This chart shows why the market is overbought: Analyst

This chart shows why the market is overbought: Analyst

Earnings season is well underway and this week will see some big names reporting their third-quarter numbers. But, hanging over the market is how long the Federal Reserve Bank's monetary stimulus will continue.

This is the week where the market eagerly anticipates earnings numbers from companies like Apple, Facebook, Pfizer, Exxon Mobil, and Chevron. Meanwhile, the S&P 500 index – generally considered the market proxy – is near all-time highs.

According to data from Thomson Reuters, earnings are generally better than expected this quarter. And, that can be expected – 63% of companies in the S&P 500 beat estimates on average every quarter. So far, 68% of S&P 500 companies that reported have beaten estimates this quarter but only about half of all companies have reported.

For all the stocks in the S&P 500, both revenues and earnings are expected to grow 3.3% this quarter compared to the third quarter of 2012. Take out just J.P. Morgan Chase and earnings are expected to grow 5.9%.

(More depth: CNBC's Earnings Central)

Yet there may be another factor that has been pushing the markets higher: The Fed's easy money policy that won't likely end any time soon. The Fed continues to buy $85 billion worth of US Treasury and mortgage bonds every month, adding dollars into the financial system. The market anticipated the Fed would taper this so-called "quantitative easing" in September but it is now expected to stay at $85 billion into next year. The Federal Open Market Committee is set to meet on Tuesday, but tinkering with interest rates is believed to be off the table.

But, which matters more to the market right now: the Fed or corporate earnings?

"I think earnings are definitely taking a front-row seat," says CNBC contributor Gina Sanchez, founder of Chantico Global. "The Fed isn't going to have a whole lot to say at this next meeting."

While it's expected that most companies will beat estimates, Sanchez notes that analysts have also revised their estimates upwards. "That I think is interesting because I think Q4 earnings are going to be actually a little challenging," she says. "I think earnings right now are going to cause the market to go up but then we might hit a stumbling block in Q4."

(Tool: CNBC's earnings calendar)

Shorting the market is JC Parets, founder and president of Eagle Bay Capital and co-chair of the New York Chapter of the Market Technicians Association.

"What worries me the most is that with every new high in the S&P 500, fewer stocks are participating," says Parets. "When you see new highs, you want broad participation; you want more stocks in an uptrend."

For Parets, the key technical indicator is the percentage of stocks above their 200-day moving average as the S&P 500 moves higher. The market is moving higher on the backs of a decreasing amount of stocks.

What level is Parets watching and what would change his opinion about the market?

Watch the video above to see Sanchez and Parets analyze the S&P 500 and hear the fundamentals and technicals take on the markets.

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