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Google, Other Market Dogs Kick Off Earnings

The marquee companies set to report second-quarter earnings next week, including Google , JPMorgan Chase and General Electric , have underperformed the market in the three months leading up to this earnings season. That’s not necessarily a bad thing.

“The underperformance led analysts to keep lowering estimates,” said Pete Najarian, co-founder of OptionsMonster.com and TradeMonster.com. “The bar has been set so low now that you can expect some surprises from these underperformers.”

Google, JPMorgan, and GE are all down more than the 10% drop in the S&P 500 Index over the last three months. Alcoa , the first major company to report, is down a whopping 24%. Najarian, who is also a Fast Money trader, is looking at JPMorgan and GE to surprise, but is avoiding Alcoa.

Stocks rebounded this week in anticipation of some positive surprises next week that will justify a higher valuation for equities. Google, which caught a bid in the middle of the week from some value investors, jumped today after China renewed its Web page licenses.

“Financials bore the brunt of analyst pessimism over the past month,” noted Charles Blood, Brown Brothers Harriman equity strategist, in an earnings preview report this week. “The second quarter situation is certainly a setup for prospective upside surprises, albeit less aggressive than stellar readings achieved in the first quarter of 2010.”

To be sure, Brown Brothers Harriman points out that investors and analysts alike are flying a bit blind going into these reports, as fewer companies gave second quarter guidance. Just 65 S&P 500 companies provided early guidance, much less than the 92 and 100 that did leading up to the previous two earnings seasons. Macroeconomic concerns out of Europe and China have led companies to stay tight-lipped until they get a firmer grip on the situations there.

One interesting side note: This is an unusually active first week for an earnings season. Typically, a few other companies join Alcoa and that’s it. Now Google, JPMorgan and Intel are jumping into the early fray.

This means the trend for earnings season, whether positive or negative, could be established much earlier than usual. So get your trades in early, as it typically gets harder as earnings season drags on because investors and analysts extrapolate the trend from the early results to the companies that have yet to report.

For the best market insight, catch Fast Money each night at 5pm ET, and the Fast Money Halftime Report each afternoon at 12:30 ET on CNBC.

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Trader disclosure: On July 9, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (CSX) Call Spread; Najarian Owns (ALTR) Call Spread; Najarian Owns (TCK); Najarian Owns (CNI); Najarian Owns (DD) Call Spread; Najarian Owns (AKAM) Call Spread; Najarian Owns (XLNX); Najarian Owns (CELG); Najarian Owns (TEVA); Najarian Owns (PFE; Terranova owns (GOOG),(AMZN),(MON),(APC),(GMCR),(MYL),(MRVL),(BAC) ,(ADI),(ADBE),(AKAM),(HES),(CVS),(AXP),(EMC),(ABT); Grasso owns (ASTM), (ABK), (BAC), (BGP), (C), (CSCO), (DYN), (JPM), (LPX), (MO), (NDAQ), (PFE), (PRST)

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