This earnings season, S&P 500 companies are expected to see profits drop by nearly 6 percent. But it's the top line of companies' income statements that could actually cause the bigger concern.
Third-quarter revenues are projected to fall 3.3 percent from the third quarter of last year, following a 3.3 percent decline in Q2 and a 2.8 percent drop in Q1, according to FactSet. And analysts aren't expecting a turnaround anytime soon, with fourth-quarter revenue projected to decline 1.6 percent.
The last time revenues ran four negative quarters in a row was 2008 to 2009.
Since two consecutive quarters of negative GDP growth mark an economic recession, the extended fall of revenue has been referred to as a "revenue recession."
And according to Boris Schlossberg of BK Asset Management, this revenue recession is pointing to a worrisome trend.
"It's basically showing you the consumer simply doesn't have the power to pay up for product, and companies are therefore forced to have to discount in order to be able to move merchandise," Schlossberg said Monday on CNBC's "Trading Nation." "We need to see better income to the consumer in order to see that revenue recession come back and turn into an expansion."
Also affecting the decline in revenue are lower oil prices and fluctuations in the U.S. dollar against other currencies, Schlossberg said.
"The dollar had a big strong rally and then it kind of came off," he said. "Maybe part of this is just exchange rate adjustments as we go forward."
In contrast to revenues, earnings per share were positive year over year in the first quarter, and much more narrowly negative in the second quarter, per FactSet.
Unsurprisingly, much of the expected sales decline comes from the energy sector, with a revenue drop of 38 percent expected to be reported for the third quarter. The industrials and materials sectors also are expected to see year-over-year sales shrinkage.
Despite the bleak outlook for company sales, technician
"Earnings are clearly a concern here. You need earnings to make stocks go higher," Ross said Monday on "Trading Nation." "But I think the technicals are set up to move higher when the market meets those already-lowered expectations."
Ross sees the S&P 500 testing the 200-day moving average around 2,060, and could go as high as 2,130.
Stocks rose slightly on Tuesday morning, with the S&P 500 trading around 2,017. A rise to 2,130 would mean a 5.5 percent gain from current levels.
"A lot of these concerns, which emanated from China and the emerging markets around the world which have been improving of late, are already reflected in the chart of the S&P 500," Ross said.
Out of S&P 500 companies, 26 have reported earnings as of Tuesday morning.