The European debt crisis has not gone away. The fix comes only at the end of the debt crisis’ beginning. Frankly, I’m kind of annoyed it took this long for policymakers to act. The domestic stock market has suffered long enough because of a lack of firm action on the European sovereign debt crisis. It isn’t going away anytime soon, but thankfully, the debt crisis is now being addressed.

Stock market earnings continue to pour in and, for the most part, they are coming in as expected, with a slight bias to upward surprises. The big story is obviously the progress on the debt crisis and, because of this, a lot of stock market investors are being distracted from the good news. All I can say is that, with a very slow economic backdrop, large-cap corporate earnings are impressive and I think it’s a theme that’s going to stick for the next several quarters. With the stock market breaking out of its correction trading range, the likelihood of more near-term upside is strong.

It’s up to the Europeans to fix their debt crisis and that’s that. I don’t want to sideline the issue, as we all know stock market investment risk has been a lot higher because of their fiscal problems. But, it is third-quarter earnings season and I want domestic stock market investors not to forget just how well some companies are doing right now. It might not seem like good times on Main Street, but, at the corporate level, things are looking good—debt crisis or not.

Consider the outstanding performance being produced by pharmaceutical powerhouse Bristol-Myers Squibb Company (NYSE/BMY). Stock market investors in this high-dividend-paying stock are being well rewarded with solid financial results that beat the Street and a stock price that just hit a new 52-week high with a four-percent dividend yield. All this and a stock market price that continues to be reasonably valued.

Bristol-Myers sells the blockbuster blood thinner known as “Plavix,” along with a number of other big name successes. The company’s third-quarter net income came to $969 million, or $0.56 per share, up from $949 million, or $0.55 per share, in the same quarter last year. Excluding an after-tax charge of $75.0 million for one-time items, adjusted net income was $1.0 billion, or $0.61 per share, topping Street consensus of $0.58 per share on an 11% gain in revenues to $5.35 billion.

Stock market owners of Bristol-Myers have been solidly rewarded over the last two years and it’s not only because of the capital gain. Bristol-Myers has averaged a five-percent dividend yield, which is quite a lot when you think about it. A five-percent dividend yield adds up pretty fast, especially in a stock market that’s been anything but consistent. The debt crisis might have held the stock market back over the last several quarters, but not in BMY shares.

Moving to the agriculture sector, fertilizer giant Potash Corporation of Saskatchewan Inc. (NYSE/POT), which is an important stock market benchmark in this burgeoning sector, reported its second highest third-quarter earnings ever. According to the company, “Although customers prudently managed inventory risk, the undeniable need for potash, phosphate and nitrogen ensured our products moved through the system to reach farmers around the world. Our third-quarter performance reflected the unrelenting pressure on global food production…”

The company’s stock market performance has mimicked the broader market this year, but technically, Potash looks very healthy, with a long-term upward trend seemingly intact. The company reported third-quarter earnings of $826 million, representing an impressive gain of 147% over last year. Revenues grew to $2.32 billion in the latest quarter, up from $1.58 billion last year, and management said it is on track to grow its earnings by around 85% for all of 2011.

The stock market has certainly been in a bad mood lately and it’s no wonder with the European debt crisis and declining expectations sapping any positive investor sentiment. Of course, you can’t say that the debt crisis is now over and you can’t say that the stock market won’t be subject to major shocks in the future; but, over the near term, I’ll take the good news over the bad. This is a stock market that’s poised for further short-term gains.

The biggest worry among institutional stock market investors and the European debt crisis isn’t a Greek default. It’s the cascading default risk to the big European banks and the resulting instability this would create with the euro currency. The debt crisis has no doubt created a permanent investment risk for domestic stock market investors. I’m just glad that European policymakers figured out that they needed to act boldly on the debt crisis issue. It just goes to show you that policymakers are always behind the action in capital markets.

Investor sentiment is fragile and the stock market’s been volatile, but the trading action over the last little while has revealed one big consolidation, not a breakdown in the main stock market indices. What’s holding the market around 1,200 on the S&P 500 Index is the expectation for decent corporate earnings. From my perspective, third-quarter earnings results can’t come soon enough. Investors need to hear from corporations about their business conditions and their forecasts for the future. This is the news that can make all the cash sitting on the sidelines take action.

The broader market is very fairly priced at its current level and reduced expectations for future growth are now factored into share prices. Accordingly, I think we’re seeing a new base developing for the broader market and, unless third-quarter earnings are bad or there’s a major shock to the system (like a sovereign debt default) I think stocks can build upon this base.

Still, it’s pretty difficult to imagine a new bull market developing right now. However, I do think that the stage is being set for the resumption of an upward trend (since the March low of 2009), as earnings expectations are generally good. Eventually investors will step up to the plate to purchase earnings growth and, when there’s some good news from the economic data, we could have the makings of a solid stock market advance. When this scenario might play out is the big question. Sentiment isn’t strong enough right now. It could happen later in the fourth quarter. We might have to wait until next year. As an optimist, I’m siding with Warren Buffett’s view that the economy will get better—it’s just going to take more time.

While I’m seeing more value in this market, I do want to reiterate my view that investors don’t need to be in any rush to take on new positions in stocks. There are always good trades out there; but, generally speaking, this is a market that isn’t poised to go far at this time.

Quite consistently, corporate earnings have been very good over the last four quarters and so have corporate balance sheets. While big companies aren’t spending on new plant and equipment, or on new workers, they have been able to increase their selling prices without affecting demand. This is a good sign and it especially reflects better business conditions in the industrial, enterprise-level economy. Things are less robust at the retail, Main Street level.

One sector that Wall Street is looking for leadership in this upcoming earnings season is technology. Large technology companies disappointed so far this year, as analysts were expecting more growth from the big players. Those companies with large, retail operations—excluding Apple Inc. (NASDAQ/AAPL)—didn’t produce good enough numbers. And that’s why you have Hewlett-Packard Company (NYSE/HPQ) wanting to get out of the retail computer business.

Over the very near term, it’s continued choppy trading action. There is, however, something to be said for how well the main stock market indices are holding up.

I think investors really want to be buyers of stock at this time, but there isn’t much of a catalyst to do so. Institutional investors are buying, but they’re also playing on the market’s volatility, accentuating the results. Reality is beginning to set in now and there’s a realization that corporate earnings are actually going to be strong in the bottom half of the year. The employment situation isn’t great and neither is the real estate market, but the corporate economy is well-positioned to deliver solid earnings growth and this makes the current stock market look very reasonably priced.

Big, long-term investors relish the opportunity to buy stocks when the indices convulse on the news of the day. Whether it’s adding to existing positions or taking on new opportunities, institutional investors (and insiders) are buying blue-chip stocks in this market.

There’s been a lot of bad news lately that’s taken a toll on investor sentiment, but I view the reduced expectations for the economy as now being built in to current share prices. The big, remaining investment risk has to do with the sovereign debt issue inEuropeand the potential for a cascading run on banks in European countries. Because of this very real and serious investment risk, there continues to be an attitude of wariness about the domestic equity market.

Along with the S&P 500 Index, a lot of large-cap stocks that were the market’s leaders have crossed their moving averages on the downside. Technically, the argument for a rising stock market holds very little water. The only good news is that the stock market isn’t overvalued. Because of strong earnings and a reasonable valuation, the market is actually holding up quite well.

What everyone wants to know is what the future holds for the economy and stocks and it’s fair to say that the question is unanswerable. In my mind, the case for the bulls and the bears is about even. We could go into recession again. The stock market could go down some more. Or, the interest rates that are artificially low might finally produce the catalyst for the economy to accelerate in the fourth quarter, and so might the stock market. This is why a lot of individual investors are sitting on the sidelines; there isn’t much in the way of definitive economic analysis to take any bold, new action in this market.

What I know is that investment risk for equities remains very high at this time. Large-cap, higher-dividend-paying stocks should outperform small-cap stocks and micro-cap stocks. Gold shares remain the most attractive for equity speculators.

In a market without any defined trend, the news of the day makes the trading action. Expect more choppy trading action in the weeks to come. Pronounced stock market volatility is here to stay for a while.

I still feel that the most important news investors should be listening to is from corporations themselves. They are the enterprises, not government, and therefore they are the drivers of earnings growth. The fact of the matter is that we are in the age of austerity, and we deserve to be. All the excesses of the past have created the slow economic environment of the present. Investors’ concern about government cuts to spending is a worry that’s misplaced. The economy shouldn’t be based on government spending and stimulus; that’s up to individuals and entrepreneurs.

Just like last year, big corporations are saying that earnings are solid, and the expectation is for further improvement in the bottom half of this year. Many Wall Street analysts are increasing their earnings expectations for S&P 500 companies this year and next, and, based on those expectations, the stock market is looking very reasonably priced at this time.

No doubt, the sovereign debt issue in Europe and the debt-ceiling negotiations in theU.S.were confidence killers. Add in some weaker economic news and you can easily see why the stock market retreated. But I think this market has a real resiliency to it and there’s a good chance that it won’t break down. If this were to happen, it would go against what corporations are saying about their businesses.

There is one important factor that investors need to keep in the back of their minds. What matters most in capital markets is the numbers. Unfortunately, people don’t particularly count. What I’m getting at is that the stock market can tolerate persistently weak employment numbers if corporate earnings are growing. If employment was improving and so was the housing market, then I have no doubt we would be in a full-blown bull market right now. As this is not the case, I think the market will hold together and tick higher modestly as long as the earnings growth is there. All that really matters in the equity market are earnings and this news so far is promising.

There is one big reason why I think corporate earnings can keep growing even if growth in the domestic economy grinds to a halt. It’s the dollar—a weaker dollar that should persist for several years to come. A weaker dollar is the biggest gift to domestic exporters and large-cap multinationals, because the earnings abroad translate into bigger earnings at home as the dollar falls relative to foreign currencies. The U.S. Dollar Index, which measures the value of the U.S. dollar compared to a basket of the world’s main currencies, has bounced around quite a bit over the last three years. However, since the beginning of 2010, it has been in a significant decline. The near-term trend for this index looks intact and this is good news for corporations.

As I say, there are plenty of potential shocks out there and investor confidence is already low. With a little bit of stability on the confidence front, I see corporate earnings swaying investor sentiment going into the fourth quarter. Stocks should be able to advance based on earnings news alone.