Glimmers of Optimism

NEW YORK ( TheStreet) -- With employment gains slowing to a trickle, Europe's continued troubles and China releasing data that second-quarter GDP grew at the slowest pace since the financial crisis hit in 2008, investors have good reason to be pessimistic and cautious when it comes this earnings season.

After all, the slowdown in Europe, Asia and Latin America has to impact corporate growth, and it has, in some cases significantly.

But, and it's a big but, I would posit that overly cautious analysts and strategists have lowered the bar so much that we might be in for a pleasant surprise when all is said and done. As you may recall, since late April, I've held that if all five of the following catalysts came to pass then we could be in for a nice rally during the second half of 2012:

Successful Greek elections. Check.

Leaders in Europe take a more aggressive approach to their debt crisis. Check.

Investors are positively surprised with the upcoming earnings season. Keep reading.

The Federal Reserves initiates QE3 (I'm guessing August or September)

Investors start trade out of bonds into equities.

Here's what I see in the earnings tea leaves, and why I believe that when earnings season is in the rear view mirror, investors will have been pleasantly surprised.

Just 30 companies have pre-announced in July. Of these, two have revised guidance upward ( Ross Stores ( ROST) and TJX Companies ( TJX) -- interestingly, both off-price retailers) and 28 have revised downward.

Keep in mind that companies tend to pre-announce bad news, not good news. So I'm not reading into the pre-announcements. I am, however, placing weight on the actual reported numbers

By contrast, the consensus earnings estimate from analysts have been raised in either the past week, or the past four weeks, at 149 companies. Reading through the list looks like a "Who's Who" of the U.S. economy.

J.P. Morgan Chase ( JPM) -- with some 26 analysts covering it, which means raising the average is difficult -- has seen its' consensus earnings estimate increase 7.25% in the last week.

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