Points today. Its seventh consecutive decline. S p sank. 6 . Strong dollar and Lower Oil Prices are once again wreaking havoc on the stock market. Just like it did earlier this year. Until we got that nice respite in july, a respite that sadly now seems over. So how the heck did we end up back in this ugly situation . What are we supposed to do about it . Why dont we start with the key culprit . Oil. Oil declined 20 from its recent highs which qualifies as a bear market. Whatever thats worth. Its remarkable how little investors seem to care as oil plunged from 50 down to 40. The whole market moved higher. Often led by none other than the oil themselves. This paradoxical action culminated in oil crashing down to 41 last friday. The same time many oils as well as the broader s p 500 moved higher. But as of this week, that decoupling, it no longer seems to be the case and as oil blew through today, most of the market rolled over including glaringly many industrials, technology and consumer stocks. Why are those stocks linked to the price of oil again . Because as i mentioned last night, theres a growing belief that the autos, which had very weak Sales Numbers today, are signaling a slowdown in the domestic economy. And the Weak Oil Market is signaling the same thing. This is the demand story i keep telling you about. That there just isnt enough demand out there or oil would be going up, not down. Today, the weakness theory was buttressed by the action not just in the autos but in ablidration of the Airline Stocks. We have to dig deeper, dive into this situation, understand exactly whats going on because frankly were getting some very strange cross currents out there. And i want you to know them. Why dont we start with the bear case . To the bears, oils is going down because not enough is being used which is theoretically what happens in a slowdown. The cruise lines are down because there isnt demand for tickets. Royal caribbean, it reported this morning, it wouldnt be sunk 6 if it wasnt for consumerled weakness because it happens to be a very strong operator. Same goes for the airlines. Theyre all being clubbed. Again, if youre a skeptic, you have to believe its related to the demand side. American which gave up 5. 87 , delta declined 7. 83 . Southwest down 4 . United continental which lost 6. 6. 25 , they dont fall this hard if theres steady demand for seats, right . So given that empirical evidence, should we conclude the economy is weak and its time to start dumping stocks . Not so fast. Lets look at the situation through a less skeptical prism just for a moment. Turn the stories on their heads simply as an exercise in critical thinking. First, oil. We learned from rbn energy, the newsletter i read to get the skinny on oil thats been uncannily correct that in the last few weeks the flow of crude from the Canadian Oil Sands which hazstaunched by the wildfires has come back with a vengeance. All million are back in play. Oil prices have been artificially elevated, not increased demand, not by increased demand but by a lack of supply caused by the conflagration. The addition of the new canadian Million Barrels a day is overwhelming the market, not lack of demand. Driving this summer shows a pickup in gasoline use. Pure demand. That gets in the way of the story but its just the fact and were stuck with them although well dive deeper into the Oil Conundrum later in the show. Royal caribbean that i mentioned earlier, the stock got wrecked today. Why . Not anything the company said other than currency, strong dollar and slower Chinese Market and maybe higher fuel costs. Now, of course, with oil well below where it was when the quarter closed, the negative fuel case, its diminished. The dollar, it is a problem. Ever since the brexit vote, the dollar has been getting stronger. Ive been uncomfortable about that fact. I think the markets been ign e ignoring it. I dont like whats happening to the dollar. Its a real negative for certain. I totally get why people would be concerned if the pace of the dollar rally continues. Lets be candid. When richard faine, ceo of Royal Caribbean came on cnbc this afternoon, what was he asked about multiple times . The zika virus. With the cases in miami being Headline News and cruises emanating from miami, thats the journalistic focal point. The company said on its conference calm al and cnbc cfo described north american demand unwavering, said there are, i quote again, solid trends in our caribbean portfolio, end quote, where the winter bookings are, again, quote, in a very strong position. Now, the analysts on the call took all that positive news as gospel. There were no questions about zika at all in the call but the zeitgeist around the stock is about zika. I would add the entire decline in the airlines and travel and leisure, the spread of zika and the apparent inability to control it, bookings in the future will be canceled. Its not farfetched. You cant deny the concept. During the ebola scare two years ago, we saw a huge decline in the Airline Stocks without anything really ever happening to their actual fundamentals. I dont care if the Royal Caribbean analysts arent interested in the zika viral. The journalists are dead right to ask. How can they not considering how top of mind it is . We can argue its not the demand side. Remember, exercising critical thinking. Its not the demand side drying up. Its the supply side expanding because the canadian tar sands. Argue its not the demand side of the airlines or cruise ships but its zika. So, to take our cue on the consumer for either would be wrong. Wheres it leave us . Once again, in a rational world, you think oil going down is helpful. We should feel better about the state of the economy if the transports are going down because of the zika virus, not lack of consumer buying power. At the same time, if the stock market is linked tightly to oil prices, were going to have to accept the markets judgment is going to it difficult here even if it isnt necessarily based in fact. As long as its in command and control, we need to learn to live with it again. Break out the january to june aybook. So whats the next domino to fall if oil keeps going lower . It will be the banks. When the banks reported a month ago, oil was at 50. Looked like it was going 60. Remember that . People are starting to worry about how the banks are on the hook to the Oil Companies just like they did earlier this year. Again, because im less bearish than most on oil, i dont really think this concern merits you selling everything, but i dont think it deserves that, but like clint says in unforgiven, deserve has nothing to do with it so you need to be prepared for the major blananks to come n off this oil story. Many of the Oil Companies refinanced by issuing equity, banks have been able to sell bad loans. Could see more weakness in technology. Some bad numbers after the close today. And the industrials as investors ponder how deep the socalled slowdown that theyve manufactured in their minds seems to be. Remember, perception always trumps reality when it comes to stocks. At least initially. Sooner or later, though, well settle into a factbased situation where we can try to make money off of whats actually happening, not the bogus nightmare scenarios that are so easily traced out and believe me, i can do on this show, i could do without a problem. Let me give you the bottom line here. Brace yourselves for those continued worries about declining demand. Even as i suspect its really the supply side and the zika virus and its fears that are really driving the bus. Richard in new york. Richard . Caller hey, jim, its richard from new york. I enjoy watching your show. Thank you. Caller i have a question about paypal holdings. Last week, they came out with their earnings. They actually had a pretty good quarter. They met the estimates on their earnings per share. They beat revenue. They announced that theyre going to increase their revenue through the year and they announced a Strategic Partnership with visa. So everything seemed to be pretty positive. And the next day the stock dumped 10 . Right. Richard, my charitable trust, we september out a bulletin saying to sell the stock. We couldnt because, of course, were frozen. The thing that worried us, once you got that deal with visa, maybe that was the upside taken away and there was also a sense that maybe some of the rate of growth has slowed. I always welcome management to come in and clarify the situation, but were not jumping up and down telling you to buy here. Even though i think it can go lower, it had been the subject of something that jack moore, Research Director and i were talking about the whole day but not yet. Not yet. Paypal can still go a little lower. Otto in florida. Otto . Caller hey, jim. Thanks a lot for you and all your staff for all the hard work you do to keep us informed. Thank you. Caller big booboobooyah from ft. Lauderdale. Good to have you. Reporter gopro, with christmas around the corner, the new camera coming out, where does gopro go and where is the future at . This is important. I think gopro can go a trade to go higher. I think it can be a trade, not more than that because youre playing it for seasonal basis because they do have a hotter camera thats out there. Not an investment. And i think when we have to we have to really understand the difference so nobody says im backing up the truck gopro. Im certainly not saying that. All right. Anyway, theyre back. The dollar. Oil. Even zika are top of mind on wall street. And these concerns could make for a bumpy ride. Oil prices settled at a fourmonth low today. Last week the world bank raised the food price forecast. Where is this commodity actually headed . Im going to dust off the charts to find out. Ford is down 13 over the last 5 days because of a worry of a slowdown. Is the drop worth it . Ill give you my tame. Zillow, Kimberly Clark connect their businesses. Could it help your portfolio as well . Im sitting down with the ceo of one of the hottest stocks out there, servicenow. Find out what it has to offer. Announcer dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet cramer, madtweets. Send jim an email to madmoney cnbc. Com or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. You tell your Insurance Company they made a mistake. The check they sent isnt enough to replace your totaled new car. The guy says they didnt make the mistake. You made the mistake. I beg your pardon . He says, you should have chosen fullcar replacement. Excuse me . Let me be frank, he says. You picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, well replace the full value of your car plus depreciation. Call and if you have more than one Liberty Mutual policy, you qualify for a multipolicy discount, saving you money on your car and home coverage. Call Liberty Mutual for a free quote today at thats liberty stands with you™. Liberty mutual insurance. Keeping the power lines clear,my job to protect public safety, while also protecting the environment. The Natural World is a beautiful thing, the work that we do helps us protect it. Public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. We want to keep the power on for our customers. We want to keep our community safe. This is our community, this is where we live. We need to make sure that we have a beautiful place for our children to live. Together, were building a better california. Price of oil has been sinking for the past few weeks, yet until recently as we said at the top of the show, this pullback in crude barely had any effect what stovr on the strength of the stock market which is amazing when you consider earlier this year the averages were pretty much joined at the hip with the action in oil. West texas crude broke down below the key 40 level today and the stock market finally took a real hit. Tonight i want to go off the charts with the help of carly grarner, cofounder of the carly trading as well as being my colleague at realmoney. Com and the author of a new book with the higher probability commodity trading. Came out just last month. Garners our resident oil expert. Shes been very right. We got to know her thoughts about the selloff of crude. I got to tell you, you may not like what youre about to hear. So far, garner says the oil has been fairly orderly which is why the markets have been able to ignore it she thinks. However, as the price of crude drifts lower, she expects the weak energy bulls to get washed out crushing oil, thats right, crushing it and sending the stock market lower right along with it. Remember, this garners view. Garner believes the oil market has to get worse before it can get better and shes got a number of compelling reasons. First and foremost, the price of crude is subject to pretty strong seasonal patterns. Garner says oil has a tendency to trade down through early august. Further, going into the end of the year, the most common pattern is for oil to trade sideways, go slightly lower. While crude might get a boost from potential supply disruptions and could be helped by rising demand, the simple fact is the seasonality issue will still be on the side of the bears for quite some time. More important, though, is the makeup of exactly who owns oil futures right now. Thats why we need to take a look the a that this weekly chae west texas crude. With the results of the Commodity Futures Trading Commission commitment of traders report on the bottom, the sca socalled c. O. T. Report. This is a great tool when were talking about commodities. Every week the cftc measures the net long or net short positions of all the large speculators meaning big institutional Money Managers as well as smaller speculators and companies actually buying and selling oil futures for legitimate hedging purposes. Its the large speculator cohort that we care about because theyre the ones who are really driving the action here. When the price of oil peaked back in june, garner points out that these large speculators amassed a netlong position of 300, nearly 370 futures contracts. 370,000. Put that in perspective, this was the biggest bullish bet by socalled smart money since before the oil collapse back in mid 2014 when a barrel of crude was still worth more than 100. In other words, at the top, everybody was long. As garner has told us repeatedly, whenever the big boys get carried away like this, its only a matter of time before they get carried out. We get a nasty selloff. All these Money Managers who are betting on oil going higher are forced to liquidate. Thats because when everybodys long oil or anything for that matter, it means theres no one left to buy. Since the high in early june, the price of crude has declined by more than 20 . Remember, bear market. Garner says thats the result of liquidation. Even after all the selling, this is whats amazing to me. The large speculated group has only decreased their holdings by 17 . Meaning theyre still net long on oil by about 273,000 futures contracts. Thats why garner thinks the liquidation is far from finished and could be even more painful ahead. Ever since oil prices peaked two years ago, crude tends to bottom when the netlong position drops to the neighborhood of 200,000 futures. Its 270,000 right now. Then we could get a bottom. If thats where were headed, garner believes it is, she expects oil to fall to the mid 30s. Consider the daily chart now of west texas. Given that this oscillator which measures whether securities got an overbought or oversold, has reached seriously oversold territory. You might think that oil is zdu for a balance. Same goes for the relative strength. Rsi. Another important gauge of momentum. Rsi all the way down. However, in this case, garner thinks these indicators may have gotten ahead of themselveses. Sure, she says its possible we get an oversold bounce that briefly sends oil back up to its highest 45 bucks but she thinks its more likely oil will keep trickling downward until the big boys finish the liquidation we just mentioned. Any Short Covering rallies are likely to be short lived and garner believes the speed of it could accelerate. She points out bottoms in oil are rarely quiet. They tend to involve dramatic and painful declines that flush out the weak bulls before a rally finally emerges. Unfortunately, garner says were yet to see a real washout and until that happen, she doesnt think we can bottom. Based on this chart, she can see oil dropping to 38. 50, a buck below where its currently trading or as low as 32. 50 if things get really out of hand. However, garner thinks the most likely scenario is oil will get bushed down near its floor of support, the 34. 50, and if it holds there she believes thats when crude could start to rebound. However, once that wipeout happens, garner says oil can start moving higher again. So take a gander at the weekly chart. This is a little daunting here. Similar to what we saw in the daily, this longterm chart also subjects oil will find some port at 35. Thats where we found our footing when oil briefly sold off in april. After we bottomed there, it managed to rally all the way back to 50. That said, if oil breaks down below 35, heres the nightmare snar wroe. Garner says its going to get real ugly, just nasty. In fact, below 35, there wouldnt be much support, we sink down to the, get this, back to the 20s. Near the february lows. And if oil somehow doesnt hold above 25, traders would start eyeing, i cant even mention okay. 15 is the next logical floor. However, garner doesnt expect things to get that brutal. She thinks its more likely the weak candid bulls will get shaken out as oil goes to 35. The sticastic operator in the rsi will move into oversold territory and on the weekly chart, more important than the daily, remember, we had the daily before. Weekly is not oversold as much. Then things can turn around. Once the big boyce are finished liquida liquidating, that will allow the price of oil to move higher. Garner won be surprised if it heads back to remember, a weak green back sends oil higher. Put it all together, while garner thinks oil is headed higher from