There's no way to sugarcoat it: The quarter, by most measures, was abysmal. 

None of this is news as negative headlines have dominated the media for some time, and the biggest problem we face as investors is deciding how much of the past is prologue. Is the recent slowdown well-discounted in the market? If so, we can extrapolate a bottom, which implies that we can buy stocks and simply wait for the economic rebound.

Or is this slowdown a harbinger of a deepening financial crisis, one that's likely to get worse before it gets better? Many have been spending the better part of this year attempting to answer these very questions.

All bottoms start off the same. Investor bearishness hits peak levels, fear takes over and we have a capitulation low. Cooler heads start to prevail and so-called "smart money" starts picking up stocks at what may be bargain basement prices.

Hope becomes the prevailing sentiment as investors pour money into stocks, secure in the knowledge that eventually they'll go up again. Of course, timing is everything. It's of no value to point out that if you invest in equity markets with a multiple-decade time horizon you'll make money. For most of us investment time horizons are a bit shorter.

I agree that currently many of the ingredients needed to call a bottom are with us: investor pessimism, high short interest, hedge fund blow ups and a few bankruptcies, to name a few.

However, we're still missing the key ingredient to call an end to the current bear market: earnings! You remember earnings. That’s why we buy stocks in the first place. If the current rally is to have legs sometime in the next month or two we should see positive estimate revisions in a lot of stocks. If not, we'll rapidly re-test the lows. It’s a new quarter and a new day so for now we all have our fingers crossed.

A year ago my weekly quantitative work would come up with dozens of companies to investigate as possible purchase candidates. Today I'm pulling up a handful. They’ve been difficult to find, but there are still some companies seeing earnings acceleration and I have to focus my efforts on them.

Wal-Mart (WMT) and Guess? (GES) are seeing their estimates raised, which is astonishing considering how weak the consumer is. Most of the steel stocks like United States Steel (X), AK Steel (AKS) and Nucor (NUE) are seeing very large positive estimate revisions. Many analysts are bumping the numbers significantly for Alcoa (AA) in front of their quarter next week. 

There's some good news out there, but I admit it’s a lot harder to find.