It now appears as though we are going to see a further test of Monday’s low. As of yesterday sentiment has reached levels capable of creating a market low. The Fed would probably like to have the market rising again before the Humphrey Hawkins address. We have had 16 Intermediate cycle lows during this bull market. Five of them were bigger and scarier than this one. The point totals look very big to the downside, however, it is really about percentage moves. We’ve seen bigger down moves in terms of percentage during this bull market.

We have seen rates move higher, but rates remain historically low. Remember the Fed took control of interest rates after the real estate bubble. I think it will be quite some time before we return to the time where the Fed merely influenced interest rates.

The last major decline occurred in August of 2015 and lasted through February of 2016. This was a time of declining interest rates. Corrections occur and often times the reasons for the declines are misstated.

The markets are currently in testing mode again, the Dow Jones is off about 660 points. We’ve broken below the closing low of Monday’s sell-off and are now testing 23778 the intra-day low on Tuesday.  If we don’t get a bounce soon, it would appear that the correction has further to go.  More volatility appears to be in the cards. Tests, if successful are beneficial to the markets.

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