If you're looking for something to blame today's early weakness on, you don't have to get very imaginative: 1) the unemployment rate spiking to over 6 percent will be the lead headline in many papers tomorrow, and 2) U.S. homes in foreclosure reaching 2.75 percent, up from 2.47 percent in the first three months of 2008. Delinquencies (30 days or more past due) stood at 6.41 percent, the highest since 1979.

The foreclosure number wasn't all bad: there were improvements in Texas, Massachusetts, and Maryland. But it was overshadowed by California and Florida, which accounted for 39 percent of all the foreclosures and a good part of the delinquencies as well.

• Foreclosures: Why California, Florida Matter To Rest Of Country

Elsewhere, the big debate is what is going on with hedge funds, and what they may do in the fourth quarter. Everyone agrees that many funds have deleveraged and are sitting on large piles of cash. What will they do with it?

Bulls are hopeful that they will put it to work in the market--the argument here is that the U.S. represents a relative value play--that as the rest of the world slows down, we will come out of the slowdown first, making the U.S. the logical choice of investors right now. They point to recent action in the U.S. dollar to support their thesis.

• Unemployment Hits 6.1%, Fueling Recession Fears

This is an interesting argument--the problem is many traders I talk to aren't convinced. I've noted several times this week how sour the mood is on the Street. Here's why:

1) with such large losses in some funds, many traders are defensive and are not inclined to make big bets unless there is a much clearer turnaround in the market;

2) funds need a cushion to meet redemption requests, as well as margin calls.

Bottom line: the markets are going to have to move notably higher to suck in a lot of those funds sitting on all that cash.

For the week: Dow down 2.8 percent, Nasdaq down 4.7 percent.

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