NEW YORK ( TheStreet) -- The question on many of my clients' minds is whether or not this rally is sustainable.The S&P 500 is up about 21% over the last 12 months, and people are still cautious and even negative. Yet, the markets remain resilient. Global policies and QE3 have strongly heightened the difficulty of short- and intermediate-term fundamental analysis, and the fiscal cliff is being ignored. In my opinion, the future is foretold by four variables: Spain, Earnings, Employment and Interest Rates. With respect to Spain, I think it was summed up neatly by Jon Markman's first paragraph for an Aug. 1, story about Europe: You can't Spell "Spain" without "pain." To wit, the country's yields have fallen one to 1.5 percentage points, and the only thing holding them back from falling more is assuredness that the European Central Bank will get involved. But time is running short, and with short time usually comes overreaction in the market. I anticipate Spain to get a bailout soon, and if that bailout is for more than ¿100 billion, I expect a sharp sell-off in the markets. When the Oct. 5, employment figures came out showing a dip in unemployment to 7.8%, former General Electric ( GE) chief executive Jack Welch openly cast doubt on the numbers. "Can't debate, so change the numbers," he Tweeted. Whether or not you believe the numbers, they are not giving us a great view of where we are headed down the line. They need to improve for the market to improve. This is not news, per se, but it is worth saying again within the context of other important variables. The interest rates grabbing the market's attention right now include mortgage rates and key rates in Europe. Remember, the housing market started the recession and Europe prolonged it. But the discussion of rates is almost irrelevant. What's germane is lending. Without banks making loans, and individuals and businesses putting the capital to work, it's going to make meaningful inroads on employment and GDP growth Unemployment, Spain and interest rates are important catalysts for the market. But the most influential short-term factor is earnings. For now, low expectations are helping companies beat forecasts. Yet despite these lower expectations, top- and bottom-line misses along with fourth-quarter warnings remain abundant. If/when analysts lower their expectations more, I believe the markets will react sharply and negatively.