NEW YORK ( TheStreet) -- After taking investors on a roller-coaster ride to nowhere in 2011, the S&P 500 is off to a flying start so far this year.

After a smart gain on Tuesday, the index is up 2.7% on a price basis, and its intraday high of 1296 was the best level seen since early August, just ahead of the volatility brought on by the first-ever downgrade of the United States' credit rating by Standard & Poor's. The close at 1292 is the highest since late July.

There are still plenty of hurdles to clear of course with more debt auctions for Italy and Spain probably the most daunting in the near term, but with all the talk of a low expectations for fourth-quarter earnings, the bulls seem set up to make some hay over the next few weeks if the headlines go according to plan, always a big if.

Typically though, seven out of 10 S&P 500 companies beat analyst earnings expectations each quarter, and since 20% of the companies in the index have already warned about their results, their estimates have been come down accordingly. Sounds like a recipe for a rally.

Then again, most roller-coaster rides tend to start out with slow climbs higher in order to set up some momentum for the twists and turns to come.

Now that Alcoa's ( AA) report is out of the way, Wall Street's attention will quickly turn to the big banks, who will start reporting with JPMorgan Chase ( JPM) on Friday morning, followed by Citigroup ( C) and Wells Fargo ( WFC) on Jan. 17 (next Tuesday), Goldman Sachs ( GS) on Jan. 18, and Bank of America ( BAC) and Morgan Stanley ( MS) on Jan. 19.

Goldman is semi-bullish on the prospects for its brethren, arguing that a lack of negatives presents a mild positive for the group. Yes, that's what it's come to for the financials, who have already staged a bit of a stealth rally in 2012 with the KBW Bank Index up 7% through Monday's close at 42.08 before tacking on another 1.9% to close at 42.86 on Tuesday.

"Low rates and GDP growth continue to present a challenging environment for bank stocks," Goldman said in a research note Tuesday. "That said, this year brings lowered earnings expectations, reduced European counterparty risk (as a result of the LTRO long-term refinancing operation ) and improved capital clarity. Valuations and mutual fund positioning should provide some downside support."

Goldman's favorites among the money-center names are JPMorgan and Wells Fargo but it was also optimistic that Bank of America could have some room to run, saying "clarity around BAC's capital base by the Fed should allow for outperformance from current levels."

JPMorgan's results are always parsed for indications of how the rest of the big banks will do, so there's a lot riding on how Jamie Dimon & Co. performed in the final three months of 2011, a year that saw its shares fall 21.6%, good for fourth worst in the Dow.

Wall Street is expecting earnings of 91 cents a share from JPMorgan in the fourth quarter on revenue of $23.26 billion. Both numbers would be the bank's lowest levels of the year. S&P Capital IQ, which has a hold rating on the stock, lowered its earnings estimate to 99 cents a share from $1.10 on Monday, citing "lower forecasts for trading, investment banking, mortgage fees, and credit card income."

As for Wednesday, Lennar ( LEN) reports its fiscal fourth-quarter results before the opening bell, and the average estimate of analysts polled by Thomson Reuters is for earnings of 17 cents a share in the November-ended period on revenue of $914 million.

The stock has lost 16% in the past year, but it's seen a strong 70% bounce since scraping a 52-week intraday low of $12.14 on Oct. 4. The Miami-based home builder has beaten the consensus view in the first three quarters of fiscal 2011, and Wall Street is bullish ahead of this report with 15 of the 24 analysts covering the shares at either strong buy (4) or buy (11).

Valuation could be an issue for the shares though, given how far they've come so fast. The median 12-month price target of $21 is just pennies away from Tuesday's close at $20.76, and the forward price-to-earnings multiple of 26.7X is more than double where the S&P 500 as a whole is trading.

Guggenheim Securities has a neutral rating on Lennar ahead of the report, noting that the run-up in the stock makes the argument for more upside a difficult one to make.

"Since the 52-week closing low of $12.71 on 08/23/11, LEN's stock price has appreciated 62.6% versus a 10.0% gain for the S&P 500 during the same period," the firm said. "We do not foresee additional catalysts that could propel the name higher near term, but we envision homebuilding orders and/or better-than-expected Rialto results might represent upside risks for our assumptions."

Given the recent higher than expected order growth of Lennar rival KB Home ( KBH) and Lennar's own performance last quarter, Guggenheim acknowledged the company could come in ahead of its estimate for orders of 2520 in the fourth quarter, but the firm doesn't see this possibility alone as enough to warrant pushing the stock higher. Guggenheim is expecting earnings of 13 cents a share from Lennar in the quarter, 4 cents below consensus.

It's also worth noting that Lennar was flagged by Data Explorers on Tuesday as one of most shorted large-cap companies reporting this week with 17% of its outstanding stock on loan. Supervalu ( SVU), also reporting its quarterly results before the open, tops the list with 24.4% of its outstanding shares held short as of Dec. 15.

Interested in more on Lennar? See TheStreet Ratings' report card for this stock.

Wall Street is expecting earnings of 24 cents a share on revenue of $8.42 billion from Supervalu in its fiscal third quarter, which ended back in November. The stock is up 4.5% in the past year, but based on Tuesday's close at $83.39, it's seen a bounce of 34% since hitting a 52-week low of $6.26 in early October. The bear camp is crowded ahead of the report with 13 of the 17 analysts covering the shares at hold (10), underperform (2), or sell (1).

Other companies reporting on Wednesday include 99 Cents Only Stores ( NDN), DragonWave ( DRWI), EXFO Electro-Optical ( EXFO), H.B. Fuller ( FUL), and SemiLEDs ( LEDS).

The economic calendar features the Mortgage Bankers Association's weekly index of application activity at 7 a.m. ET, weekly crude inventories at 10 a.m. ET, and the Federal Reserve's Beige Book for January, which is set for release at 2 p.m. ET.

And finally, Urban Outfitters ( URBN) was the big mover in after-hours action, losing more than 14% following the resignation of CEO Glen Senk, who was in charge since May 2007.

-- Written by Michael Baron in New York.

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