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) -- Monday's


bounce was nice but investors shouldn't get too comfortable just yet.

In fact, this latest round of rhetoric about the importance of keeping Greece in the eurozone, which gave the rally some added oomph, may have actually provided the troubled country with more reason to buck against its benefactors.

"It now appears to us that the Greeks are playing 'chicken' with the other Eurozone countries, believing it's worth bluffing for better terms," wrote Sam Stovall, chief equity strategist at

S&P Capital IQ

, in commentary earlier on Monday. "Indeed, since austerity and default are equally painful, the Greeks may have already come to the conclusion that default will end up being a cheaper and quicker solution to their debt problems."

Deutsche Bank, though, argues that European banks are now "better prepared" for Greece's problems, and the firm thinks the next big 5%-plus move in the

S&P 500

is more likely to be to the upside than further down.

"Policy investors (EU/ECB/IMF) now hold about 80% of Greek sovereign debt.," the firm said. "European bank exposure to all Greek debt has been halved from about ¿140bn in March of 2010 to about ¿70bn in December 2011. More importantly,ECB liquidity commitments and bank recapitalizations underway should avoid funding panics. For banks, liquidity buys time and time buys solvency."

With the U.S. economy on firmer footing than it's been in the past few years and Japan's post-earthquake economy in growth mode, Deutsche Bank expects a "relief rally" to materialize as the outlook for second-quarter earnings improves.

"Two key early reads on 2Q non-financial earnings were solid," the firm said. "In April, Industrial production increased by 1.1% pushing capacity utilization to a post-recession high and Mfg

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manufacturing ISM improved to 54.8. This suggests continued sequential S&P 500 EPS growth."

Deutsche Bank also provided some perspective on the severity of the recent market weakness, which has been relentless over the past two weeks.

"Selloffs of 5-10% are quite common, but only 1 out of 3 turn into a full10%+ correction," the firm said. "We don't expect a sharp correction as our EPS outlook remains intact. Rebounds can be sudden and powerful. Since 1960, the avg 6- mo. return from a 10%+ correction not followed by a recession was 18.3%."

Citigroup was growing incrementally more positive on the broad market as well, saying several factors suggest "the worst may be over." But the firm expects stocks to stay in a tight trading range "given major uncertainties around European economic woes, the US fiscal cliff and peak-like corporate profit margins."

"Investors are worried that further declines are probable as feared outcomes such as 'Grexit,' contagion out of Europe, a Chinese hard landing and an almost dysfunctional U.S. legislative process drives a more meaningful global pullback," wrote Tobias Levkovich, the firm's chief U.S. equity strategist. "Indeed, some are calling for another recession to emerge that can crush earnings and thereby the stock market. Yet, lead indicators such as credit conditions do not support that view though exogenous shocks could derail more plausible prospects. Moreover, implied earnings growth and relative valuation appear to protect the S&P 500's downside."

The specter of more central bank support is also a factor, Levkovich said.

"The risk of being short the market at this juncture in the face of a possible LTRO III or QE3 actions may negate the benefit of such strategies as the old adage 'never fight the Fed' comes to mind," he wrote. "While the S&P 500 might need to fall back to 1,250 (which would equate to a 12% correction) to compel a new domestic easing program, it would not suggest a very profitable trade from current levels."

As for Tuesday's scheduled news,


(DELL) - Get Dell Technologies Inc Class C Report

is reporting its fiscal first-quarter results after the closing bell, and the average estimate of analysts polled by

Thomson Reuters

is for earnings of 46 cents a share in the April-ended period on revenue of $14.91 billion.

Top-line growth has stalled out at the Round Rock, Texas-based PC giant, which has gotten aggressive about acquisitions of late. If the company delivers an in-line revenue performance this time around, it will be its first sub-$15 billion quarter in two years. The factors at work are manifold from the rapid adoption of tablets,


(AAPL) - Get Apple Inc. Report

grabbing market share with its Macs, and the economic unrest in Europe curbing demand.

In early April, Dell announced three deals, snapping up Make Technologies, Clerity Solutions and Wyse Technology. Those additions followed the acquisition of SonicWALL and AppAssure, and the company is sure to face questions on its conference call about what the grand plan is and how it all fits together.

The stock is up just 2% so far in 2012 and is down nearly 5% in the past year but based on Monday's regular session close at $14.97, it's down 18.5% since hitting a 52-week high of $18.36 on Feb. 21. The valuation reflects the weak momentum of the business with Dell shares trading at a forward price-to-earnings multiple of 6.7X; although that's still more pricey than rival


(HPQ) - Get HP Inc. Report

, which is at 4.9X. HP, which is reportedly prepping deep layoffs, is slated to report its fiscal second-quarter results on Wednesday.

The sell side is split with 14 of the 30 analysts covering Dell at either strong buy (5) or buy (9), and the 12-month median price target at $20. Brean Murray is a bull with a buy rating and $21 price target but the firm acknowledged that "near-term catalysts could remain sparse." The firm the stock's valuation is attractive at current levels, which it said are very close to "trough" levels on a number of metrics.

"We're not yet concerned about April PC demand coming in softer than March because ODMs

original device manufacturers were expecting it, although we believe Europe has gotten off to a softer than expected May," Brean said. "While we believe risk to overall PC demand could exist beginning in the June Q/July Q, we believe concerns over Dell's March Q/April Q PC unit share is likely overdone."

For its part, Sterne Agee lifted its rating on Dell late last week to neutral from underperform, saying it sees limited downside in the stock at current levels.

"Shares have grossly underperformed, hitting our previous $15 price target, declining 17% since our downgrade in mid-February vs. a 2% decline in both the S&P 500 and NASDAQ in the same time period," the firm said. "

Our concern was that investor sentiment on DELL shares had gotten too positive and arguably complacent for a company where consensus is modeling essentially no revenue or EPS growth. With the sizable pullback in shares, we believe expectations have been reasonably reset."

Check out TheStreet's quote page for Dell for year-to-date share performance, analyst ratings, earnings estimates and much more.


(WSM) - Get Williams-Sonoma, Inc. Report

also reports on Tuesday, and Wall Street is looking for a profit of 32 cents a share from the San Francisco-based upscale home products retailer in its fiscal first quarter on revenue of $811.7 million.

The stock is down nearly 10% in 2012, personifying the old "sell in May and go away" adage with all that damage coming since it hit a 52-week high of $40.76 on May 3. The company has a streak of eight upside earnings surprises on the line, but the bears are in control with 19 of the 28 analysts covering the shares at either hold (16), underperform (2) or sell (1).

Companies reporting before the opening bell include


(AZO) - Get AutoZone, Inc. Report


Best Buy

(BBY) - Get Best Buy Co., Inc. Report


Cracker Barrel

(CBRL) - Get Cracker Barrel Old Country Store, Inc. Report


Express Inc.

(EXPR) - Get Express, Inc. Report

, and

Polo Ralph Lauren

(RL) - Get Ralph Lauren Corporation Class A Report


The late roster features

Analog Devices

(ADI) - Get Analog Devices, Inc. Report


Avago Technologies

(AVGO) - Get Broadcom Inc. Report





Collective Brands







(GES) - Get Guess?, Inc. Report





Take-Two Interactive

(TTWO) - Get Take-Two Interactive Software, Inc. Report

, and

Wet Seal



Tuesday's economic calendar features existing home sales for April at 10 a.m. ET. The consensus estimate is looking for a rebound to 4.65 million after March's 4.48 million figure, which was below economist expectations.

itself is projecting a big beat with its estimate of 4.80 million.

And finally,

Urban Outfitters

(URBN) - Get Urban Outfitters, Inc. Report

was active in Monday's after-hours session after the Philadelphia-based specialty retailer reported an above-consensus profit for its fiscal first quarter. The company said it earned $34 million, or 23 cents a share, for the three months ended April 30, 3 cents ahead of the average estimate of analysts polled by

Thomson Reuters


The performance was below last year's equivalent quarterly profit of $38.6 million, and the company said its gross profit rate took a hit in the latest quarter on expenses related to store openings and "slightly higher markdowns on a few women`s apparel categories across all brands." The stock was last quoted at $26.79, up 2.4%, on extended volume of nearly 800,000, according to



Written by Michael Baron in New York.

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Michael Baron


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