82 percent of the time, during the six weeks of earnings season. In the seven quarters that analyst sentiment was positive, the S&P 500 averaged a decline of 1.18 percent, with positive returns only 43 percent of the time.

Potential for 'upside surprises'

So does this mean you should buy the least-liked stocks and hope for the best? Hickey said there are two places he would recommend investing based on this year's negative sentiment and the likelihood of an earnings surprise.

One opportunity is IBM. Hickey said the negativity in IBM has been baked into the stock since IBM's earnings miss in October of last year. Shares of IBM tumbled as much as 8.4 percent, as the company decided to abandon its five-year plan to boost profit. Warren Buffett notably lost more than $1 billion in the decline. Since October, Hickey said the stock has found support at $150.

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"All of the bad news is out on the stock," said Hickey. "I think you can see potential for some upside surprise."

IBM is expected to report on April 20 after the bell. Of the 30 analysts that cover IBM, only five have a "buy" rating on the stock.

Another opportunity is the Industrial Sector's Exchange Traded Fund, the . Hickey said the spread between positive and negative revisions for the Industrials sector has not been this negative since the second quarter of 2012.

"In the three quarters over the last six years where the revisions spread was more negative," said Hickey, "the sector was up in the following six weeks all three times with gains of between 5.3 and 9.4 percent."

Hickey pointed to stronger data out of Europe, and lower input costs, as catalysts of an earnings surprise this time around.