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The Standard & Poor’s 500 fell another 1.70% today and it’s now down 3.94% from the September 2 high.

As the index dropped last week (again) and over the weekend, lots of Wall Street money managers said Hey, stocks were over-valued and news from Beijing and Washington (and places in between) is negative, but if stocks drop 5% we will be buyers.

It looks like might get to test that conviction sooner than anyone expected.

Which way will things break on another decline?

Today, September 20, the S&P 500 broke below support at the 50-day moving average at 4435. (The index closed today at 4358.) We’ve also left support at the 20-day moving average (4481) behind. The next technical support level is the 200-day moving average at 4106. A drop to that level, a decline of 431 points, would bring us to a “dip” of 9.5%.

That would certainly be enough of a plunge to get my interest.

But will we get there?

I can see two wildcards.

First, the odds are that the Federal Reserve, which meets on Wednesday, won’t say or do anything to rock the interest rate boat. But would you be a buyer ahead of the meeting if you worked on Wall Street? Sounds like sit on your hands time and wait for the Fed’s rhetorical smoke to clear. In other words, the Fed meeting is an argument for doing nothing tomorrow ahead of the meeting.

Second, China Evergrande. The de facto insolvency to this huge Chinese property developer (they were paying investors in property rather than yuan today) has rattled the entire Chinese market because no one knows who might be dragged into the quick sand. Today big China names, the almost certainly have only minimal exposure to the problems at Evergrande plunged. Alibaba (BABA) was down 5.35% on the day. Tencent Holdings (TCEHY) was off 3.77%. (JD) tumbled 4.56&.

And the troubles in China slopped over into the stocks of China suppliers and commodity plays. Caterpillar (CAT) was down 4.47%. Copper miner Southern Copper (SCC) dropped 2.79% and more speculative and more thinly traded copper miner First Quantum Miners (FQVLF) fell 6.60%. Lithium producer Albemarle was down 5.01%. Volkswagen (VWAPY) dropper 4.70% and General Motors (GM) was lower by 3.82%.

At other moments like this, the speculative better would be that the People’s Bank is about to step in and flood the market with cash and reassurance. That is the time-worn path.

But this time the slowdown in China’s economic growth (even before the Evergrande mess) seems to have brought out enough worry to delay speculative buying. And President Xi Jinping’s campaigns against technology billionaires and in support of a more equitable distribution of wealth seems to have created some doubt about whether the People’s Bank will be “encouraged” to go down this road again.

If I were a betting man, instead of a conservative disciplined investor, I’d be thinking of placing my speculative bets on China now–before any bets on a 5% dip in the United States. After all Alibaba is down 34% from its local high on June 29. (Which is not even close to its higher 2021.) and Tencent is down 27.1%. Bloomberg’s John Authers has a good piece today on why the People’s Bank is likely to intervene as it has before. The analogy he argues it the Fed’s decision to flood the market with cash to head off the effects of the collapse of Long Term Capital.) That decision, he notes, helped pave the way to the Global Financial Crisis. But we’re closer to the former than to the latter event. (

But think about your own reaction to my suggestion that the smart buy on the dip move now is to buy China stocks on that true correction rather than U.S. equities on a 3.9% drop. Scares you, doesn’t it? And I don’t think you’re alone. Which is why this market chaos is likely to go on until the People’s Bank actually shows us the money.