For the most part, earnings for the second quarter have held up fairly well. Considering that Wall Street was expecting a 1 percent decline for Q2 earnings as compared to the prior year, most reported companies have been able to clear expectations. Yet, the markets are still uncertain as European troubles have managed to creep back into the picture after a very brief pause.

This week, we asked Toni Turner of TrendStar Trading Group for her thoughts on some key earnings results from major companies, as well as her expectations on Spain’s impact on the market.

EQ: After receiving a boost from positive earnings posted by early reporters, Financials have been unable to maintain that momentum with disappointing results last week from Morgan Stanley (MS), Bank of America (BAC), Goldman Sachs (GS) and American Express (AXP). What do you make of this sector? Is there a play here?

Turner: We see Morgan Stanley come out with second quarter profit down 54 percent from a year earlier, and of course a lot of their losses are from lower trading revenue. We’ve seen that quite a bit. Some of these banks are obviously being impacted by the shifting economy and added regulations. Of course, this particular sector is one of the most important because it provides leadership to our economy. If the Financial Select Sector SPDR (XLF) trades under $14, which is the 200-day moving average, and if the entire market is moving south, that might be a short candidate. However, if the Fed keeps hinting about adding more stimulus, then the banking sector benefits.

EQ: Last week saw some positive signs too as major corporations like Google (GOOG), Microsoft (MSFT), GE (GE) and others beat their expectations. Is this promising for the market?

Turner: Absolutely. What I want to see here is if there is upward momentum for the companies that are doing well and if they can sustain that momentum. I think now we’re facing the problems from Europe again. We were able to ignore them when Federal Reserve Chairman Bernanke was speaking last week, but problems from Spain and Greece particularly are emerging with added fury. So I think this week we’ll be turning back to Europe. So I would not jump into any big issues in the spotlight right now, but you have to realize that the time period between May and October, and the earnings season that comes into it, is a very trying time. At Toni’s Market Club, we get into very conservative stocks that stand a better chance of sustaining up moves.

EQ: As you mentioned, Spain renewed the market’s worries over Europe’s financial crisis, overshadowing most other headlines to drag stocks lower. Is Europe back in the driver’s seat?

Turner: I expect Europe to keep retaking the stage over and over again. I think that what has happened is going to be what continues to happen, that is, European headwinds will continue to crop up, no matter what else is going on. If the worries from Europe start mounting, and it looks like they’re going to as you see more and more articles about the dollar and the euro reaching parity. We have to remember if that’s the way this path takes, that means the U.S. dollar will of course rise against the euro. Currently when the dollar rises, it takes our markets lower. I’m trading with small share size and a good deal of caution.