Analysts' estimates remain too high, in my opinion — and disappointment is likely to play a role in stocks early next year much as they did in October and November.

To get outside clarity on this issue, I've turned to independent credit analyst Brian Reynolds at WJB Capital. He points out that the consensus estimate for all stocks in the S&P 500 is $87 for this year and $93 for next year. Yet the S&P has actually only earned $46.10 per share in the past four quarters. To get to $87, all corporate write-offs would have to stop and the economy would have to improve enough to get back to peak earnings. Yet since peak earnings were aided by huge buyback programs created with leverage, it's going to be at least a few years before those levels are hit again.

So if you get real crazy and say earnings growth could be 20% next year as bank write-offs are eclipsed, it implies that the S&P 500 could show $56 in EPS. Slap the current index average PE of 15.5 on that number and you get a year-end 2009 projection of 868 for the index, about 30 points lower than today.

If you think earnings will struggle amid tough credit conditions and recession, pushing the aggregate estimate to $50 and the average index company's PE to around 13, then you get a projection of 650, or around 25% lower than the current quote.

At this point, we're just playing with numbers, but the exercise provides us with some guideposts. To even move back to August levels, around 1,250, we would have to see earnings rise 30% over the next year to $60 and the average PE multiple go to 21.

That's a tough bet.

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This article was written by Jon Markman, contributor to InvestorPlace Media. For more actionable insights likes this, visit www.InvestorPlace.com.