The first crop of earnings reports was a disappointment, but most of the early bank reports on Friday were decent, and Bank of America also reported earnings above expectations Monday morning.

Thirty- five companies have reported third-quarter earnings so far. Of that group, 68.5% have beaten estimates, lower than the prior four-quarter average of 78.1% but higher than the historic average of 66.2%, according to Refinitiv.

Like the second quarter, many have been anticipating an earnings apocalypse — a dramatic collapse in earnings.

The evidence so far suggests a contraction but not a collapse.

The third-quarter estimated earnings growth rate for the S&P 500 is now 3.6%, down from 11.1% on July 1. Excluding energy, however, the growth rate drops to minus-3.1%.

Those huge oil profits have concealed that nine of 11 S&P sectors have already seen downward earnings revisions. Technology has seen a substantial downward revision — from up 5.8% on July 1 to minus-4.0% today.

There have been similar downward revisions in the fourth quarter as well. Technology has gone from an expected gain of 8.6% on July 1 to minus-0.4% now, for example.

Bottom line on earnings: the market has already priced in a much lower multiple ( P/E ratio), anticipating a slowdown in the economy. Everyone is now anticipating that earnings will be slashed for the fourth quarter, and that will be the impetus for another leg down in the market.

The pain trade (the trade that would cause the greatest surprise in the market) would be that earnings come in close to expectations, which could cause the same rally that we saw after the June lows, when another expected earnings apocalypse did not happen.

If you're looking for signs of a bottom, you're not going to find it in the technical indicators. Technicians were full of gloomy comments over the weekend.

"Since the expiration of this summer's bear market rally in mid-August, the balance of Demand and Supply materially weakened," Lowry, the nation's oldest technical analysis service, wrote to clients over the weekend.

No kidding: rallies so far (there have been several, in May, June, July, September and October) have met with little buying enthusiasm (heavy volume).

"Historically, such patterns are signs of a stock market that is vulnerable to further intermediate-term downside," Lowry wrote.

A simple indicator of momentum, the advance-decline line, fell to a new bear market low last week.

"This reinforces the market';s fragile state and suggests further downside for stocks as breadth often leads price," Lowry wrote.