(Read more: GOP proposes new 'supercommittee' to settle fight)
What makes this a bit more exciting is that prior budget standoffs have mostly been about cuts to spending, but this time the stakes are a bit higher as one faction of the Republican party is trying to single-handedly dismantle President Barack Obama's signature piece of legislation: the Affordable Care Act, or Obamacare. And that ain't happening, according to the president. Both sides are betting on a victory as they prepare for the 2014 midterm elections. And the world turns.
Global leaders are becoming uneasy. International Monetary Fund President Christine Lagarde warns that failure to raise the debt ceiling would damage not only the U.S., but the rest of the world, as well.
Even the Chinese are getting in on the act, demanding that someone please "take control" of the cuckoo's nest. Remember, they are the largest creditor to the U.S. (as of July 2013, they own $1.28 trillion in Treasurys) and thus have the most to lose in a default.
Chinese Finance Minister Zhu Guangyao rang the alarm bell and reiterated that their Treasury position gives them the right to demand resolution. I mean, can you imagine the outrage in this country if we come to a technical default and pay interest on our Treasurys to foreigners, but delay payments to our vets and retirees? Is anyone driving this bus?
(Read more: Boehner: No 'lines in the sand' on debt limit)
The closer we get to Oct 17, the worse it will be for the markets as the reality of a default will begin to get priced into the market. Now remember, some investors are hoping that the average Joe panics at exactly the wrong time and bails out, creating a buying opportunity for them. Others seem to be able to stomach what is sure to be a volatile ride and are ready to commit more on any weakness. The question is: which one are you?
On Monday, all sectors showed weakness as the broader correction that we all have been talking about seems to be at our doorstep. As we continue to navigate the drama in D.C. and the beginning of earnings season, no one should be surprised if we see the pressure build in the weeks ahead. In the end, though, as I have been saying, I do believe stocks will build to finish the year on a plus tick once the dust settles.
From the Dow perspective, we hit resistance at 15,695 back on Sept. 19 and are now likely to test the 14,800 level, which would represent a 5.7 percent pullback. If the jokers in D.C. can't get their act together, then the Dow may even test the 14,600 level, a range not seen since June. For the broader S&P, we hit resistance at 1,725 and have since corrected by some 3 percent ending Monday at 1,676—(this is clearly NOT a panic situation) below the 50-day moving average of 1,679. A further test lower will see the market test 1,665 and then 1,625.