Retail giant JC Penney (NYSE: JCP) reported its first quarter numbers this morning, and reported that the current economic environment led to a pretty hefty 50% drop in its net income.

The company stated that the cut back in consumer spending was to blame for the drop in net income, and predicted that the tough times were far from over. In its earnings report, the company estimated that the difficult times could easily last for the remainder of the year.

Despite the 50% drop in income, and poor business outlook for the rest of the year, the stock is actually in the green today, as traders have pushed shares of the retailer up 1.7% to $45.01, up $0.76. The reason... the company was able to beat Wall Street estimates.

Fossil Inc. (NASDAQ: FOSL) shares are falling today after the company forecast a second-quarter adjusted profit of 29 cents per share, just below analysts' estimates of 30 cents per share. FOSL also forecast sales between $341.1 and $347.5 million, missing analysts' estimates of $352.4 million. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on FOSL.

After hitting a one-year low of $24.81 in August, the stock hit a one-year high of $46.25 in December. This morning, FOSL opened at $34.46. So far today the stock has hit a low of $33.33 and a high of $35.65. As of 1:15, FOSL is trading at $33.98, down $3.27 (-8.8%). The chart for FOSL looks bullish and deteriorating slightly, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.

For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in four and a half months as long as FOSL is below $45 at September expiration. Fossil would have to rise by more than 33% before we would start to lose money. Learn more about this type of trade here.

Shares of wireless carrier Sprint Nextel Corp. (NYSE: S) are plunging after the company reported a large first quarter loss this morning. The company posted stronger-than-expected adjusted earnings, but this was not enough to reassure investors who pushed the stock down more than 3%.

Sprint Nextel posted a quarterly loss of $505 million, or 18 cents per share, compared with a loss of $211 million, or 7 cents, in the same period a year ago. Its quarterly numbers were dragged down by losses of more than 1 million subscribers and severance charges. However, excluding one-time charges, the company would have earned 4 cents. Analysts had expected earnings on that basis of only 2 cents per share, according to Thomson Financial. Revenue tumbled 7.5% to $9.3 billion, well below expectations of $9.4 billion.

It has been a tough year for investors. We have been dealing with recession fears, housing market worries, high gasoline prices and a very weak U.S dollar. As much as we would love to say that the worst is behind us, we still could be in for some more rocky times ahead. So its best to try to figure out which stocks would be best to avoid for the time being.

Richard Gibbons wrote up a nice piece over on The Motley Fool that looks at some of the stocks that we would be wise to stay away from at this time. Regardless good or bad times, he is convinced there are always ways to make money, but in order to find the winners, it is also necessary to pull out the losers.

So how can we separate out the winners from the losers?

Gibbons seems to have a simple answer for this. He believes there is really no use in wasting our time trying to separate the winners from the losers as there are so many great cheap stocks that could offer us a chance to make money. Gibbons' advice is to not choose ugly and risky companies that could put our hard earned money at risk. To makes this clear, he uses a baseball analogy, expressing his options for the curve balls instead of the fastballs.

Tomorrow afternoon Walt Disney Co. (NYSE: DIS) will be answering Wall Street's questions about the strength of its US amusement parks when it reports its second quarter earnings.

The last time that Disney reported earnings was February 5, when the company topped analysts' estimates of 52 cents per share by a whopping 11 cents.

This time, analysts expect earnings of 51 cents a share on sales of $8.51 billion, compared with 43 cents and revenue of $8.07 billion a year earlier. Sales are expected to decline year-over-year as a result of the weak market conditions hurting Disney's theme parks, particularly its Walt Disney World in Florida.

Health insurer Cigna Corp. (NYSE: CI) reported a plunge of 80% in first-quarter profit this morning. The results were dragged down by deep charges related to its reinsurance business and litigation. The company missed analysts' earnings targets, and also issued a warning for its full-year earnings, sending its shares down in premarket.

For the quarter, Cigna said that its profit dropped to $58 million, or 21 cents per share, compared with $289 million, or 98 cents, reported in the same period a year ago. Excluding one-time items, the insurer's earnings numbers would have come at 94 cents per share, one cent below the average estimate of analysts, according to Thomson Financial .

Looking at revenue, Cigna posted a rise of 4.5% in the quarter on a year-over-year basis. Analysts had been expecting to see revenue of $4.55 billion, while the actual number was slightly higher, at $4.57 billion. The company said that the number of clients who joined its health plans jumped 5.5% to 10.4 million.

Tomorrow afternoon, Starbucks (NASDAQ: SBUX) will be joining the earnings parade when it reports its second quarter numbers.

The last time that the company reported earnings was on January 30, when the company beat analyst expectations by a penny, posting 29 cents a share. But that was still not enough to get buyers enthusiastic about the stock.

Shares have fallen around 13% since then. This time around, analysts are looking for the company to show earnings of 15 cents a share.

Under Armour, Inc. (NYSE: UA) shares are falling after the company reported a first-quarter profit of $2.9 million, or 6 cents per share, beating analyst forecasts of 3 cents per share. However, the company also lowered its 2008 profit forecast to between $103.5 million to $104.5 million, from a previous estimate of $108.5 million to $110.5 million, which is giving investors reasons to worry. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on UA.

After hitting a one-year high of $73.40 in August, the stock hit a one-year low of $25.32 in January. This morning, UA opened at $34.54. So far today the stock has hit a low of $33.80 and a high of $36.87. As of 11:55, UA is trading at $34.89, down $3.69 (-9.6%). The chart for UA looks neutral and deteriorating, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in seven weeks as long as UA is below $45 at June expiration. Under Armour would have to rise by more than 29% before we would start to lose money. Learn more about this type of trade here.

After the world's largest credit and debit card processor, Visa Inc. (NYSE: V), reported earnings last night, today was its main competitor MasterCard Inc.'s (NYSE: MA) turn to step up to the plate. The company posted quarterly earnings figures that topped analysts' expectations, pushing its shares up 10% in morning trading.

MasterCard reported that its first quarter profit more than doubled to $446.9 million, or $3.38 a share, helped by gains from the sale of its investment in Redecard S.A. in Brazil. The weak dollar and more customers who used their credit and debit cards for purchases also boosted the company's earnings.

Included in MasterCard's earnings was 37 cents a share related to the terminating of a customer business agreement. Excluding that, the credit-card giant posted earnings of $3.01 a share, exceeding analysts' estimates for a profit of $2.00 a share.

Shares of Internet security company McAfee Inc. (NYSE: MFE) have been tumbling after the company reported yesterday after the market closed that its first-quarter profit slipped 27%, hurt by higher expenses related to product development and marketing. The world's second-largest security software maker also slashed its full year earnings guidance, prompting investors to pull the stock down in morning trading.

McAfee said its profit dropped during the first quarter to $31.6 million, or 19 cents per share, compared with $43.4 million, or 27 cents per share reported in the same period a year ago. Excluding one-time items, the company's earnings would have come at 43 cents per share, missing analysts' predictions for a profit of 45 cents per share in the quarter.

The second-biggest maker of security software did post a respectable growth of 17% for its first-quarter revenue which jumped to $370 million. This was above analysts' predictions for quarterly revenue of $352 million, according to Reuters Estimates. However, McAfee's operating costs during this period also increased to $226 million.

Tech giant Apple Inc. (NASDAQ: AAPL) reported its fiscal second quarter numbers this afternoon, easily beating out Wall Street estimates for the quarter.

Analysts had been expecting the company to report earnings of $1.07 a share, and the company actually reported earnings of $1.16 for its most recent quarter. Sales came in way above estimates as well, with a reported $7.51 billion, exceeding the $6.964 billion analysts had been looking for.

Today's report should help wipe any concerns that the current economic slowdown in America is negatively affecting the company's business.

Shares of the world's largest payment transfer company, Western Union Co. (NYSE: WU), have been rallying in today's trading after the company reported a strong quarterly profit, helped by favorable exchange rates that lifted international business. Strong growth came especially from India and China, but the domestic market too provided significant revenue growth on higher demand for electronic bill payment services.

For the quarter, Western Union said that its profit jumped 7% to $207 million, or 27 cents a share, helped by strong gains from its international business. These numbers are up from $193.2 million, or 25 cents a share, reported in the same period a year earlier. Included in the company's earnings figures was $24 million related to restructuring charges. Excluding that, Western Union's earnings would have come at 29 cents per share, exceeding analysts' forecasts for a quarterly profit of 28 cents a share.

Western Union posted a respectable growth of 12% year-over-year, climbing to $1.3 billion. During the period, Western Union benefited from the slumping dollar, a major driver for its international business. Analysts expected the company show revenue of $1.24 billion in the first-quarter, according to Thomson Financial.

Despite a tumbling economy where recession fears gain ground each day, the good times are rolling for coal producer Arch Coal Inc. (NYSE: ACI) which reported this morning that its first-quarter profit nearly tripled. For this period, the company counted strong demand and higher fuel prices. Wall Street expressed enthusiasm over its surprising earnings numbers by pushing the stock to a new 52-week high.

The coal producer said its profit increased during the first quarter to $81.1 million. This is a significant jump from the same period of last year when the company reported a profit of $28.7 million. Arch Coal posted quarterly earnings of 56 cents per share, topping analysts' predictions for earnings of 46 cents per share.

Taking a look at the company's quarterly revenue, we see a growth of 22% to $699.4 million as prices have almost doubled during the past year. The company also said it sold 34.3 million tons of coal in the first quarter compared with 31.4 million tons in the same period a year ago. Analysts had forecast $686.8 million in revenue, according to Thomson Financial.

Shares of heavy equipment and engine manufacturer Caterpillar Inc. (NYSE: CAT) have been soaring in morning trading after the company reported a growth of 13% for its first-quarter profit, helped by strong international sales. The company offered the perfect example of the international growth importance.

The company said its quarterly profit surged to $922 million, compared with $816 million a year earlier, boosted by strong global gains that offset weakness on highway truck markets in North America. Caterpillar posted earnings $1.45 per share, exceeding analysts' forecast for a quarterly profit of $1.33 per share.

Total sales for the company rose by a respectable18% year over year to $11.8 billion, beating analysts' expectations by $1 billion, according to Thomson Financial. This was mainly because the heavy equipment maker benefited from a rise of 30% in international sales, while North America revenue came with a small increase of only 4%. The results proved continued weakening in North America, where sales have been under pressure from the sluggish economy, but strength internationally where the weak dollar lifted the company's sales.

Reliance Steel & Aluminum Co. (NYSE: RS) shares are falling despite a positive Q1 earnings announcement after the company forecast a second-quarter profit between $1.50 and $1.60 per share, less than analysts' estimates of $1.66 per share. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on RS.

After hitting a one-year low of $39.91 in August, the stock hit a one-year high of $64.27 yesterday. This morning, RS opened at $61.90. So far today the stock has hit a low of $59.75 and a high of $63.95. As of 12:20, RS is trading at $62.11, down 2.16 (-3.4%). The chart for RS looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a May bear-call credit spread above the $70 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in one month as long as RS is below $70 at May expiration. Reliance would have to rise by more than 13% before we would start to lose money. Learn more about this type of trade here.

RS hasn't been above $65 at all in the past year and has shown resistance around $65 recently. This trade could be risky if today's earnings do not hold the stock down, but with a slumping economy, times do not look too good for steelmakers.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in RS.