This has been a strange earnings season.  We’ve seen plenty of companies report, but the headlines of the week’s beginning – Europe, economy, debt crisis – have overshadowed generally positive results.  This week especially is dicey for companies set to report, as the U.S. debt rating is in question and the July jobs report is coming on Friday.

We’re looking at earnings plays with a bearish eye, as the path of least resistance for stocks appears to be lower.  One company that looks vulnerable is General Motors (NYSE:GM), which reports on Thursday before the open.  There isn’t much data on GM’s post-bankruptcy earnings history to work with,  but we do know that rival Ford (NYSE:F) beat on both the top and bottom lines, yet the stock fell to a 2011 low last week.  Pricing and supply issues are restraining growth, and continued signs of a wobbly economy aren’t helping the auto makers.

On the chart, GM has been stair-stepping lower throughout 2011.  The shares are down nearly 25% for the year and hit an all-time low last Friday.  Granted, the new shares of GM have been around only since last November,  but this is a weak stock that is vulnerable to a weak economy.

The real worrisome aspect to this trade, however, is the surprisingly bullish sentiment the Street is displaying toward GM.  It’s frankly shocking that 12 of 15 analysts rate the stock a buy (the other three are holds).  It’s hard to believe these analysts are looking at the right chart.  In addition, short interest is unimpressive, and the put/call ratio is in the middle of its recent range.  Anything but outright skepticism is misplaced sentiment in our book.

With the market teetering and plenty of landmines ahead, the bearish path is the preferred choice, especially on underperformers such as GM.  It’s difficult to see much to like about this stock, especially with analysts already so bullish.   Look for a big drop on Thursday.  Buy the Aug 29 put for around $1.50.

Have a great trading week.