Earnings 'recession' worries could be a drag
Luschini said earnings really do appear to be declining this quarter, as forecast, and he expects the first earnings "recession" since 2009. The S&P 500 companies, when considering actual reports and estimates, are expected to see profits decline by 4.1 percent for the third quarter, according to Thomson Reuters.

"We're getting deeper into earnings season and not watching any one company, but the cumulative effect," said Mark Luschini, chief investment strategist at Janney Montgomery. "Everybody knows this quarter is going to be bad."

Earnings could be a bigger driver for stocks Tuesday, after IBM 's disappointing results reinforced concerns that the corporate profit outlook is getting murkier.

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IBM reported a larger-than-expected 14 percent decline in revenues, which were hit by a stronger dollar and weaker hardware sales. IBM has been shifting from lower margin businesses to more lucrative cloud computing, and its revenues have been in decline for 14 straight quarters. The company also warned that full year profits would be lower than expected.

IBM stock fell nearly 5 percent in after-hours trading Monday, and it could be a sizable weight on the Dow in Tuesday trading.

So far, earnings for the S&P 500 companies have been beating estimates by a wide margin of 70 percent, but revenues have been missing forecasts at a high rate of 60 percent, according to Thomson Reuters.

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Corporate forecasts have also not been reassuring and while companies may have their individual reasons, collectively the tone has begun to feel more negative. Luschini said he is particularly watching for what impact China and foreign markets are having on corporate outlooks. IBM reported that its China revenues declined by 17 percent.

"If those outlooks dim, that doesn't bode well for a seasonal rally in stocks," said Luschini.

The Dow was up 14 at 17,230 Monday, while the S&P 500 was flat, rising less than a point to 2,033. The Nasdaq had the biggest gains, up 18 at 4,905. The S&P 500 is just 5 percent below its all-time high, recovered ground since the Sept. 17 Fed meeting, when the Fed took no action on interest rates.

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Tuesday's earnings include Dow components, Travelers , Verizon and United Technologies before the open. Also reporting before the bell are Bank of NY Mellon , Fifth Third , Lockheed Martin , Pentair , Tupperware , Harley-Davidson and Canadian Pacific Railway . Companies reporting after the close include Yahoo , Chipotle Mexican Grill , Discover Financial , VMWare , , Chubb , and Pinnacle Financial .

Besides earnings, there are new housing starts at 8:30 a.m.

There are also several Fed speakers including Fed Gov. Jerome Powell and New York Fed President William Dudley at 9:15 a.m. ET, who along with SEC Chair Mary Jo White are at the New York Fed for a conference on the evolving structure of the Treasury market.

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