To say the stock market has started the year on a rocky note is a bit of an understatement. Some might chalk things up to the leading cause, the lack of a Santa Claus rally at the end of 2015 and into 2016 (given the 2.3% drop in the S&P 500 from Christmas Eve through Jan. 5). But from my perspective, the market once again has been hit by what we would call a healthy dose of reality with more than a sprinkling of uncertainty.

The drivers behind the market move lower included a healthy dose of uncertainty following North Korea’s latest nuclear bomb test early in the week. Also, there were the latest go-rounds between Saudi Arabia and Iran that have more than likely extinguished any chance of these two major producers working together to cut production amid the growing oil supply glut, plus renewed concerns about the growth of the global economy. The net effect was a 6% drop in the S&P 500 for the week, marking the worst start of a new year since 1928.

Given the relationship between individual stocks and call options, the last week has resulted in even greater losses for our Tematica Select List. As you’ve probably seen, given the sharp move lower in our Fitbit ([stock_quote symbol=”FIT”]) and Mobileye ([stock_quote symbol=”MBLY”]) positions, as well as those for Disney ([stock_quote symbol=”DIS”]) and Amazon ([stock_quote symbol=”AMZN”]), it’s become a case of shoot first and ask questions later.

Digging into these and other moves, as well as looking under the hood of the market, leads me to think that, at best, the market will move sideways through the upcoming December-quarter earnings period. As I’ll explain in a minute, it’s more apt to head lower before stabilizing. Therefore, let’s look to minimize any additional losses by exiting your PayPal (PYPL) January $35 calls (PYPL160115C00035000), Regal Entertainment (RGC) January $20 calls (RGC160115C00020000), Wells Fargo (WFC) February $60 calls (WFC160219C00060000), Mobileye (MBLY) February $46 calls (MBLY160219C00046000), and the Fitbit (FIT) February $30 calls (FIT160219C00030000).

Following those trades, you should have no active trades left in your Tematica Select List other than the Disney (DIS) February $110 calls (DIS160219C00110000). While I aim to hold that position, be sure to set a protective stop at $0.40. I’m sure the idea of having no active positions has raised an eyebrow or two. However, given the fast drop in the market last week, I would look to use any near-term market strength to selectively add a few put trades or call options on inverse ETFs such as ProShares Short S&P 500 ([stock_quote symbol=”SH”]).

Why not today? Based on the latest reading for the S&P Capital IQ Short-Range Oscillator, the market is oversold. That reality means we could see a “dead cat” bounce on any modestly positive news.

As for why I think the market is poised to go lower before heading sustainably higher, the December PMI and other data published early last week from ISM and Markit Economics echoes what I’ve been seeing in the monthly truck tonnage (down 0.9% month over month in November) and monthly rail carload traffic (down 15.6% year over year in December) railcar loadings. Plus, we have a slowing domestic economy and continued contraction in the China economy. From my perspective, this led to a very unsurprising cut by Deutsche Bank in its gross domestic product (GDP) growth forecast for 4Q 2015 and 1Q 2016. The firm now has its GDP growth forecast for 4Q 2015 at 0.5% (down from 1.5%) and its revised take on GDP in the current quarter at 1.5%, down from 2%.

Candidly, I expect more to follow as recent data get digested. The World Bank recently cut its outlook for China’s growth in 2016 to 6.7%, from 7% in June, and expects Brazil’s economy to shrink 2.5% this year and Russia’s to contract 0.7%. Meanwhile, the World Bank has reduced its 2016 global growth forecast to 2.9% from 3.3% last June, which helps explain the demand side of the equation for falling commodity prices. I’m keeping tabs on these commodity prices, such as copper and steel, which could be a leading indicator for a pick-up in the global economy.

The growing amount of data I’ve been seeing over the last few months point to a mismatch between the slowing global economy and earnings expectations for the coming year. As I have shared previously, I do not see how the S&P 500 group of companies will jump-start earnings to match the current consensus expectation of 7.5% growth year over year in 2016 vs. 1.1% in 2015. As we head into the December-quarter earnings season, I expect to see the above confluence of factors result in more companies offering cautious outlooks for the coming year than prognosticating robust growth. There are plenty of reasons to tread carefully near term, along with potential downward earnings revisions for the S&P 500.

Exactly how low those earnings expectations will go remains to be seen, but what it means is we are likely in for more turbulent times as this resetting occurs. We’re already starting to see more of that as Goldman Sachs ([stock_quote symbol=”GS”]) lowered its 2016 earnings forecast for the S&P 500 to $117 per share vs. the $127.05 per share figure published by FactSet at the end of 2015. I expect more downward revisions to follow.

When these revisions happen, it tends to be less than pleasant. In all likelihood, it means the market will trade sideways to down further until all the “bad news” is digested. While the S&P’s forward multiple has fallen a few points to 15.2x, those arguably lofty 2016 earnings expectations likely will boost the forward multiple back up over 16x alongside slow to no earnings growth.

This means I will continue being prudent as we navigate the upcoming earnings season that kicks off today with Alcoa’s results and picks up substantially in the following days. It is better to keep our powder dry and strike when the time is right than look to be a hero and buy before the market storm gives way to a discernable path ahead.