Earnings season begins Tuesday with Alcoa (AA) leading the way as usual. Earnings reports will last until early November and most expect results to be lower but still respectable. It will be outlooks and guidance that matter most.

I was out of the turret yesterday with friends for the market's big low volume rally Monday. Most of the action was HFT driven on a semi-holiday. We're caught in an environment between ultra-low interest rates, decent earnings and low PEs. This is a turn-on for value investors. At the same time the economy is contracting which may affect forward earnings and the euro zone drama has become a day-to-day event.

As the U.S. economy struggles along at near zero growth perhaps stock markets will do the same--move sideways for awhile. The catalysts to drive prices higher are good earnings ( Alcoa just reported a big miss due to Europe) and a crisis resolution within the euro zone. Given the 18 month $200 billion in equity fund outflows per ICI, where's the money for buying stocks? It's mostly parked in bonds since most investors just don't "trust" markets or see improving conditions. This leaves us with an election cycle and nothing being done in Washington. So we're in a box.

And, speaking of the euro zone little Slovakia's parliament rejected the expansion of the EFSF proposal. This throws a monkey wrench into the plan but may only be temporary for a few hours as politics within the country are unique to say the least.

If you look back at the 2007 top to 2009 bottom you'll note substantial rallies along the way to a bottom. We might be experiencing something similar now.

Stocks were mixed with tech doing well while bonds, the dollar and gold were weaker and commodities higher especially grains.

Volume Tuesday was even weaker than Monday as many investors await earnings, Fed Minutes Wednesday and, of course, more euro zone news. Breadth per the WS was mixed.

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The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.

The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.

The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.

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All things considered, it's still confusing to see the NYMO getting almost short-term overbought while the VIX is still demonstrating fear. It's a reflection on how screwed-up this market remains.

So we got the Alcoa earnings which were a disappointing miss; but, the company always produces odd results. Just remember most earnings (good or bad) from this company are quickly forgotten. It's one of the lower priced constituents in the price-weighted DJIA (IBM being the highest). This IBM vs AA view is why many don't follow the DJIA preferring instead the S&P 500 Index as more representative.

Wednesday will feature Fed Minutes which will allow some to view and evaluate the inter-play from the Fed's last meeting. This shouldn't change much of what they did then but gives generates more hope sometimes.

Let's see what happens.

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The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell any security.  Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period.  Chart annotations aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com .

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.