One thing we know for certain - corporate earnings are going to stink for the third quarter. That's a given.

Quite honestly, however, what happened in the third quarter is ancient history when it comes to the market. The market is much more interested in what is going to happen.

You should be, too.

As an investor, what you should be focused on is not so much the actual earnings announcements, but how stocks and the overall market react to those earnings. That's what is key.

Indeed, what companies say about their prospects for profits over the next few quarters will likely have a much bigger impact on stocks than what they report for the third quarter.

A good sign for this market would be stocks holding up well in the face of terrible third-quarter earnings. Such a display of resiliency would indicate that stocks, by and large, have discounted the worst in terms of corporate profits and have probably bottomed.

However, if the market reacts poorly to the earnings announcements and company projections, it would indicate that the market is still vulnerable to bad news.

A market that declines on bad news has not fully discounted all bad news and thus is vulnerable to further weakness.

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