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Though in dribs and drabs at first, earnings season is about to get under way.

There's been a bit of nervousness in the market over the second-quarter numbers. There's a sense that if the

Federal Reserve

really is accomplishing its goal of slowing the economy, then that slowdown should affect corporate profits. Moreover, during the confessional period that precedes reporting season, several high-profile companies warned that they could not match Wall Street estimates. Among them,

Goodyear Tire

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First Union



Computer Associates

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Nevertheless, the numbers should be pretty good, according to


equity strategist Joe Kalinowski. "The confession season, aside from all the press we've been seeing, has been pretty quiet," he said.

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About 65% of the second-quarter preannouncements have been negative, notes Kalinowski. Typically, around 80% of preannouncements are negative. When the pace of negative preannouncements is slower than usual, companies tend to beat estimates by wider margins than usual. Second-quarter

S&P 500

earnings will grow by about 17% over last year, according to Wall Street estimates, but Kalinowski reckons the actual number may come up to 18% or 19%. Not as white-hot as the first quarter, but still pretty blistering.

Though most strategists think the numbers will come in good, some worry about what companies may say about their third-quarter outlooks. The recent warnings by Computer Associates,

BMC Software



Entrust Technologies

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fanned those concerns.

All three are enterprise-software companies, and their revenue stream typically follows what's known as a "hockey-stick" pattern: slow sales through the first two months of the quarter, huge sales in the last month, particularly the last week. It makes the companies vulnerable -- customers know about the hockey stick, and will hold out for bargains. And it may be that these companies had problems simply because their customers got aggressive with them. (


Adam Lashinsky

took an in-depth look at the hockey-stock pattern in a recent


Or it may be something more. If the economy really is slowing, then maybe June was slower than May was slower than April. And maybe these companies, which book so many of their sales in June, got hurt more than others. Or maybe customers started worrying about business in the third quarter and cut back on sales.

Any way to know this for sure? Not yet. But it's interesting that Tom McManus, the equity portfolio strategist at

Banc of America


was warning a couple of weeks ago about how companies with hockey-stick quarters might get hurt by the cooling economy.

"I don't know if there are any particular earnings disappointments that would confirm that I was right," said McManus, "but you can see these things coming."

When thinking about how customers have dealt with companies, it's useful to think about the experience people have when travelling, explained McManus.

"When you fly do you always get an aisle seat? What happens when you get a middle seat? You start to build up a store of resentment," he said. "Inevitably, when demand starts to slow, you're going to remember. When you sense your bargaining position is starting to improve, you're going to take into account all those perceived slights, all those middle seats. This is business. This is human nature."

In general, McManus reckons that companies may run into some challenges in the third quarter. Not only must they vie with an apparently slowing economy, they have to deal with the high cost of energy. Power costs, and recent brownouts, are a particular cause for concern.

"I pay more for my electric service than I do for my cell service, but I could sure do without my cell service more than I could live without my electric service," said McManus. "All of us use power in some way, including the manufacturing companies that are this country's economic base and provide a lot of the employment. If some company is subject to alternating brownouts and its machinery doesn't work properly, I could see how they might send employees home." And that is a double blow, because not only is the company less profitable, but the confidence of its workers has been sapped. They won't spend as much.

Yet for all those concerns, the stock market might do pretty well for now. Just because there are signs business may slow in the third quarter does not mean that companies are going to stand up and testify to their fears -- at least not yet. Many technicians believe the major indices are at major resistance levels, and if those levels are breached there could be significant upside.

"Any bit of good news is probably enough to get us going here," said Bob Dickey, managing director of technical analysis at

Dain Rauscher

. "If we can break this thing out, it would really cook for a while. Maybe the earnings reporting season will be enough to do it."