What's next?

Despite the G7 statement over the weekend hinting at coordinated intervention:

We are committed to taking coordinated action where needed, to ensuring liquidity, and to supporting financial market functioning, financial stability and economic growth.

...the markets are behaving badly as I write this. Asian markets are deeply in the red and ES futures are down over 2%. There is no doubt that markets are deeply oversold, but oversold markets can get more oversold.

Here are some signposts that I am watching for from Monday's market action to see if the market has put in a short-term bottom:

• Does the decline get arrested in Europe? Will ECB intervention occur and will that spark a relief rally?
• How do the financials behave relative to the market? European sovereign risk, as well as the fear of a US double-dip recession, are driving this rush to safety and the financials are one of the most vulnerable sectors of the market. Do the financials outperform or underperform the market Monday?
• How will the US stock market behave intraday? The markets will be buffeted, on one hand by panic and forced selling from margin calls and risk managers, and on the other hand by short-sellers covering shorts by the day's end just in case the Fed comes out with a market friendly statement on Tuesday. (See my comments here about my assessment of the likelihood of QE3).
• How does gold behave? As I write this, the gold price has screamed upwards in Tokyo and breached the $1700 mark. If this is truly a risk-off "margin clerk" market, then risky assets like gold, silver, copper and other commodity prices should get hit just as hard.

Buckle up. It's going to be a wild ride.