Good Monday afternoon, everyone, and welcome back to the trading week. We hope you all had a great weekend, but it's time to get back to work.... especially considering how the market sucker-punched a bunch of traders today by pretending it was in breakout mode at the end of last week only to pull the rug out from underneath them at the start of this week. SmallCap Network's Premium Advice - Elite Opportunity Actionable short and long-term NASDAQ and NYSE stocks poised for index average beating returns. Experienced daily in-depth analysis of major indices and their ETF's for short-term trading profits. Earnings options plays. Commodity trading precious metals & gold. Currency, bonds and much more! Get in the know now by getting on-the-ground trading and investing advice to make you more money. 30-Day Money Back Guarantee. Click Here and Sign-Up Today! Is Monday's sizeable rollover a red flag, or is it just more of the same volatility? We'll look at this exasperating market in detail below. First, let's give you an updated Q1 earnings scoreboard. Q1 Earnings Update Can you believe we're almost halfway through earnings season already? I don't mean in terms of time as much as I do quantity of companies; about 200 of the stocks in the S&P 500 have already posted first quarter results, with Apple (AAPL) slated to report this evening. It'll be over before you know it. Anyway, as I feared, rather than underestimating and over-delivering, many companies so far have failed to live up to last year's comparable levels. That's the indirect way of saying the previous Q1 earnings expectations for the S&P 500 have been lowered... again. The last time we looked about a week ago the S&P 500 was on pace to earn $26.94. Now that figure has been whittled down to $26.67. The forward-looking estimates were peeled back too. They're all lower than the $27.32 the index earned in Q1 of 2014. The end result? The S&P 500 is now valued at a trailing P/E of 18.8 and a forward-looking P/E of 17.4. Both are alarmingly high. Strangely enough, financial stocks have been the problem children this time around, with nearly 31% of that sector's names falling short of estimates. Only 57% of the financial stocks that have reported first quarter results have topped earnings estimates. At the other end of the spectrum are consumer staples stocks. A little more than 88% of those names have exceeded earnings expectations for Q1, and only 6% missed. Of course, beating or coming up short of estimates still doesn't illustrate growth rates (or lack thereof). How is each sector and the overall market looking on the actual year-over-year comparison front? Read 'em and weep, bearing in mind everything from Q2-2015 on is an estimate, everything from Q4-2014 back is an actual reading, and Q1-2015's figure is about half estimate, half actual. We'll get a chance to talk more about both of these ideas later, but I suppose there are two things that really stick out to me so far about earnings season. One is, oil's demise truly deserves a little more of the blame for marketwide earnings weakness than I'd been suggesting. The other is, maybe I was wrong about healthcare earnings. I really thought the bulk of the Obamacare benefit had already been priced in last year, setting up weak year-over-year comparisons beginning in 2015. This hasn't been the case though. In fact, healthcare and technology are really the only two sectors that have anything to brag about for Q1. One more random thought: Given the consumer discretionary sector's penchant for consistent growth, I think the first quarter's earnings lull may actually present an opportunity to slide into some of these names that may have been beaten down. Like I said, we'll talk about some of these ideas in detail when we have more time. For now, let's go ahead and get to what I know most of you have to be wondering about today.... is Monday's stumble an omen? Yes! Wait.... No. Remember on Thursday when I said "We'll also warn you the market may make an effort to fake you out (in either direction) here because..... well, it can. In fact, it would almost be poetic to see the market heat up in late April to make it look like a summertime rally was in the works only to dovetail right into the whole 'sell in May' thing."? Today is a good example of what I was talking about. I know we're supposed to buy new highs and sell new lows. As we've talked about before though, the market has a knack for making traders think one thing when it's ultimately destined to do another. One of the best ways it could vex most traders right now is to make them all think it's finally started a long-awaited breakout only to lure them all in and then slam the door in their face. With that in mind, take a look at today's chart of the S&P 500. We cleared the hurdle at 2118, which should have been a bullish catalyst. And who knows? Maybe it ultimately will be. The market gave up quite a bit of ground today, not only moving back below 2118 but even logging a lower low. You can also see the VIX wiggled its way back above a key floor at 12.7. So we're bearish? Not in the least... at least no more than we were bullish as of the end of last week. For the same reason one day doesn't make a trend, one day doesn't break one either. Frankly, the market should struggle and be a little indecisive at this time, because this is a big ceiling. The bulls could still easily regroup here and renew the effort needed to get - and stay - above 2118. Heck, the S&P 500 could fall all the way back to the 20-day and 50-day moving average lines at 2092 and still technically remain in an uptrend. I'm just saying, if a meaningful correction is in the cards, it would be poetic justice for it to happen here, right after the market looked like it was going to rally. My big line in the sand is 2070, give or take. You can see there's a near-term support level there (dashed) on the daily chart, but this line is actually a much longer-term floor that's equally clear on the weekly chart of the S&P 500 below. Now it's just a matter of waiting for the market to commit. Like we mentioned to you last week, stay tuned - it's do-or-die time for the bears. I will admit, however, today's bearish engulfing bar for the S&P 500 right as new highs are being hit is a big red flag in my book.