Judgment day for the market is upon us. This afternoon after the market closes AA will kick off earnings season. The average estimate appears to be .66. The chart for AA looks horrible. The stock has been hammered the past few weeks, but so has the rest of the market. Is all the selling in AA justified, or just another boat sinking with the broader market?

In my Are we all doomed? article I predicted that the market is very close to forming a short term bottom and that I am looking for good beaten down companies to pick up. Whether or not the market is truly near a short term bottom will be affected by how AA responds tonight. Good earnings from Alcoa and the market may shake some of its pre-earnings jitters.

Applying my short term market model to AA I see that it predicts the next valley to occur around $30.86. The average margin of error using this model on AA is plus or minus $1.34. Given that the low today for AA touched $31.02 its very likely the low is in. Even if the true low is not in, I expect it to be a pretty safe trade right here. However, AA is a bit off its lows for the year. If it misses badly on the earnings, or the broader market continues to tank. Its very possible to revisit those lows.