Stephen Frankola sends: The markets are teeter-tottering daily as economic and corporate data test the confidence of investors worldwide.

Coupled with Fed cuts, statements, and meetings, as well as a slew of economic data, the earnings season injects even greater unpredictability into the market.

Here’s three of my predictions, justifications, and analysis for three major companies releasing earnings after the bell today:

-VMWare (VMW) will probably be headed lower after releasing earnings today. They currently sport a 70 forward P/E; without a major beat, Wall Street will not be able to continue to justify such a lofty valuation. Odds are, VMW may beat but fail to impress Wall Street. I wouldn’t be surprised to see a 10-20% haircut if that’s true; just look at Apple’s (AAPL) fall after lower-than-expected guidance. However, if they manage to blow out and revise upward, it’ll be a major boost of confidence in the economy. I think the first situation is much more likely.

-American Express (AXP) may report a good quarter, but in their call, I bet that they cite some unpredictably in the future because of a weakening economy at home. I think AXP is a solid company that may be unfairly beaten up if the report is somewhat cautious.

-Sandisk (SNDK) may be a bright spot in the reports today. This quarter may be good, as many flash-memory-using devises (iPods, phones, other MP3 players, etc.) seemed to sell well during Christmas, but more importantly, I think they’ll affirm a quickly growing demand for their memory in lots of devices. The first flash-memory-based computers are just coming out now; in three years, flash will be the standard storage medium. I think a bright future forecast will propel SNDK out of it’s current hole.

With the possibility of cautious or negative reports from major companies, the markets may be in for a wild day tomorrow. If things go better than I expect, the case for a market bottom will strengthen.

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