Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

ON THE EDGE - By Charles Payne

|Includes: HON, JNPR, KLAC, KMB, Microsoft Corporation (MSFT), PG

It was a tough session, but not one that came as a total surprise. After the calendar changed to 2014, it has felt like everyone has been marking time waiting for something disappointing to happen. Ironically, blue chip stocks have come under the most pressure paying a big price for any disappointment. So, while the market exhibited a soft underbelly, few would be shocked if there were some kind of correction. Still, that overhand blow from the Far East did a fair amount of damage.

China posted a PMI reading that indicated their economy is contracting. This news comes after it was revealed that economic output last year was the slowest since 1999. Of course, China has been trying to engineer a slowdown akin to tampering with the brakes of a runaway locomotive. I actually think they've done a pretty good job, but there are serious questions, including the shadow banking threat. There is also the question of how to hold down wages now that it's clear their one-child policy has created a labor force crisis.

It's also clear that China has been the straw stirring the drink. Even improving news from Europe and solid news for America's PMI reading aren't enough to offset a contracting Chinese economy.

There are other factors weighing on the market:

A 10,000 point move in five years is very impressive, especially with a 30% rally last year. Some would simply say it's time. (Not luck of the draw kind of "due," but a new reality that puts greater onus on strong top and bottom-line growth to justify further upside.

On that note, there is a fair amount of dissatisfaction with earnings since this is shaping up to be the least impressive earnings period in a long time. To a lesser degree, there could be angst over Fed policy. However, there hasn't been any news on that front that would alter the conversation (tapering has begun, and until it is increased or halted, it's not headline stuff.)

Late in the session a few buyers materialized just in time to keep the Dow from closing beneath a key support point (50-day moving average). We are a long way from panicking, but nearing critical support points could hasten a faster decline if violated. The "must hold" support points are where even rock solid buy-and-hold bulls might blink. Note: For the Dow it would be the December 17, 2013 close, which came the day before the Fed announced tapering.

We took a fair amount of action yesterday, closing out ideas to preserve profits for those most susceptible and least likely to rebound in the wake of bad news. Of course, we also bite the bullet on losers as well. I'm not panicking; on the contrary, I'm salivating looking for overreactions to create opportunities. Yesterday on Varney & Co on the Fox Business Network, I said I love when investors panic. However, I should have been more precise in my language, to point out that I was talking about the so-called pros.

Closing out positions near all-time tops isn't really panicking, and neither is taking 28% instead of 31%. But I'm already seeing overreactions to earnings that should be celebrated. The smartest dudes in the room already know what they want to hold and what they want to shed. Therefore, watching shares of a company that beat by a penny surge, while one that beat by a dime free fall is almost humorous, except real money gets lost by people that cannot afford such shenanigans.

The games continue as we aren't even halfway through earnings season, and then we'll have to wait around for the next round of data from China, in addition to our employment data.

The grind continues. ..

Today's Session

Earnings aren't that bad this morning as most names were in-line with estimates, or actually posted really good news and better guidance. But today's session, at least early on, will be about emerging market weakness highlighted by individual stories of growing pangs and mismanagement.

Additionally industrial bellwether name, Caterpillar (NYSE:CAT), pre-released its global sales numbers this morning and point to a lackluster quarter that they will comment on further during their earnings release on Monday. However when compared to the sales in previous months, the overall decline in sales looks to be slowing down. The company's global market update, as well as comments on inventory levels, should set the tone in the industrial sector going forward.

A Gift and A Curse…Both?

Howard Shultz, CEO of Starbucks (NASDAQ:SBUX) may have talked himself out of a jam during the earnings call last night. The company posted revenue of $4.2 billion on same store sales increase of 5% but the street was looking for $4.3 billion and 6% respectively. He got out of his jam by pointing out a Eureka moment that signals bigger problems for others in the retail space.

The Internet has caught up to the hype!

Shultz called the fourth quarter, and particularly December, a "seismic" shift and "turning point" for the way people shop. He went on to warn it's "going to be an ongoing issue," and "it's happening faster than most people think." Consequently, brick and mortar retail has entered a death spiral as foot traffic recedes and actual purchases follow. (Starbucks should be a winner because of Internet-related payment systems, social media campaigns and it's still a cool place to lounge around and surf the net.)

Shultz's comments suggest massive job losses and even more economic harm in the form of deflationary pressures. These comments counter, to a degree, what we heard from Pope Francis yesterday who called the Internet a "gift from God." From his perspective, the Internet helps people communicate and learn from one another and that breaks down walls that currently divide us.

"The revolution taking place in communications media and in information technologies represents a great and thrilling challenge; may we respond to that challenge with fresh energy and imagination as we seek to share with others the beauty of God," - Pope Francis

Both men are correct.

Yet, despite the seismic impact the Internet has had and will have on our lives nobody is calling this period of time the Third Industrial Revolution. I think that's because the Internet can have as much of a negative impact on life as positive. Technology equals productivity but cost jobs and the Internet may pull down walls but in a way that medieval soldiers would attempt to bring down the walls of an enemy's castle.

The locomotive connected people. The automobile connected people. Electricity empowered and connected people. Skyscrapers gathered more people in the same place so connected them in a meaningful manner.

Yes the Internet allows us to spread the word of God, send baby pictures to grandma, learn about anything that ever happen and facilitate commerce, but it still has enough drawbacks that from time to time its more curse than gift.

I agree with Pope Francis the Internet is a gift from God, but we must be leery of its curses too.