Soft Earnings Expectation Ahead...

FUNDAMENTAL ANALYSIS
Just as I feared, companies are coming out of their holes one by one to warn of soft earnings ahead. I have been building a case of a possible STAGFLATION over the past few days and these earnings warnings just days ahead of the earnings season further supports that view. Gold also hit a record high of $880 today as inflation fears rises dramatically. Growing inflation fears, sloppy earnings ahead and slowing employment... everything continues to point to the dreaded STAGFLATION. What if the Fed really do cut rates again? Well, it will definitely feed the stock market for a day or two but when the inflation numbers start coming in much higher again follow that, the stock market is going to take back all that gains and go down some more... we have seen that over the past few months now, haven't we?

TECHNICAL ANALYSIS
The Dow was so extremely weak today that the November low failed to provide any support at all! Rather than go up a little to test the 30WMA before falling down the cliff, it is jumping right off the cliff right now! I am going to look at the Aug lows at about 12517 for some support, otherwise, this market is cooked! That being said, with such a panic and the total equity put call ratio surging into put options, it is not surprising to see that reaction rally up to the 30WMA over the next few days. Stock Options traders might want to make sure your aggregate options delta is negative by now.