Let's take a look into the crystal ball to see how the markets will fare for Monday.
Not Good!
Earlier today, the Japanese Yen soared to a three-month high against the US dollar, causing Japanese shares to tumble, and dragging down every other market across Asia. Chances are, this will trigger another sell-off around the world. And adding to this, I just don't know when we'd be able to see a bottom, especially if the US markets continue to fall, and the JapaneseYen continues to strengthen.
What is more scary is that it isn't something like 9/11 that initiated this sudden global drop, and the unknown factor is exactly what's freaking everyone out. Just sell and get out, and then consider getting back in when everyone knows what's going on. Personally I think that markets around the world have simply been enjoying bull markets for too long, and the actual worry is the currency, exactly the excuse needed for big players to cash in on profits. Last week, the rationale was the cooling down of the overheating stock markets in China, which has been sinking since. Hence, you should short some of those Chinese ADRs if you haven't done so yet. Meanwhile, government bonds are rising as scared investors go into commodities and these types of safer investments.
We can almost be certain that ADRs will drop today, especially Japanese stocks like Toyota (impacted by their currency appreciation), and Chinese stocks like China Life (impacted by the Chinese Government's intervention into their stock markets). This is a scary moment, and the question is how long of a correction it will last to be. Once thing's for sure, DJI won't look pretty either today, in just a few hours time.