The S & P shot up last week to finish half way back from its June peak to July trough. It also moved well above its July low at 1010 after faking out most technicians with that break to the downside below 1040. The S & P’s 200-day moving average is at 1111, although we are into some of the overhead supply right here over 1070. Unlike some quarters, this week kicks off with a slew of important earnings reports. This will set the tone for the month and into August. There is a lot at stake here. The second quarter started out strong, became markedly weaker in May, and then finished with a modest uptick in June. That leaves room for a lot of uncertainty in Q2 numbers. Companies are likely to forecast very conservative estimates. Expectations have been falling as fast as, or faster than, company projections. Therefore, there may be some reports that look bad at first, but then play out better in the stock’s reaction. Profit margins will be important, as they indicate how much of a slowdown the company can absorb. We all know about the ever-growing balance sheets. Companies are sitting on piles of cash. They may use the weak economic outlook to highlight what great financial shape the company is in. Finally, Q2 2009 was the bottom of the recession. The year-over-year comparisons should be impressive and likely will be used as the headline for the company reports. What the market does with the news out this week will be very telling in how the rest of summer will pan out.