The S&P 500 is now down almost 9% from its high a month ago. At the same time, certain areas like Small Caps, International and Energy Stocks have been hit much harder.
You will hear the news scream about Ebola, ISIS, weakness in Europe and others. Please keep in mind that bad news sells.
In my humble opinion I think the market is doing what it has done each time the Federal Reserve has ended a Quantitative Easing Run. The market tends to reset itself to a lower level that reflects prices without QE. Please see the chart below:
The market has long been due a pullback or a correction, but it has been a long time since we have felt this and at this severity.
What this means for the market is that the consistent underlying bid that has been in place for a long time may be gone. It does not at all mean that the uptrend in the market is over, but it does mean that we should continue to expect an increase in volatility going forward.