The Market's Precarious Position

Earnings season is upon us (more on that below), and the market indices are once again at a vital juncture. Thursday's session was all negative all the time as the jobs number proved disappointing.

The market continues to defy gravity, but now may be an important inflection point. Do the bulls have the muscle and the power to keep this rally moving or will the bears taken center stage and push the markets lower?

Stimulus From Earnings? Not So Sure

Some earnings will prove decent, but most will be a disaster. The second quarter of 2008 is going to be a hard number to beat for many firms. Even though many estimates have already been adjusted we will not see anything close to last year's earnings. The truth will come in expectations and whether anyone wants to step up and take the lead.

A smattering of earnings have shown some mixed results so far, and this pattern won't likely change. Energy is up significantly this quarter, and those names should post decent earnings. Tech also seems rather immune to the consumer meltdown, while retailers have discounted the Armageddon scenario but may be ahead of themselves.

( Alcoa (AA) will kick off the earnings season for the Dow with its report after the market close on Wednesday. Other earnings this week include Ruby Tuesday (RT), Family Dollar (FDO), Pepsi Bottling (PBG), 3Com (COMS), and Infosys(INFY).

Surprises Around Every Corner ... Still

The market is still showing a high level of complacency, and this will eventually have to change. The VIX is at levels not seen since before the Lehman disaster, so is risk to be tolerated now? I wonder about many of the "surprises" that can/will pop up out of nowhere.