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Market Preview: Cautiously Optimistic

Stocks in this article: JPM WFC C BAC AMD SPY ^GSPC ^IXIC ^DJI

It's the lowest level since a 30.45% reading for the week ended August 3 and well below the long-term average of 39%. The AAII has about 150,000 members but doesn't disclose how many participate in its survey each week.

Bearishness swelled to 38.8%, a jump of 5.8 percentage points and the highest level since a reading of 43.1% for the week ended July 26. The neutral camp came in at 30.6%.

Thursday was a pretty disappointing day for stocks with the Dow Jones Industrial Average reversing course and dropping more than 100 points from its session high to close at the low. Apple (AAPL) resumed its recent decline, falling 2% to close at its lowest level since Aug. 10, while the Nasdaq has now retreated nearly 5% from its intraday high for the year. Yes, the S&P 500 eked out a miniscule gain to break a four-day losing streak, but that's not much of a consolation prize.

As for Friday's scheduled news, earnings season picks up steam Friday with two big banks opening the books before the opening bell, JPMorgan Chase (JPM) and Wells Fargo (WFC).

JPMorgan is still feeling the fallout from the London Whale debacle with the latest reports saying Chief Financial Officer Douglas Braunstein may on the way out. The average estimate of analysts polled by Thomson Reuters is calling for the Dow component to report a profit of $1.24 a share in the September-ended period on revenue of $24.53 billion.

A big subject for Wells Fargo will no doubt be the lawsuit the bank is facing for its mortgage practices related to the financial crisis. Wall Street is looking for earnings of 87 cents a share from the San Francisco-based company on revenue of $21.47 billion.

Wells shares are up nearly 28% in 2012, edging appreciation of 26% for JPMorgan. Guggenheim Partners is expecting big things from the large-cap banks this quarter. The firm has buy ratings on both Wells and JPMorgan with price targets of $43 and $50, respectively.

"We are forecasting 4% sequential growth in operating earnings per share this quarter, twice the current market expectation," the firm said. "This would represent the 7th positive quarterly earnings surprise since 4Q10. Furthermore, Large Cap Banks could hit post-recession new highs in profitability levels, as returns on tangible common equity could hit 14% this quarter."

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