Upcoming earnings season expected to be brutal - what to look for

As the first quarter ended this week, earnings season is about to unofficially kick off Tuesday April 7, when Alcoa Inc. (AA) -- the first of the Dow Jones Industrial stocks -- reports earnings. This earnings season comes with no small amount of jitters as the recession has deepened throughout the quarter, with the economy shrinking an estimated 4.5 percent.

In fact, this earnings season may be even more crucial to the market and the way investors see the path ahead. First quarter results are likely going to be awful, with expectations that Standard & Poor's 500 companies' earnings have fallen 36 percent from a year ago. Alcoa is expected to report a loss of 57 cents a share, compared to a profit of 44 cents a year ago, illustrating the problems we're facing.

But two main questions will determine the course of this earnings season: Are expectations too low or too high, and what will be the outlooks?