Mostly bad luck. The pitching isn't great-- but it has underperformed and should get better. There are just a few small things I've noticed on audit:
1) Flyball staff, flyball park. You're on pace to give up 241 homers, which is a ton. Nothing you can fix easily...
2) 2B/SS defense is only fair, although the rest of the team is fine. Instead of playing Boone Oliver until he literally rolls over and dies on the field, rest him against the occasional RHP and play Joakim Araujo instead.
3) I think you might be overextending your starters a bit in the 4-man... try cutting pack pitch counts a little. If that fatigues your pen, ditch Pat Martin, who blows, and get a higher-innings, higher-quality replacement at the trade deadline. In fact, do that anyway.
Patience. It will get better.