It is not china alone that is causing the market into such uncertainty, but rather the weak foundations of which this bull market was built on. On Monday morning of last week, before ten am ,the Dow plunged 1000 points.
There are many reasons to be disconcerting with this market, none more than the astronomical margin levels on record low volume. What this means, is less people are more heavily invested in the market, since it's inception, and almost all of this Capital is leveraged, making it infinitely more dangerous.
During this six and a half year bull market, many stocks have jumped to that overpriced category, as a generally bullish market has the ability to propel even undeserving companies to new highs.
Another major indicator of the imminent crash/correction that will take place by years end/or next years beginning, is the amount large companies are borrowing to buy back their own stock. Given the interest rates were near zero, many CEOs believed this to be a natural move. I believe differently, the price per earnings are projected at 15/16 , an overt lie or "miscalculation" as they will put it. Price per earning or P/E will prove to be closer to 27. When their stocks fall, naturally their companies are worth less, if the market makes a thirty percent move to the downside(personally I see a 50 percent correction from the dow high of 18000). They will lose more than they will be capable of paying back, even with interest rates near zero. Major companies borrowed more than they could replace should the market turn, and should their stock price takes a hit they will be in quite a predicament to put it lightly. The fed will not go along with the projected rate hike in September, the only thing saving a large portion of Wall Street is the fact the interest on their debt is near zero. The fed won't risk raising rates is September, even mention of it drives the market down hundreds of points or a significant percentage on all three major indexes.
A healthy market doesn't consist of 20 percent unemployment, and wages stagnated. Any economist claiming this market was built on a growing economy was misleading their readers, especially the infamous NYT times economist proclaiming "debt is good," at these leveled debt is dangerous. The markets volatility, China's free fall and fed policy has created a scenario that will rival the Great Recession of 07 and the dot com crash of 99. The last year of a the last three two term president have seen a significant recession towards the end of their presidency(this is a personal indicator one an economist would never use). Given the indicators, it is likely the pattern will continue, yet because of this presidents policies we might see one much worse, just like the invisible growth they speak of. Yea, we get it, D.C and it's surrounding counties are feeling it, just not the rest of us.
Simplify the portfolio, let the market find a bottom(which could take 18 months at least). If you feel you have the knowledge and know-how to play a bear market than I would suggest such a play. If I were your adviser, of which I am not, nor intend to be, would say to liquidate your positions, let the market find a bottom and do exactly what newspapers claim won't happen, a substantial correction. large corporations who have a vested interest in the market, paying off so called "journalists" begging you to hold, knowing a sell off would hurt the market and and expose it's weak foundations is not uncommon possibly even prevalent.