Another No Good, Very Bad Day For The Market?

There are bad days in the market and there are real bad days. Tuesday's price action has the potential to be characterized as a real bad day.

A year that began with a thud is not faring much better in its second week. In Monday's session, the S&P 500 index futures opened sharply higher only to surrender those gains and make a new low for the recent slide. However, it did manage to battle back and post a modest gain.

Tuesday's price action is more damning. What was a 25 handle gain has dissipated as the index struggles to stay in the green.

Why?

Why is the price action so troubling? Perhaps the "buy the dip" mentality has faded and "sell the rip" is the new mantra for the market in 2016.

Alcoa Inc (NYSE: AA) got the unofficial start of earnings season off on the wrong foot. Despite a slight EPS beat, its revenue miss of roughly $500 million has the Street sending the issue towards it April 2009 low ($7.03) as it lower by $0.72 at $7.28.

For now, earnings reports later in the week will be more determinant of the next major move in the market.

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Big Banks

On Thursday before the market opens, the Street will be digesting earnings from financial giants JPMorgan Chase & Co. (NYSE: JPM). After the close, the Street will get earnings from old-time tech giant Intel Corporation (NASDAQ: INTC).

On Friday before the open, several financial institution will be reporting Q4 earnings.

These include Blackrock, Inc. (NYSE: BLK), Citigroup Inc (NYSE: C), Wells Fargo & Co (NYSE: WFC) and PNC Financial Services Group Inc (NYSE: PNC). Keep in mind, the purported hike in interest rates, which is said to be beneficial sector, will not be fully reflected in these Q4 reports.

In view of the index's recent fall from grace (knocking on the door of all-time highs in December), it's now much closer to its lows from the Flash Crash-low in August.

Based on the March 2016 contract, that low comes in at 1814 or roughly 100 points from its current level. For technicians that were calling for a retest of that critical level, if this earnings season disappoints, they may very well see that scenario come to fruition.