NEW YORK ( TheStreet) -- There's something poetic about the prospect of the Bluth family via Netflix ( NFLX) making a return in such tenuous times for the market.

It's only the first trading session of October, and the trees are still covered in leaves, but thanks to the ongoing follies in Europe, the bear is very close to waking from its slumber. The S&P 500 settled down 2.9% on Monday at 1099, putting the index down 19.5% from its 2011 closing high of 1364 on April 29. A 20% pullback qualifies as bear-market territory, and the technicals become an added hurdle once that happens.

This is a tough time to be courageous and buy stocks as the nervousness is palpable. The VIX, Wall Street's so-called fear index, which is derived from options activity in the S&P 500, jumped nearly 6% to close at 45.45 on Monday. Readings above 40 are indicative of high levels of volatility, and we last visited these heights during August's tumult. Before that, the VIX hadn't sniffed 40 since May 2010 when Greece was last teetering and flash crash entered the lexicon.

The last two sessions have seen bankruptcy rumors sweep in and send shares of AMR Corp. ( AMR), the parent company of American Airlines, on Monday, and Eastman Kodak ( EK) on Friday, spiraling lower. Granted, neither of these names seems to be on the firmest of footings but it's telling when an inordinate amount of pilots retiring at once or a drawdown on a credit line sparks this kind of action.

The devastation in the banks on Monday was also eyeopening as Bank of America ( BAC) dove back below $6, returning to its financial crisis levels from March 2009. The 7%-plus decline in Morgan Stanley ( MS) shares put them back even further, all the way to December 2008. Meanwhile, Citigroup ( C) coughed up nearly 10% to close at $23.11 after setting a new post 1-for-10 reverse stock split low of $23.05. That means shareholders who took such a psychological hit on amount of stock they had back on May 9 when the deal went down have now had to endure a nearly 50% decline -- the stock closed at $4.52 on May 6 and opened at $44.89 on May 9 -- in the value of those shares as well. The financials may finally be asserting themselves as market leaders again; unfortunately, it's in the wrong direction.

As has been the case for months now it seems, the headlines out of Greece and Europe will take precedence on Tuesday, especially with a light calendar for scheduled news out of the U.S. We'll get testimony from the two big central bank leaders -- Jean-Claude Trichet and Ben Bernanke -- in the morning hours, so expect the market to gyrate appropriately. The only U.S. datapoints are the weekly Redbook chain-store sales at 9 a.m. ET and factory orders for August at 10 a.m. ET, but neither of those are expected to be attention grabbers.

That leaves saving stocks on Apple's ( AAPL) shoulders, right? The iconic maker of the iPad, iPod and iPhone is universally expected to reveal the iPhone 5 on Tuesday, and the first major event for CEO Tim Cook may be enough to pull the market's attention back from overseas, at least for a few hours.

Expectations are for a slimmer, faster version of the smartest of the smartphones with a better camera and if Apple disappoints on the design front this time around it would be the first time, so no worries there. The scuttlebutt also has a cheaper, scaled-down version of the iPhone on the menu for China and emerging markets. And who knows, maybe Cook will use the venue to get in a jab or two at ( AMZN) after its discount dive into the tablet market last week.

Much has been made of the invitation sent out by Apple, which featured a "1" next to the phone icon. Sterne Agee, in a Sept. 28 note previewing the event, theorized this may mean only one new iPhone is introduced, which could be a bummer for some.

"This is consistent with our supply chain checks but could be disappointing for those who had been predicting 2 or 3 new iPhones," the firm wrote. "We continue to believe there will be a new iPhone flagship (likely called iPhone 5) and then the current iPhone 4 could see minor changes and a price cut to $99. We potentially may even see the iPhone 3GS price cut to $49 or free to address the entry-level."

Sterne Agee also wants to see what kind of presence Steve Jobs does or doesn't have at the event, which is being held at Apple's headquarters in Cupertino, Calif., rather than a larger venue in San Francisco as has been the case in the past.

"We also think most interesting is whether new CEO Tim Cook will lead the keynote and whether chairman and co-founder Steve Jobs will participate," the firm wrote. "Tim is perceived as an operations and supply chain guru and that he certainly is, but we believe it is too early to write him off as not a visionary and showman like Steve Jobs. Time will tell and it could take a while."

Apple shares closed Monday at $374.60, and have now pulled back roughly 11% since hitting a new record high of $422.86 on Sept. 20. That's only made the high flier - up 35% in the past year -- more affordable, however, bringing the forward price-to-earnings multiple down to 11.5X. Wall Street remains over the moon about Apple with 52 of the 56 analysts covering the stock at strong buy (28) or buy (24), and it's unlikely anything will happen on Tuesday to change that.

And finally, the only brand name earnings report on Tuesday is Yum! Brands ( YUM) reports its fiscal third-quarter results after Tuesday's closing bell, and the average estimate of analysts polled by Thomson Reuters is for earnings of 83 cents a share in the September-ended quarter on revenue of $3.1 billion.

Shares of the parent company of Taco Bell, Pizza Hut and KFC are essentially flat for 2011, although they've fallen roughly 15% since hitting a 52-week high of $57.75 on July 14. The company has topped Wall Street expectations in seven of the past eight quarters, delivering an average upside surprise of roughly 8%.

Growth in China has been the big driver, offsetting weakness in the United States, so the market will want to see the company is hitting any speed bumps. Same-store sales jumped 18% in China in the second quarter vs. a 4% decline stateside, and 99 of the 241 new international restaurants the company opened last quarter were in China.

Last time around, Yum! lifted its full-year earnings per share growth view to at 12%, excluding items, but commodity costs have continued to rise since then, economic growth has slowed, and there's even been signs the brakes are being tapped in Asia as well, so there is some risk here. As usual, the sell side is pretty bullish with 13 of the 21 analysts covering the stock at either strong buy (6) or buy (7), and the 12-month median price target at $61, implying potential upside of nearly 25% from current levels.

-- Written by Michael Baron in New York.


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