Shanghai Composite Hits Lowest Level Since May

China's Shanghai Composite index got walloped overnight - falling 6.7% - and reaching it's lowest levels since May, reports the Wall Street Journal.

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Could China be leading the broader markets down? I think it's very possible. China's been the posterchild of this monster rally - "Look everyone, China's doing OK!" And if China's not really doing so hot...uh oh!

In reality I think we've seen a lot of smoke and mirrors from a government desperate to keep the economy rolling. They've used enough forms of "economic steroids" to make a MLB slugger proud.

With Chinese stocks off nearly 25% since August 4th, I'd be very cautious right now about equities in general.

Related reading:

• How China Goosed Intel's Q2 Numbers
• Jim Rogers: I Would Not Be Buying Chinese Shares Right Now