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Market Preview: Plenty of Warnings

Levkovich was already looking ahead to the fourth quarter too, saying it's "implausible" to think corporations will be able to meet current Wall Street expectations.

"The good news is that investors already believe that projections are too high," he said, adding that earnings calls this time around are likely to be rife with executive obfuscation.

"The US election and the components of fiscal cliff resolution may contribute to a lack of management confidence in corporate conference calls," Levkovich said. "Various reports, from the Business Roundtable to the National Federation of Independent Business, all suggest that Corporate America is worried about the economic outlook and this concern should make leaders reluctant to overpromise much for the next several months. Indeed, this anxiety should not come as a surprise given the political inability to address the tax/spending issues until after the Presidential elections."

Judging by Monday's action, investors are still feeling skittish. Yes, September's ISM index was the strongest reading in four months but all it took was Federal Reserve Chairman Ben Bernanke stating the obvious to knock stocks off their early perch.

Just because there have already been so many warnings and the expectation is for earnings growth to be negative, that doesn't mean the decline won't be deeper than even these red flags indicate. After all, what if Apple (AAPL), the other savior for stocks, isn't able to blow away the monster expectations for the iPhone 5?

The early rush to buy the smartphone was apparently underwhelming -- judging by the stock's reaction -- and a rare misstep with its Maps application as well as supply issues seem to have taken some of the shine off Tim Cook's tech colossus, which has now lost ground in five of the past six sessions after Monday's 1%-plus decline.

"Our checks of 237 Apple stores suggest continued solid demand for iPhone 5, and we have not seen any data points that suggest a more severe supply constraint than originally assumed," said Citigroup, striking a more measured tone than sell-side research on Apple typically takes. "Apple shares have modestly underperformed since 9/24 (-5% vs. -2% S&P500) on lower-than-expected, first weekend iPhone 5 sales, which we believe was more of a supply issue. 74% of Apple Retail Stores we contacted last week had no iPhone 5 units in stock at the time. Some investors are concerned by iPhone 5's LTE coverage in Europe potentially hampering demand. While its limited coverage is factually correct, the actual impact on iPhone 5 adoption should be limited."

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