As expected global markets continue to slide with all eyes on China where the government did not step up to the plate. Government intervention was never suppose to play a role in free markets, hence the term "free". That said, once meddling began, so did a form of addiction.

But there are other truism of markets that even the communist overlords of central planned capitalism are learning the hard way. Selling begets selling. Panic selling begets panic selling. In such cases, it's best to let the dust settle where it may or needs to.

Of course China has already shelved dreams of the Yuan replacing the dollar (although there's scuttlebutt, the IMF is still considering inclusion into its basket of currencies) to refocus on exports rather than domestic consumer driven economy.

Still China isn't looking to ruin its burgeoning markets from real estate (which might be bigger powder keg than equities) to stocks. I'm sure the central planners in China are looking to do something dramatic as their drip-drip intervention has been more like water torture than a confidence builder.

So China needs to do something massive as their market is negative for the year and now the gains over last 14 months are at risk.

What this means for our Fed is unknown, but they must communicate no rate hike or risk over playing the psychological game with investors.

The re-pricing of US stocks continues, but understand, it doesn't mean these levels are some kind of fair value. We weren't looking at over valuation associated with traditional excess, but we were in an old, hated bull market led by stocks with global sales.

I've noticed in the past, the idea of one climactic sell off is misplaced, but capitulation happens over a series of time.

Picking bottoms during periods of panic is impossible, but we still look at key support points. In this case, I pointed out on Friday that number could be 16,117 for the Dow.

If you own great companies, you shouldn't panic. The flip side is unless you're a nimble trader, we don't need to get exact lows, but make no mistake, you don't want to realize there's value in Facebook when shares are back above $90.

We all have to be more nimble than normal. I've asked everyone to raise cash over last month and we closed a lot of potions (some for losses) because of near term risks, not indictments over fundamentals.

Let's see how things shakeout, but understand the moment of truth starts at 3:30 EST when the dam broke Thursday and Friday.

I think we will be net buyers this week, but unlikely we will pull the trigger today.

It's really a shame near term emotions must be calmed with government intervention. But never forget the invisible hand of free markets still ultimately dictate value and equilibrium.

Hedges

ProShares UltraShort S&P500 (SDS) is a good vehicle for a stock hedge also iShares 20+ Year Treasury Bond (TLT) is worth consideration for conservative investors. The former is more aggressive than the latter for investors looking for less volatility in a hedge. Both are trading up in the pre-market.

Game Plan

I'm not selling based on price action, today. I am looking for buying into the close to signal a reversal. What I am really looking for is a big intraday reversal that spreads into the next session. Keep an eye on small cap, the Russell 2000 ($RUT) could bounce first.

Special Report

I have written a special report to help you get through this market correction and make money! I do not want anyone to get burned in this market by selling good names. In this special report, I explain why the markets are seeing steep swings, which stocks not to sell and which stocks are on my watch list of great stocks to buy.

Be sure you have downloaded the final edition - 9 pages with the watch lists. It's completely free and I want everyone to have a copy. Click here to get yours.

Today’s Session

The markets are indicating lower this morning. The Dow Jones is down approximately 4.12% or 678 points and set to open around 15,789. The NASDAQ and S&P 500 are also indicating lower, -4.96% and -3.92%, respectively. Oil has hit fresh 6 ½ year-lows. Similar to the major indices, the commodity is down over 4%, and set to open around $38.80. Today will be another rough session and we are definitely looking for hedges and short ideas.

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