Can Earnings Season Breathe New Life into the Rally?

Third Quarter earnings can't get here quickly enough for me. We need some new information to support the Cash for Clunker Stock rally. And I think earnings season is our best chance to see new life breathed into stock valuations.

It's no surprise that investors are growing tired of the flip-flopping economic data. Unemployment claims come in better than expected one week, and then worse than expected the next. Manufacturing data looked promising last month, this month, not so much. Housing data is doing the same non-rhythmic dance.

Basically, new economic data is showing the brutal downward-sloping trendline of previous economic data has been broken. But we haven't established a new uptrend for economic data yet. And if you remember how the stock market gyrated during the "jobless recovery" of 2004, you know it can take a while for data like unemployment to get on a positive track.

*****You might be wondering why I would look to earnings to help reinforce the idea that the US economy is improving and buying stocks is a good idea. After all, many analysts are skeptical that Second Quarter earnings growth, which was largely based on cost-cutting measures, will continue into the Third Quarter on the back of rising revenues...

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