MINNEAPOLIS ( Stockpickr) -- Traders rely on volatility in order to generate rapid-fire profits. Typically, some sort of macro or micro event is needed for investors to push a stock higher or lower in price in a short period of time. One such event that reliably generates volatility is earnings.

Rightly or wrongly, when a company releases earnings for a period, investors react to the news. In some cases, these reactions can be quite strong and drastic. Building up to the event creates all sorts of speculation as to the results.

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Wall Street analysts fine tune their spreadsheets in hopes of predicting exactly what a company will make. Whispers leading up to the event add more color to the story. When the numbers finally come, the market is primed like a pump ready to explode.

Beating or missing the number is a part of the equation, but so too is the guidance for the future. There is simply a little bit of everything and a whole lot of something that gets investors' attention when companies report results.

It is a perfect environment for traders who can accurately predict behavior and use it to ride the waves.

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In the coming week, there are several companies from the retail sector that are reporting results. Here is my take on a few of those stories:

Urban Outfitters ( URBN) The hip clothing store for the younger generation reports earnings for the quarter ending Oct. 31 today after the closing bell. The current estimate is for the company to make 42 cents per share. The company has beaten estimates in each of the last four quarters, with the largest beat coming in the January quarter, when Urban Outfitters beat by 5 cents.

The estimate for the current period has been dropping slightly over the last few months. Those lower estimates are a direct reflection of the sense that the economy is not growing as strongly as hoped. During that same time, shares of Urban Outfitters fell below $30.

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In the last few weeks, the stock has recovered along with the rest of the market. The current sense is that retail sales are holding up better than expected. It is reasonable for investors to assume that the company will exceed expectations when results are released on Monday.

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