That looks like smudged rainbow-colored shit. I have no idea what you tools you used to create that, but it looks nasty. I guess it's okay for your first, and at least you did some real editing which is more than I can so far a lof of the jokes I've seen around, ie MarkoftheVeno (HAHAHAHAH). The background blows.
Just try and edit your sprites but keep it looking like an actual Mortal Kombat sprite. Yeah...
1. It's too big 2. The background is pretty bad and looks stretched and bad quality 3. The blood thrown around looks horrible. 4. At least you edited sprites, but they are very bad quality. They look like a cartoonish drawing.