It's a sea of red out there ‎this morning with indices around the world getting slammed downward. Following on from bearish key reversals in the NDAQ and SPX, plus the Dax completing a head and shoulders top Thursday, markets may have passed a tipping point. 

US index futures are down this morning with NDAQ futures down 0.9% outpacing the 0.4% decline in SPX futures to the downside. Amazon.com could drag on the market today after missing badly on earnings. Amazon earned $0.40 per share last quarter way below the $. Street estimate as the company invested in distribution and logistics to move product. Management indicated that increased spending in the current quarter to increase capacity ahead of the holiday season could lead to its first quarterly loss since 2015.

The stock market rally of the last nine months boosted valuations dramatically and while many companies posted earnings strong enough to satisfy the street, companies who miss have been punished severely such as Twitter who took a 14% haircut Thursday. A number of companies did beat the street including Electronic Arts, Intel and Merck. 

Meanwhile, Australia's resource weighted S&PASX fell 1‎.5% overnight which could impact sentiment toward Canadian share today. Commodities are mixed with copper falling 0.3%, gold steady and WTI up 0.3%. European indices are also under pressure this morning with the Dax and FTSE both falling

We're quickly heading toward the end of the current earnings season toward the historically seasonally weakest and most volatile time of the year for stocks, mid-A‎ugust to mid-October. With an incredibly low VIX indicating high complacency, markets could be vulnerable to a shakeup.

One potential catalyst for a correction could come from US domestic politics. Budget negotiations are coming and with the US getting close to its debt ceiling, the risk of a government shutdown is growing. The potential for politicians to agree on anything has faded dramatically in the last 24 hours. 

Republicans couldn't get enough Senators to pass a scaled back Obamacare repeal bill that would have removed the three most unpopular aspects, and the border adjustment tax was removed from the tax reform plan. Press reports this morning also suggest plans to do something to help the US steel industry are running into obstacles. 

Political risk in the US has been ignored by the street lately but could come roaring back to prominence in the coming weeks.

‎For today, the focus is on GDP reports for the US and Canada. Expectations are high on both sides of the border, but earnings so far suggest the Q2 business environment has been positive. Earnings from Big Oil (ExxonMobil and Chevron) could attract attention, particularly from traders looking to see if these two join the parade of oil companies cutting back on capital spending this week.

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