Suckers' Rally, Part 2?

Risk Is Back as Fund Managers Turn Bullish on Equities
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Presumably it wasn't for use by management. I found this gem buried in this morning's conference call from Dupont: "One bright spot was the continued robust demand in industrial chemicals for cyanide..."

(cyanide is used to make paper, textiles and plastics, as well as chemicals used to develop photography).

Sucker Rally, Part 2: after yesterday's gravity-defying rally in the final hour, a lot of traders took advantage of the down open to buy the market, assuming something similar might happen today.

Well, maybe. The problem with this theory is that if we get to 3:15pm ET and nothing happens, they will quickly dump their positions, and we could end at the lows of the day going into the close.

What's happening today? Very hard to sort out the causal factors. Weak earnings and revenue are the main factor, but some traders insist that two other data points are hurting stocks: 1) the NYT story that Bernanke is unlikely to come back for a third term even if President Obama wins, and 2) the debate last night, where the president appeared to have done a bit better than some expected.

One thing's for sure: S&P futures dropped almost 8 points after 6am ET when Dupont came out with the stunningly disappointing earnings and guidance. So disappointing earnings are for sure a major factor in today's decline.

The biggest challenge for the market now: it's hard to get 2013 earnings growth with slowing revenues.

This is very obvious in "multi-industry" companies...they offer the best insight into the global economy. They sell in many different regions of the world and to many different businesses. They are companies in construction, electrical supplies, tools, heating ventilation and air condition (HVAC), power generation, healthcare equipment, automotive parts, and aerospace/defense.

They make the stuff that is behind the walls of your house, in your car, in the planes you fly, and in your doctor's office.

I'm talking:

Ingersoll Rand ,

Parker Hannifin ,

Danaher ,

Dover ,

Grainger ,

Snap-On , MMM , Textron , United Technologies , Rockwell Automation ,

Cooper Industries ,

Honeywell ,

and General Electric*, among others.

The business for these companies is choppy:

1) most are missing revenue forecasts;

2) orders are slowing down, i.e. the "book to bill ratio" for many companies is below 1, with many reporting delays in new projects. The concern now is that capital spending for 2013 may be lower than expected.

3) there's no help from any region: China may be bottoming but is not helping immediately, Europe is stable but remains weak, and the U.S. has seen some slowing since the prior quarter.

Bottom line: there is a lot of anxiety about which stocks to hold: go defensive or stay in risk-on names? The market is taking down expectations for a Q4 global bottom, but not too much: the S&P is still just 4 percent from its four year highs, which it hit the week earnings season started (October 8).

Is there any reason to hope that this pullback will be shallow?

Yes, there is.

Bulls point out that:

1) cost reduction/restructuring are ongoing, helping earnings

2) slow growth is still the most likely trend in China and the U.S.

3) Q4 guidance is conservative, so companies will most likely beat again in Q4

4) corporate balance sheets are in good shape

5) M&A likely to pick up

6) buy on dips has worked: since the most recent bottom in June, there has been no pullback deeper than four percent.

7) don't fight the Fed is the most successful trading strategy of the year. Traders are very aware that attempts to short big cap international names has been disastrous this year, thanks to the Fed and the ECB backstop.

What it all means: I think if we close today or this week below 1400 on the S&P 500 (five percent correction from recent highs), technicians and traders will sit up and take more notice.

—By CNBC's Bob Pisani

*GE maintains a minority holding in NBCUniversal, CNBC's corporate parent.

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