Market Preview: Clouded by Question Marks

Complicating matters for investors is that the 2012 election is looking exceptionally hard to predict, observed Tobias Levkovich, the firm's chief U.S. equity strategist.

"Intriguingly, it does appear that the outcome is far from certain, with polls suggesting that, while President Obama has the edge currently his lead has dwindled into the margin of error, with critical swing states such as Ohio, Virginia and Florida still very much in play," he wrote. "Indeed, most political pundits see the election's final result as coming down to roughly 10 highly contested states."

Levkovich also provided a breakdown of what sectors should benefit from which candidate's victory. Another four years of Obama would likely be a positive for "alternative energy, generic pharmaceuticals (as a result of their lower cost relative to more expensive branded drugs), the technology industry and the entertainment or media complex," he said.

If the former Massachusetts governor wins, Levkovich said "theoretical Romney stock winners would include health care, defense, financial as well as energy and mining entities, not to mention utilities. With respect to managed care stocks, we suspect that multiple expansion would ensue if Romney were to prevail."

The so-called fiscal cliff, though, remains a wild card and Levkovich expects the uncertainty to build over the next two months.

Since May, he has maintained "no apparent resolution to the fiscal cliff was plausible before the elections since both sides had ideological considerations that prevented any compromises which would potentially dishearten their core voter bases. There is little reason to change that perspective now and especially in light of a tight race where voter turnout is being cited as the possible difference maker."

As for Wednesday's scheduled news, the earnings calendar includes Dollar General (DG), FuelCell Energy (FCEL), H&R Block (HRB), Korn/Ferry International (KFY), Men's Wearhouse (MW), Sycamore Networks (SCMR), and VeriFone Holdings (PAY).

Apple's direction on Wednesday will also be of interest as investors begin to position themselves in earnest ahead of the company's now-confirmed big event on Sept. 12. The big to-do is widely expected to be the launch of the iPhone 5, and Wedbush Morgan boosted its price target on the stock to $885 from $800 ahead of the confab while reiterating its outperform rating and lifting earnings estimates.

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