Throughout the summer, we’ve heard about declining consumer confidence (AKA, sentiment). The conclusion typically drawn is that low consumer confidence now likely means low consumer spending ahead. Until recently, warnings have been sounded about weak winter holiday sales.

Now, however, consumer confidence readings are creeping back, and retail sales are actually looking good. How should we interpret these moves? And how should we view those low, summer levels?

The answer is twofold.

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Boeing (BA) just reported good earnings, the 787 delays appear to be over and the company, along with Airbus (EAD.EU), picked up many orders from commercial airlines, now flush with baggage fee cash. My original reasons for owning Boeing have been fulfilled, so it’s time to move on to something more interesting.

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It’s been slow coming. After a rare quadruple bottom, the U.S. stock market has risen this month (October, no less!) amidst continuing angst and warnings. The whisper economic reports (“psst… they’re actually looking better”) remained out of the spotlight as Europe, politics and other negative “stuff” was tossed about as proof that we were not out of the woods.

Then came Thursday’s U.S. stock market sharp rise. Although the reasoning is that Europe’s problems appear solved, the gains contain much more information than that.

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Netflix (NFLX) management tried to do the right thing, but they implemented their strategy incorrectly. Unfortunately, their classic mistake cannot be rectified. Worse, because Netflix is non-diversified, the costly error could put it on a course similar to Blockbuster (BLOAQ).

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Strike one was Apple’s (AAPL) loss of Steve Jobs. Strike two is Apple’s financial report, while dazzling, coming in below expectations. Strike three? The pitch is on the way – but more about that later. First, let’s discuss why those first two items are clearly strikes.

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With their stocks well off their highs and significantly lagging the markets, Wall Street companies have gotten a bad rap. Add in congressional-regulatory disagreements plus “Occupy Wall Street” protests and many question the wisdom of owning any of these firms.

From a contrarian standpoint, this is a good environment to consider buying the good stocks that were tossed out with the bad. Among the “good” are three Wall Street firms that I believe are the best in their respective fields and could provide superior returns in the future: JPMorgan Chase (JPM), KKR (KKR) and, yes, Goldman Sachs (GS).

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How many times can this game be played? Google’s (GOOG) business strategies are questioned, recent acquisitions look less desirable, and doubts arise about the company’s ability to grow advertising revenues. All the while, the stock price meanders. Then: Voila! A nice, big earnings report drives up the price and silences the critics. However, the party soon ceases, and the cycle begins again.

The problem is that once-a-quarter happy time cannot offset the rest of the realistic quarter. The same management making the same mistakes over time makes a lousy investment. How bad is it?

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Similar to Alcoa’s (AA) earnings report, JPMorgan Chase’s (JPM) has more meat in the comments than in the numbers. Contrary to Alcoa’s focus on growth, however, JPMorgan CEO Jamie Dimon discussed the bank’s conservative, steady-as-she-goes approach, even cutting back on the previously announced aggressive branch expansion.

The question is, “What gives?”

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This earnings season just kicked off with a major surprise from Alcoa. It wasn’t what Alcoa (AA) did – it’s what it said. Although last quarter’s earnings came in under analysts’ already reduced estimates, management kept its sales growth forecasts virtually unchanged. “Kept” implies a passive, do-nothing attitude. Actually, it’s an active statement founded on management’s convictions.

There are two components of this growth projection, and each could fuel stock market gains, particularly the latter.

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