This column was originally published on RealMoney on April 3 at 9:11 a.m. EDT. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here .

When trying to gauge the near-term setup, consensus fuels the flame of the analysis. Some fundamental meat, some psychological beans and some sentiment spice, and you've got yourself a spicy enough chili to make a New Mexican's forehead sweat. So what's the story with the three ingredients right now?

As I listened to CNBC and Bloomberg TV while getting ready for work this morning, I heard, for probably the 298th time in the past week, that profit earnings growth has slowed. Now that's a consensus sentiment. I happen to, for the first time in years, agree with that analysis, which is part of the fundie spice.

Of course, I remember arguing against that same consensus for each of the past three years around the onset of first-quarter earnings season, and the bears (mostly permabears, of course) have been dead wrong each time. Indeed, in tech and away from anything real-estate-related, earnings growth might very well come in with double-digit growth, extending the double-digit streak of double-digit growth. (Nice triple use of the word "double," huh? But I digress.)

What if earnings grow as steadily as they have for the past four years? This market would probably rally nicely, as the consensus about the fundamentals would be way under the reality of the fundamentals.

Meanwhile, if earnings are up about 3% to 5%, in line with what most say they expect, stocks are likely to have a very tough time rallying. Even as folks say they know earnings are slowing, if that reality hits hard this quarter, the guidance for next won't be pretty even as the consensus expects the second half to speed up again. The markets likely won't like estimates having to come down further for the second half of the year.

And if earnings are really putrid, and guidance across the board is mostly down? Downside is most likely in that scenario.

It's possible that the bulls will get it going on when earnings hit next week. I'm eager to hear what the fundies look like at the big cyclicals, including Alcoa ( AA), next week. But I continue to think that the risk/reward of being long isn't attractive quite yet.
At the time of publication, the firm in which Willard is a partner had no positions in the stocks mentioned, although positions can change at any time and without notice.

Cody Willard is the manager of CL Willard Capital Management, LLC. He is a regular guest on Fox News, CNBC and other networks, and he writes a monthly column for the Financial Times. He is also an adjunct professor at Seton Hall University and the author of TheCodyReport.net, a monthly stock market newsletter. Willard appreciates your feedback -- click here to send him an email.

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