Is it really time to start another earnings season? Yes it is. Alcoa (AA) gets the party started on Wednesday, after the market closes. Not knowing what may add itself to the publishing schedule between now and then, though, let's go ahead get our preview of Q3's earnings out of the way today. As of the most recent look, the pros at Standard & Poor's believe the S&P 500 is going to earn $29.93 per share for the third quarter of this year. That's about 59 cents less than the Q3 expectations we were working with at the end of Q2, but it's 11.1% stronger than the $26.92 the S&P 500 earned in the third quarter of 2013. Of course, the analysts at Standard & Poor's aren't the only guys and gals making these forecasts. It seems like the S&P's folks are the most optimistic when it comes to the market's earnings growth, as the people at FacSet say aggregate earnings are only going to improve by 4.6% in the third quarter on a year-over-year basis. That's quite a bit below the 9.0% increase the FactSet bunch was expecting for Q3 three months ago. FactSet calculates per-share earnings of $29.07 for the S&P 500 in the third quarter, but FactSet is also using a Q3-2013 income of $27.10.... which doesn't exactly match the Q3-2013 figure of $26.92 Standard & Poor's is still using. Still, $26.92 and $27.10 are close enough in my book to not question either, especially considering it's now year-old data. No, FactSet's math doesn't actually "work out" to earnings growth of only 4.6%. It's more like 7.2%. I'm sure it's not a math error but rather a data collection/calculation quirk. I'm also sure it doesn't really matter in the end, so I'm not going to try and rectify the mismatched math. Instead, I'm just going to split the difference and say the S&P 500 is likely to grow earnings by 9.1% in the third quarter. That should mean the S&P 500 is going to earn about $29.36. So here's the question you really need to be asking yourself as we head into Q3's earnings season: Based on everything you've seen happen or not happen over the prior three months, do you really think corporate America has put itself into a position to improve its year-over-year earnings by 9.1% during Q3? If your answer is yes - and if you think a trailing P/E of 17.1 and a forward-looking P/E of 14.9 are reasonable valuations - then you don't really need to worry about a thing right now. If your answer is no (and we're leaning towards a "no") regarding the market's actual growth potential, then you've got a lot to think about here. For perspective, the average forward-looking P/E for the past ten years is 14.1, while the average forward-looking P/E for the past five years is 13.5. On a trailing basis, the average P/E for the past ten years was 15.5, and the average five-year trailing P/E is 15.2, according to FactSet. So, you can spin it however you want it, but it doesn't change the fact that the market's unusually valued here. That's not to say the market has to pull back now. It is to say, though, there's probably zero room for error. The slightest whiff of a shortfall on the earnings front could do some damage in a hurry. We'll be interested to see how it all plays out. We won't get much clarity this week, but by next week when earnings season is in full swing we should be able to see if Q3's expectations were on target or not. New Name on the Radar We don't have any new picks for you today - the market is still too wishy washy and on the fence to take any swings, particularly on an end-of-day basis. There is a possibility the Elite Opportunity newsletter put on our plate today, however. We're not ready to name names yet, but we know exactly what we're looking for. The chart below is what it is. In this weekly timeframe you can really see the turnaround that's been in the making since the stock hit bottom in May. Since hitting that low, this chart has been working its way into the tip of a bullish wedge. In the meantime though, we got a key bullish cross of the moving average lines.... lines that are now providing support. As for the theory/philosophy at work here, think of it as a slingshot. The tension has been building for months now, and once the chart - and traders - get to a point where they can't hold it down any longer, POW! Off she goes. If we get that break above the recent ceiling, this one could be a big mover. And, I've got a feeling this is how things are going to pan out for this stock. John Monroe seems to agree. We'll see. If this chart does end up being catapulted into a new uptrend, we'll say so here in the newsletter. We just hope we don't have to chase it too much if-and-when it takes off. By the way, if you'd like to get these (and other) trading ideas in real-time before they take off, most of the recent picks we've looked at here have actually been ideas published in the Elite Opportunity newsletter. John's doing things in real-time, which means he issues trades in the middle of trading hours; you can even get the EO's trading alerts delivered to your smartphone. As we've mentioned before, we're somewhat hampered here just because we're an end-of-day newsletter and we have to be extra picky about which stocks we get into and when we get into them. The Elite Opportunity doesn't have that same limitation. Anyway, if you want more trading ideas when they first develop, I highly recommend subscribing to the EO newsletter. Here's how to get a two-week test drive. Here's how , or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ Stocks Are Stuck, But Gold Isn't This is going to be a very short stock market outlook, mainly because there's just not a lot to say. We had a pretty good feeling the bulls were going to back off when push came to shove, and sure enough, they did. Our chart of the S&P 500 tells us everything that rally matters. The index peeled back after briefly moving above the 50-day moving average line (purple), but pushed off of the 100-day moving average line (gray) when it was brushed mid-afternoon. And, it's not like there was a lot of volume pushing things in either direction today. Until we break out of this rut, there's not much to worry about. And, at this point, I'd say the odds of a breakout are just as good as the odds of a breakdown. I'm fine just hanging out on the sidelines until something worth following appears. That being said (and as we've discussed before), just because stocks may be stuck in a rut doesn't mean every trading instrument is. I've got a feeling gold is poised for a big, upward moved now. Yes, I'm aware that gold bulls are few and far between now. Most of the so-called and self-proclaimed gurus expect gold to keep falling. They're basing that expectation on gold's current momentum. As you and I know all too well, however, nothing lasts forever, and there's a lot more money to be made by catching a reversal when it's just beginning rather than chasing a trend that's been in place for a while. But why do we think gold is poised to bounce when nobody else seems to agree? It's mostly got to do with the value of the U.S. dollar, which has been THE key short-term driver of gold for several weeks now. In simplest terms, the U.S. Dollar Index gave us a huge reversal clue today, suggesting its overheated uptrend has flamed out and is now in pullback mode. The charts of the U.S. Dollar Index and the SPDR Gold Trust (GLD) speak for themselves. Check out the height of Friday's bullish bar for the sawbuck, and then check out today's subsequent bearish mirror image of that bar. To candlestick analysts it's called a marubozu reversal, but in less sophisticated terms it's often called a train-track reversal. Regardless of what you call it, the hint is the same - this is a major reversal from the U.S. Dollar Index, and odds are very good this truly is a pivot point for the dollar. Ergo, this is also a bullish pivot point for gold. I'd like to get some confirmation of this reversal effort before committing, but I'm pretty confident with what we've seen so far. We'll look at an updated version of this chart tomorrow. That's all for now, folks.