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How to Trade This Week's Earnings

MINNEAPOLIS (Stockpickr) -- Without knowing any better, one could look at the market returns for the past week and think that nothing much happened. A fractional net loss for the period masked significant volatility that traders could exploit for quick profits.

In reality, there was much going on, much of it confounding to the so-called experts. Stocks traded down hard one day and up significantly another. The rest of the time was spent recovering, not knowing which way we were headed.

For those looking for clues, my earnings preview can serve as playbook for the week ahead. In fact, last week one of our suggested plays would have netted double-digit gains.

>>Also: 5 Stocks Insiders Predict Will Outperform the Market

Urban Outfitters (URBN ) kicked the week off with earnings that beat estimates by a penny. I suggested that investors should trade expecting strong numbers to push shares higher. Sure enough, that penny beat, despite a decrease in gross margins, was enough to push Urban Outfitters to a gain of 10% for the week.

Nordstrom (JWN) reported earnings after the bell on Monday. The company actually beat expectations for the period, but its guidance for the year was less than what analysts expected. On Tuesday, shares of Nordstrom fell by 4.5%, taking some of the steam out of a stock that had been steadily higher just as I had predicted.

Last, but certainly not least, was the disaster that was Central Garden & Pet (CENT). I told traders to be careful with this value trap, with the most likely outcome being an earnings miss. I did not expect the miss to be as significant as it what transpired.

>>Also: 10 Banks With Real Earnings Improvement

After the market close on Thursday, Central Garden posted a loss of 2 cents excluding items. Analysts were predicting a profit of 14 cents. Shares plummeted to a 13% loss on Friday.

Where will the action happen this week? The market itself may be in a state of flux, but there is always action, and looking at the earnings calendar is a great place to start. Here are my thoughts on this week's companies scheduled to post results.

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