Good Tuesday afternoon folks. Hope your week's off to a good start. Just to shake things up a little bit, we're going to take a step back and look at the bigger fundamental picture today. Now, before your eyes glaze over in anticipation of a long, drawn-out philosophical look at stocks, know that we're going to be taking our look in high-speed fashion. After all, there's still a lot of near-term stuff to talk about after today's bounce to record or near-record highs. Time to Separate the Men From the Boys, Part 1 Is it really time to start thinking about earnings again? It seems like Q4's earnings season just ended. Yet, here we are at the beginning of the second quarter, which means the first quarter numbers are being tallied as we speak. Q1's earnings season officially begins on April 8th - the date Alcoa (AA) is expected to release last quarter's results. As far as what to expect, the folks at Standard and Poor's are saying the S&P 500 is on track to earn $25.49 per share for the first quarter. That's 5.1% better than the year ago figure, and 10.0% higher than Q4's per-share earnings. It's a big leap to be sure, but bear in mind the pros were looking for a big leap last quarter too. As earnings season approached and then as earnings season progressed, though, the estimates were whittled down.... all the way down to a modest decline in year-over-year income. Point being, don't get married to the $25.49 figure. I'm not going to anyway. As a matter of fact, I'd be shocked if the number didn't shrink over the course of April. Anyway, I want to bring it up for you today because I'm guessing most of you saw of the same commentaries I saw today that suggested there was still room for stocks to keep growing. Jeremy Siegel said the Dow was likely to reach 16,000 this year. That would be nearly a 10% gain from current levels. Standard & Poor's research chief Sam Stovall is cautiously bullish, though he concedes growth is unfurling at a snail's pace. He's talking about a GDP growth rate between 2.7% and 3.0% for the second half of the year, which would be a major improvement on the Q4 GDP growth rate of 0.4% He's also targeting 1670 for the S&P 500 within the next twelve months. That would be a 6.2% gain from where we are right now. Stovall's optimism on stocks is based on what he says are historically-low P/E ratios, whether you're talking about the past or the future. Specifically, he says the S&P 500 is trading at about a 15% discount to its long-term average P/E. At the same time, there were several bearish takes recently posted. David Stockman said in an op-ed the current rally was a Fed-driven bubble that was going to be popped soon. Meanwhile, Elliott Wave's market analyst Steve Hochberg notes that things look so good on paper, we should actually be worried about the "as good as it gets" scenario. [That's a contrarian stance we actually sympathize with.] So what? Well, there are a handful of "so whats" to think about. There's only one we want to focus on today though... Sam Stovall's assessment of the market's value. How cheap is cheap when you're talking about a P/E ratio? As of right now, the market's trading at a trailing P/E of 15.93. The 12-month forward-looking P/E is 14.06. That translates into a 14.7% increase in 2013's earnings for the companies in the S&P 500. That's a big improvement. For perspective, 2012's bottom line barely improved at all. In fact, a 14.7% improvement is big to the point of being implausible. I'd be the first to acknowledge I've been more bullish than bearish lately, impressed by the persistent effort from the market to keep growing, and pointing out the broad - even if tepid - improvements from most economic indicators. But, I have to take issue with the presumed 14.7% increase in income the pros are looking for this year. More than that, if the forward-looking P/E ratio of 14.06 is the only thing keeping you interested in the overall market, then I really think you may want to reconsider just how strong the bullish tide is at this point. I could be wrong. Q1's earnings may well come in as strong as expected. But, between the sequester and Cyprus and nagging unemployment - just to name a few problems - it's tough to believe Q1's numbers are going to be red hot. The point is, I think the overall market is positioned for little more than tepidness right now, and I suspect the first quarter numbers will validate my opinion. I also have a feeling things aren't going to improve as much as some folks are expecting later in the year. The GDP growth rate near 3.0% Stovall is talking about by Q3 or Q4 would be a monster-sized recovery from where we are now... and possibly out of reach. Now, I don't say this to scare you, and certainly not to steer you completely away from the market. But, I do think we need to concede 2013 is not going to be the wildly bullish year some think it is. So where do you want to make a point of parking a little more of your money than usual if the market's going to struggle? That's the can of worms I'm going to open tomorrow, in part 2. But, I can tell where to get that kind of information and guidance on an ongoing basis... the SmallCap Network Elite Opportunity. I know I laid some pretty heavy stuff on you above, trying to rectify what's probably an exceedingly optimistic outlook with something a little more realistic. It's not easy. But, for those that can walk the fine line between hopes and realities, they stand to navigate the market with near-perfection. Well, that's exactly what the veteran traders at the SCN EO do - they understand how to manage the difference between what the market is doing and what it should be doing. If that's the edge you've needed, then I suggest you see what it's all about with their free two-week test drive. You can learn more about it here. Or, copy and paste the following link in your browser: http://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=SCN+Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ Now, about this market.... Zooming In Yeah, stocks may have made a nice gain today, reaching new multi-year highs in the process, but I don't know that I'd put on your party hats just yet. We've been talking a lot about technical ceilings lately. Well, they're still in place, and still in play. Although the S&P 500 briefly traded above the key 1570 market today - hitting a high of 1573.66 - the close at 1570.25 was right in line with the more recent resistance line. And, all it took was a brush of the upper 20-day Bollinger band to send the market back from its intraday highs. Point being, it's not like the bulls really made any great progress on Tuesday. The same applies to the Dow Jones Industrial Average. It decidedly pushed past a technical ceiling at 14,565 today, but the rally was stopped once it ran into its upper 20-day Bollinger band. Although this longer-term look at the Dow's chart shows it's possible the index could simply use that upper band line as a guidepost, more often than not it ends up acting as a ceiling and a prompt for a pullback. In other words, the market is at a major inflection point. The good news (for the bulls) is, today's buying volume was stronger than average, like Thursday's buying volume. Still, the market's going to have to push through some major resistance right here if the rally is to last. Remember, the S&P 500's all-time high is 1576.09. It's possible the sellers are waiting in the wings to see the index fully reach that mark before the selling flood-gates open. We need to wait and see if that's the plan this time around. But, between the unusually large gains we've seen since November on top of all the alarmingly dangerous clues Elliott Wave's Steve Hochberg pointed out, there's just something very unsettling about traders' bullish perception of stocks right now. Remember, most major corrections tend to be surprises to most traders.