The skeptics are calling it the worst day on Wall Street in four years, some even six years.  The optimists are declaring today as official "correction" day that, after a nearly 1,000 point loss on the week, the market is now officially by technical standards in correction territory and it is now time to buy like crazy, on margin if need be.  In simple terms, China's manufacturing sector reported its most dramatic shrinkage in six years today and that sent the Shanghai index down another 4%, bringing its total slide since mid-year to 30%, much of that just since last week when China devalued its yuan not once but three times in an effort to stabilize its faltering economy.  Today's 4% hit created a ripple effect including oil below $40 a barrel for the first time in six years continuing its longest losing streak in almost 30 years, a ripple effect felt across all other commodities sectors as well.  The dollar fell too, which is contra-indicative since usually the dollar goes the opposite of commodities; but today they both fell at the same time.  The overall effect was an enormous dump on the Dow to the tune of 530 points, its biggest one-day decline in four years, a momentous 1,000 points for the week.  That translates to 6% down for the week or a $1 trillion dollar loss.

Still, the overall sentiment is that there is no real danger afloat.  Stock prices have been way too high relative to their actual worth as dictated by earnings for some time now so a major correction like this has been expected for a while.  The advice for the average "buy and hold" investor is just to sit tight and enjoy the summer, keeping in mind that passive strategies have been wildly successful for the past eight years beating the pants off of most mutual funds and hedge funds and that index funds have tripled since the bottom of the recession making annual yields way more than the historic 8% averages.  The advice for active investors who track the market daily waiting to buy on lows and sell on highs is as follows:  Buy, buy, buy!  The market is not going lower so buy as much as you can as fast as you can even if you have to borrow to do it.

But the main reason the smart money is not getting into a twist over recent events is because of the view that the Chinese measures are considered appropriate.  There will likely continue to be this volatility (the VIX actually went up a whopping 50% again today) until the new policies take full effect and the Shanghai index levels off.  This is what is expected and it could happen as early as Monday.

Meanwhile, I'm offering an unusual bonus this Friday.  Today's events put a slight damper on the skeptics who still believe the Fed intends to hike rates in September but there are still those who believe that's exactly what's going to happen.  So I offer two links below, one offering a passionate argument why they believe the rate hike will definitely be in September, another the opposite view that there will be no rate hike at all this year.  Just goes to show that everyone's just guessing, and most of the time they're guessing wrong.

Incidentally, today's rout was quite an energetic one, with 10.6 billion shares traded, volume was way above average.

Minutes clarify: Rate hike coming in September - John Silvia | Reuters.com

Fed rate hike could be delayed until 2016 - Nick Colas | Reuters.com

China fears hand Wall St. its worst day since 2011

BY CHUCK MIKOLAJCZAK

DJ:  16,459.75  -530.94     NAS:  4,706.04  -171.45       S&P:   1,970.89  -64.84

Fears of a China-led global economic slowdown drove Wall Street to its steepest one-day drop in nearly four years on Friday and left the Dow industrials more than 10 percent below a May record.

Wall Street's selloff this week suggested investors are growing nervous about paying high prices for stocks at a time of minimal earnings growth, tumbling energy prices and an expected rate hike by the U.S. Federal Reserve that could gradually usher the end of almost a decade of easy money.

Stocks have seen few large moves this year, staying in a narrow range throughout 2015, but volatility spiked this month once China surprisingly devalued its currency. Weak Chinese manufacturing data on Friday, and another drop in China's stock market, rattled investors' nerves and led to Friday's tumble.

While this month's selloff has been swift, many analysts feel the declines may be close to being exhausted, with a turnaround possibly starting as soon as next week.

"You're definitely witnessing a perfect storm in terms of China timing, people on vacation that affects liquidity, and you've got a lot of questions on the Fed and people are obviously focused on oil," said Andrew Frankel, co-president of Stuart Frankel & Co in New York.

"If you're buying a stock, you're dipping a toe in here."

The Dow Jones industrial average .DJI closed down 530.94 points, or 3.12 percent, to 16,459.75, the S&P 500 .SPX lost 64.84 points, or 3.19 percent, to 1,970.89 and the NasdaqComposite .IXIC dropped 171.45 points, or 3.52 percent, to 4,706.04.

Next week, investors will focus on housing data, which has been strong of late, and the preliminary reading of second-quarter GDP, which could lead investors back towards riskier assets if they point to an improving U.S. economy.

The Russell 2000 .RUT index of small-cap stocks also confirmed a move into correction territory, marking a 10-percent decline from its most recent closing high on June 23.

The CBOE Volatility index .VIX, Wall Street's so-called fear gauge, touched its highest since October and notched its biggest-ever weekly percentage gain.

The S&P slumped 5.8 percent for the week, its biggest weekly decline since September 2011. The index lost more than $1 trillion of its value this week, according to S&P Dow Jones Indexes. Only 10 S&P 500 components advanced on Friday.

The selloff was broad, with all 10 major sectors in the red. The energy index .SPNY dropped 2.6 percent as U.S. crude oil CLc1 dipped below $40 a barrel for the first time since the 2009 financial crisis.

Many investors still anticipate the U.S. central bank will begin raising interest rates by the end of the year, but fewer of them expect a September hike after reading minutes from the Fed's July meeting on Wednesday.

Apple (AAPL.O), still by far the most valuable U.S. company, fell 4.6 percent to $107.44, the biggest drag on the S&P and the Nasdaq.

For the week, the Dow dropped 5.8 percent and the Nasdaq tumbled 6.8 percent.

The drag from Apple pushed the technology .SPLRCT sector down 4.2 percent. The consumer staples index .SPLRCS fell 2.6 percent, moving into the red for the year. Eight of the 10 S&P sectors are now in negative territory for the year.

Six stocks fell for every one that closed higher on the NYSE; on the Nasdaq, the ratio was about 2-1/2 decliners for every 1 advancer.

The S&P 500 posted no new 52-week highs for the first time since Aug. 8, 2011, after S&P downgraded the U.S. credit rating, while there were 75 new lows; the Nasdaq recorded 13 new highs and 276 new lows.

Volume was heavy, with about 10.6 billion shares traded on U.S. exchanges, well above the 6.75 billion average this month, according to BATS Global Markets.