Earnings Surprises -- Why Should They Matter?

Upside surprise No. 2, Philips (PHG - commentary - Trade Now), doesn't seem to do anything more than upside surprise No. 1, Alcoa (AA - commentary - Trade Now). That's right, we got a quick run-up for Philips when it reported a nice profit, but no follow-through from the rest of the markets in Europe after this electronics company reported.

Why should there be, though? Philips might as well have said "this profit is a sham" from the commentary it put out --more firings, numbers down huge from last year, terrible outlook.

But, get this. One of the analysts quoted in an excellent Bloomberg story this morning says something that states precisely where we are and why this stock is up: AT LEAST THEY GAVE AN OUTLOOK.

After four weeks of drift down I would say the consensus that is building around me is that we are done with drifting, and now it's time to get hammered.

I have said on my show and written here that I think going into earnings season having been down for four straight weeks is actually good news as we know that earnings season almost never creates a healthy investment climate because we have usually run up before the season begins.

Still, the possibility that the Philips good news is only good for Philips I am sure makes the bears want to growl and ignore the possibility that earnings report No. 3 of consequence, Novellus (NVLS - commentary - Trade Now) -- expected after the close tonight and another one I expect to be good -- won't matter either.

At the time of publication, Cramer had no positions in any stocks mentioned.

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Know What You Own: Cramer mentioned semiconductor company Novellus. Related companies are Applied Materials (AMAT - commentary - Trade Now), Axcelis (ACLS - commentary - Trade Now), Mattson (MTSN - commentary - Trade Now) and Tegal (TGAL - commentary - Trade Now).

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