The second quarter earnings season is proving to be a critical point in the cycle of recession and recovery. Optimistic -- or rather, better than bad -- outlooks from the likes of IBM (IBM) and bellwether chipmaker Intel (INTC) are providing further evidence to our pundits that the worst of the recession is over, but that may be about all they agree on.

Even ultra-bear Nouriel Roubini, who is credited with predicting the current collapse, said the economy is turning a corner although he took pains to note that he believes the recession is still far from over. "I have said on numerous occasions that the recession would last roughly 24 months," he wrote on his blog on Thursday. "Therefore, we are 19 months into that recession. If, as I predicted, the recession is over by year end, it will have lasted 24 months with a recovery only beginning in 2010."

Nevertheless, Roubini's comments sparked a rally on Thursday -- one of several throughout the week as upside-earnings surprises fueled investor optimism. The Dow Jones Industrial added close to 600 points over the course of the week, closing at 8,743.94 on Friday.

While many of our pundits agree with Roubini that the economy is showing some signs of life, opinions diverge on the timing of a recovery and how investors should position their portfolios to take advantage of it.

"The recession is over," proclaimed Bank of America/Merrill Lynch chief global strategist Michael Hartnett in a report on Tuesday. "The global recovery is likely to be slow and require sustained policy help."

While Hartnett believes investors should "rebalance their portfolios to reduce cash, and look for opportunities to increase equity exposure while staying with high quality bonds," other pundits are taking a more cautious approach.

Robert Arnott of Research Affiliates says he fears that the markets have gotten ahead of economic reality during the most recent rally, and if anything, this is the time for investors to take profits.

"A thorough exercise of asset class valuations reveals that many once beleaguered asset classes may have come too far, too fast in this recent rally. Accordingly, now is likely a time to take profits and to resume our cautious vigilance of 2008," he wrote in the firm's July newsletter on Wednesday.

A similar tone of caution was sounded by Barry Knapp, market strategist at Barclays Capital. Knapp says analysts' earnings forecasts are too optimistic given current macroeconomic indicators and investors may be set up for some disappointment. Nevertheless, he raised his year-end price target for the benchmark S&P 500 to 930 from an earlier, gloomier 875.

"Company guidance and outlooks should improve somewhat. So, the economic recovery thesis is unlikely to be dealt a major setback by equity earnings," he said of the parade of earnings results. "However, we continue to believe that analyst and company expectations about the shape of the recovery are overly optimistic. In other words, by our analysis, 2010 estimates are still too high and will act as a headwind for equities in 2010."

And while upside-earnings surprises and a strong outlook for the second half of the year from Intel was indeed a promising sign, Ed Yardeni, founder of Yardeni Research, says the chipmaker's earnings report offers support for his belief that the rest of the world may recover faster than we do.

"Consumers in emerging economies rather than in the U.S. are likely to lead the global recovery. The best way to play this theme is with IT companies, which should benefit from rapidly growing demand for cell phones, netbooks, and flat screen TVs," he wrote Thursday. "The U.S. may no longer be the locomotive, with emerging economies in the caboose."