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UPDATE: Using Goldman As Roadmap For Other Banks

Bank earnings are garnering a lot of attention with Bank of America and JPMorgan reporting late this week. Can the financials lead the next leg higher?

There is some evidence of momentum, granted the momentum is modest.

But second-quarter earnings for financial companies are projected to be slightly improved, down 55 percent from a year ago, compared with a decline of 63 percent in the first quarter, according to Thomson Reuters' data.

And the bullish case gained a little more traction after Goldman Sachs said quarterly earnings surged 33 percent, trouncing expectations.

Considering Bank of America and JPMorgan report later in the week, what can you glean from Goldman results as you game earnings that lie ahead?

I think there are three things to walk away from the Goldman earnings that can be applied to other banks, says Jeff Harte of Sandler O’Neil.

1) Goldman is best in breed
2) Strength in investment banking trading suggests peers will have better capital markets than expected
3) Commercial real estate remains a drag

So what’s the bank trade?

Personally, I would not commit new money to Goldman at these levels although I think they’re a great compay, says Tim Seymour.

If Goldman pulls back to around $140, I’d get long, says Pete Najarian.

I think the bank trade is short JPMorgan with a stop above $35.25, counsels Guy Adami.

In the options market, I’m seeing out of the money call buying in the XLF , adds JJ Kinahan of Think or Swim on Fast Money's Halftime Report. I think Goldman has given hope to investors that maybe banks can beat expectations and that the markets are functioning as they should.

I would take profits in banks, counters Patty Edwards of Storehouse. They've run quite a bit.

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Trader disclosure: On July 14th, 2009, 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); Seymour Owns (AAPL), (BAC), (GE), (VIP); Terranova Owns (TER), (RIMM), (MSFT), (SUN), (FTO); Najarian Owns (CSCO) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (INTC) Call Spread; Najarian Owns (JNJ) Calls; Najarian Owns (JPM) And Is Short (JPM) Calls; Najarian Owns (MCD) Call Spread; Najarian Owns (MS) Call Spread; Najarian Owns (NVLS) And Is Short (NVLS) Calls; Najarian Owns (STI) Call Spread; Najarian Owns (XLF) Call Spread; Najarian Owns (YHOO) Call Spread

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Hughes And Her Clients Own (DIOD), (ITRI), (FTEK)

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Sandler O'Neill Recvd. Inv. Bank. Comp. From (C) In Past 12 Mos.
Sandler O'Neill Expects To Receive or Seek Inv. Bank. Comp. From (BAC), (JPM), (C) In Next 3 Mos.
(
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(GS) Is A Non-Inv. Bank. Client Of Sandler O'Neill

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