Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Follow-up: JPMorgan's legal woes
Yesterday, I highlighted the thicket of potential legal and regulatory actions Dow component JPMorgan Chase (NYSE:JPM) finds itself in. Today, we learn that the bank is preparing to admit "wrongdoing" in the London Whale debacle in a civil settlement with U.K. and U.S. authorities. JPMorgan is arguing it should not be fined because shareholders have already born $6 billion in related losses -- that's at least one point where I agree with them!

Mythbusters: The stock market edition
It looks like yesterday's bounce in stock prices is not holding, as U.S. stocks opened lower this morning with the S&P 500 (SNPINDEX:^GSPC) and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES:^DJI) down 0.12% and 0.16%, respectively, at 10:15 a.m. EDT. On that basis, the indexes are on track for their worst weekly performance since the month of June.

This morning, Reuters suggests that "while many investors are concerned that economic growth will stall without the Fed's help, shares have been supported by some strong earnings and encouraging data overseas." Some strong earnings? Some companies were bound to put up good numbers, but let's put an end to a common misconception right now: Corporate earnings, in aggregate, have not been strong in the most current reporting season.

It may be true that, "of 442 companies in the S&P 500 that reported results through Thursday morning... 67 percent topped analysts' expectations, matching the beat rate over the past four quarters." However, those estimates had been steadily declining for over a year.

During the second quarter alone, the bottom-up estimate of the S&P 500's earnings-per-share for the quarter fell 4%. With second-quarter earnings in for nearly 90% companies in the S&P, the current estimate for earnings-per-share implies less than 4% year-over-year growth -- essentially treading water relative to GDP growth. By what standard is that "strong earnings"?

If you want to find out how the same process could play out over the next several quarters -- and the risk it presents for equity investors -- please refer to my Jul. 30 article, Forget the Fed: The Problem Is Earnings