War in the Middle East coupled with tempered earnings expectations sent the market sharply lower this week:

Dow -3.2%

Nasdaq -4.4%

S&P 500 -2.3%

The week began innocently enough with plans to evaluate stocks on their earnings reports. Investors seemed ready to stop thinking about interest rates and start thinking about company prospects. Alcoa (AA) would report after the closing bell and we'd officially be into second quarter earnings season.

Yet, talk ahead of the report turned to the technology sector and its widely expected tough times ahead. Applied Materials (AMAT) fell 1.8%, Dell (DELL) fell 1.6%, and Intel (INTC) fell 2.1%. By the end of the day, the averages finished roughly unchanged with the Dow up 0.1% and the Nasdaq down 0.6%.

Tuesday looked better. Alcoa posted record earnings the night before, but mentioned that sales were a little short and that the third quarter is always a tough one. That spoiled the mood a bit and sent stocks down until mid-afternoon, when somebody put out the word that tech stocks were oversold.

Investors seemed to ask in one voice, Have we hit bottom in this sector? Just the thought was enough to send tech shares sharply higher, and all major indices into the black for the day. Applied Materials gained 2.2% while Intel gained 2.7%.

That was the last good news for the week.

On Wednesday, Israel's expanding war on both its northern and southern borders sent oil prices higher and stock prices lower. In the midst of that downdraft, some key analysts seemed determined to make the worst of an already bad day. UBS lowered its earnings estimate for Dell and sent the stock down 4.4%. Credit Suisse said that it expects Apple (AAPL) to guide revenue down, and the shares closed 4.8% lower.

At the end of the day, the Dow had lost 1.1% and the Nasdaq 1.8%.

The war got worse on Thursday and the market followed. Oil cracked $77 a barrel. The analysts didn't let up, either, giving out downgrades to both Disney (DIS) and Wal-Mart (WMT). The market started out on the downslope and stayed there all day.

On Friday, oil pushed through $78 a barrel and June retail sales came in with a 0.1% drop. Rising oil prices during the summer driving season, analyst downgrades as abundant as summer blockbuster movie tickets, and earnings expectations tempering all came together to make it a bad week.

At Friday's closing bell, the market had lost more in a three-day period than it has in the last twelve months.

Next week, attention will be on the Mid-East war and further earnings reports. While reports so far have come in pretty strong, they weren't enough this week to counter the prevailing seasonal trend and the headline of an escalating war in oil country. It's anybody's guess as to how the war will resolve itself, and therefore I can't make a meaningful forecast for the near term.

What I can do, however, is stick to my year-long forecast of trouble in Aug/Sept while noting that it started earlier than I thought. I continue to urge making a shopping list for cheaper prices ahead. It's one way to feel good about the market as it heads lower.

It's also important to keep the recent volatility in perspective. We've seen all of this before. History suggests that the best way to handle a sinking market is to buy into it. Do not sell your good companies at a loss because of a war in the Mid-East. The fortunes of very few companies depend on the geopolitical situation in Israel. This storm will pass, and another one will come, and solid companies will come out on top. They always have.

That said, it's nice to get them on the cheap. That's why you should be thinking of buying more shares of your good companies when their prices fall, or establishing new positions in companies you've been watching that finally come into buying range.