Inventories of crude oil fell for the week, which pushed oil prices further into record territory above $130. The airline index is getting crushed, down -5.5% after AMR announced it is cutting its 2008 domestic capacity by 11-12%.

The company said the airline industry is not build to withstand oil prices at $125 per barrel. First off, I don't remember any of these guys doing such a great job operating their businesses even when oil was at $25. Second, since fuel costs are one of their biggest inputs, shouldn't these guys have sophisticated hedging programs on to reduce the risk of a big spike in oil?

There were a few more earnings reports last night (INTU, ADI, BJ), which actually came in better than expected. But most of the stocks are lower this morning.

Financials are weak again, and the major indexes were briefly higher after the open but have since slipped into negative territory.

Asian markets were mixed overnight, while the dollar is down again vs. the Yen and Euro; the 10-year yield is back up to 3.80%.

On the plus side, the put/call ratio closed at 1.10 yesterday, and has again opened at a high level of 1.26. So at least traders aren't taking these declines lightly. The ARMS Index just hit a high level of 1.64. My gut tells me this pullback might not amount to much more than a 2-3% wiggle.