US stocks are set to enter into bear market territory this morning ahead of the unofficial start of earnings season. But there’s a surprising amount of optimism to be found here at Contrarian Profits. 

CNN reports that at 6:51 a.m. ET, Nasdaq and S&P futures “were off their lowest levels of the morning but still suggesting opening losses for Wall Street.”

The S&P 500 index closed yesterday just above above bear market levels. The Dow and Nasdaq, however, are officially in bear markets – both are roughly 20% off their October peaks.

It’s little wonder investors are wary of stocks. Bill Patalon III in Money Morning points out that 2Q corporate earnings declined 11.1 percent, much worse than the projected decline of 2 percent.

But Bill says the real key to the stock market’s future may well lay with major multinationals…

In recent quarters, many multinational companies – we often refer to them as “Global Titans” – have weathered the domestic storm. The reason: They’ve been able to generate substantial revenue and profits from continued growth in emerging markets and from the weak dollar (which increases demand for the “cheaper” U.S. goods). Unfortunately, this trend may be coming to an end as global inflation heats up and slower international growth means that multinationals may be losing their safety net.

Fortunately, many of the contrarian gurus we publish here see plenty of opportunity to profit in bear-market conditions.

Justice Litle, the new editor of Taipan Daily, says that although the bear market is bad news for all ‘buy and hold’ investors, “for those of us who know markets can go down as well as up — and who aren’t afraid to buck convention – there are plenty of ways to ‘beat the bear.’”

Keith Fitz-Gerald in Money Morning says it’s the spectators — those who sit on the sidelines clutching their cash — that are the real losers in a bear market.

Keith has set out five rules for bear-market invesing: 1) Don’t try to catch a falling knife; 2) Don’t overpay; 3) Look for pricing power; 4) Watch out for the “new research coverage initiated” signal; and 5) drill for dividends.

Read on here to learn more about why this bear market is good news for investors.

Of course, Barry L. Ritholz pointed out yesterday in BigPicture.com, 13 out of 15 past one-month Dow selloffs — like the one we saw in June — have been closely followed with a significant snap-back. Except in 1973 and 2001. All you need to work out now is whether today’s conditions are more like 1973 and 2001 or the other 13 periods. Then you have your trade.