You’ve got to love the stock market game. Just about the time you think you’ve got it figured out, boom – it changes. Or maybe it doesn’t, who knows. Frankly, there are times when it is very hard to tell why Ms. Market is doing what she is doing. But since that’s the stated objective or our time together each day, let’s give it a shot, shall we?

The S&P 500 is now off 5.76 percent from its recent high water mark. Believe it or not, that’s the good news. The Dow is down 7.26 percent. The S&P midcaps are off 6.9 percent and the Russell 2000 smallcaps have now fallen 7.3 percent from their recent highs. Looking across the pond, the EAFE index has dropped 7.3 percent and the much maligned emerging markets now sport a decline in the double digits at 11.21 percent this year alone.

Given the numbers on the pullback, it will suffice to say that we’ve got a correction on our hands. As such, there are really only two questions that matter. First and foremost there is, why are stocks going down? And then there is the ever popular question of, how low can they go?

Since any honest player in this game must plead ignorance on the latter issue (or merely admit to guessing early and often), it is probably a good idea to focus on the first question here today – you can probably find the opinions and the guessing lots of other places.

It’s The Economy, Stupid

For the past week or so, the idea has been that stocks have been falling on fears of what another emerging markets crisis would mean to both the major economies and equity markets of the world. Thus, we’ve spent an inordinate amount of time doing inter-market analysis to try and determine whether or not there was actually a crisis at hand.

Read the rest of the report…


David Moenning

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David Moenning is the founder and chief investment strategist for, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.

For up to the minute updates on the market’s driving forces, Follow Me on Twitter: @StateDave (Twitter is the new Ticker Tape)

Positions in stocks mentioned: none

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.