Market Preview: Finding Reason to Rally

"The major indices all pulled back to strong areas of technical support during the week, with prices finally bouncing hard on Friday," Arbeter wrote at the time. "We think the next leg of the current advance off the early June lows has begun, and we expect a lot less price volatility and a much more fluid move higher."

He sees 1330-1340 as a zone of "pretty decent chart support" for the S&P 500 and is now expecting a move to the 1385-1422 range "before the next decent-sized pullback."

The lazy optimism that seems to be boiling up was maybe personified by a call from Credit Suisse on Wednesday. The firm "marginally" reduced its year-end target for the S&P 500 to 1425 from 1440, saying it believes macro surprises are nearing typical trough points.

""While tail risks remain high (Euro, US fiscal cliff), we stay overweight equities," Credit Suisse said. With the 10-year Treasury hovering around 1.5% the past few days, it seems more investors may be starting to feel the same way.

As for Thursday's scheduled news, the big earnings reports keep coming. Three more Dow components are on the docket -- Microsoft(MSFT) , Travelers Cos.(TRV) and Verizon Communications(VZ) -- along with other notables Morgan Stanley(MS) and Google(GOOG) , which gets the deep-dive treatment here.

The Internet search giant's stock has been a notable laggard in 2012, falling 10%-plus while the Nasdaq is sitting pretty with a 13% gain. The company's issues are well known, namely slowing revenue growth, margin pressures stemming from rapid expansion and a pricey acquisition of Motorola Mobility.

The average estimate of analysts polled by Thomson Reuters is for earnings of $10.05 a share on revenue of $8.42 billion from Google in its fiscal second quarter ended in June. That compares to a profit of $10.08 a share on revenue of $8.14 in the first quarter and earnings of $8.74 a share on revenue of $6.92 billion in the same period a year earlier.

The sell side is still stubbornly bullish with 35 of the 43 analysts covering Google at either strong buy (19) or buy (16) and the median 12-month price target at $745, implying potential upside of 28% from Wednesday's close at $580.76.

Oppenheimer, which has an outperform rating and $752 price target, is expecting an in-line quarter from Google, excluding the Motorola Mobility deal, but its estimate is for a profit of $9.42 a share on revenue of $8.33 billion, a performance would disappoint most on Wall Street.