Coming Week: Don't Get Fooled Again

"Specifically, what I will be watching for are reports about overseas sales and guidance for the remainder of the year," says Gayle.

One thing he is concerned about is possible softness coming out of Europe. The weakening dollar has been boosting profits at some multinational corporations, but as the greenback has stabilized recently, the question going forward is how much more can they grow if overseas economies weaken?

Additionally, market observers will want to take a look at earnings from telecom giant Verizon (VZ Quote) and tech firms EDS (EDS Quote) and Motorola (MOT Quote).

Homebuilder Centex(CTX Quote) also reports next week, as do pharmaceutical company AstraZeneca (AZN Quote) and credit-card processors MasterCard (MA Quote) and Visa (V Quote).

Notable earnings releases in the commodities and energy space include reports from Barrick Gold (ABX Quote), U.S. Steel (X Quote), Exxon Mobil (XOM Quote), Chevron (CVX Quote) and International Paper(IP Quote).

"The energy stocks are going to garner a lot of headlines [because of their high profits], but I am not sure we'll get a lot of useful information," says Gayle. "Politically it's going to be a painful time for them."

When looking at the earnings reports, investors and traders alike would do well to beware of company officers low-balling analysts with their outlooks for the next period in the hope of exceeding expectations at a later date. Such statements can hurt the stocks in the short term.

"There has been a very strong tendency to guide us to very low numbers in the next quarter," says Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors in Albany, N.Y. "The question is whether you believe them."

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting