Let the selling begin!

Since the Fed sought to rescue markets and savage the US dollar with a 50 basis point cut in the federal funds rate last week, US indices have floundered, and Monday displayed in clear view, the handwriting on the wall. Stocks struggled between positive and negative most of the morning until finally succumbing to selling pressure in the afternoon.

Dow 13,759.06 -61.13; NASDAQ 2,667.95 -3.27; S&P 500 1,517.73 -8.02; NYSE Composite 9,946.42 -35.41

Once again, the financial sector was front and center in the selling front as banks, mortgage lenders and brokerages variously took hits in advance of Tuesday's key reading on new home sales (10:00 am).

The credit markets are still unstable, though a little improved since the calamitous days of July and August. Still, deals are not being done in the M&A departments of major brokerage houses, dampening third quarter profits. With earnings due out for the majority of the market in the coming 3-5 weeks, analysts are busy revising estimates accordingly.

While most stocks outside the housing, building and financial sectors may fare reasonably well, the overhang from the housing, mortgage and credit situations will not make for a pretty earnings season.

The walkout and strike of 73,000 UAW workers at GM plants also acted as a damper on Monday and may become to a considerable drag on the economy if the strike is not settled quickly.

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That doesn't seem to be in the cards, as union leaders say they and GM negotiators (acting as the lead for Ford and Chrysler) are far apart on a number of considerations, not the least of them being how much GM and other automakers will contribute to a UAW-managed health care fund.

Monday's trading saw declining issues take the lead over advancers by better than a 3-2 margin. New highs remained temporarily afloat over new lows, 266-171. That gap is narrowing, boding ill for bulls, again.

Oil eased 67 cents to $80.95, while gold and silver added negligible amounts. Gold is poised to break through multi-year highs should the markets (equity and/or credit) begin to rupture.

Tomorrow's reading on new home sales will likely send equities into a tailspin, along with the understanding that the UAW strike will be an extended experience lasting weeks and maybe months, instead of days.