While Monday's declines were not extraordinary, they were - with the obvious defection of the NASDAQ - uniform. Lock-step movement of the majors is usually cause for alarm, either to the upside or down, and, in this case, the S&P, Dow and Composite have been displaying the kind of cascading losses indicative that the move is not contained within a few select sectors, but rather, is broadly-based.
US stocks are not the only issues facing lower pricing. Stock indices around the world have been under severe pressure for most of October, extending back into August and September for most of Europe. Emerging markets, suffering losses most of the year - in the case of China, the decline began in 2015 - show no signs of recovering, their slide relentless and often violent.
Overnight, Hong Kong's Hang Send and Japan's NIKKEI indices were battered, the Hang Sent down, 3.06%, the NIKKEI off 2.67%. China's SSE Composite, already a basket case down more than 50% since 2015, fell another 2.26%.
Early on Tuesday, all European stock markets were lower. As has been the case for the past eight weeks, Germany's DAX was leading the way down.
When markets open in the US on Tuesday, the expectation if for further declines, as futures predict a very rough opening. S&P futures were off by as much as 37 points, NASDAQ futures were down more than 125 points, and Dow futures had fallen by more than 400 points by 8:00 am ET.
The immediate key levels for the major indices are obvious ones, as markets close in on the October 11 interim bottoms. The Dow is looking at its close of 25,051.55 on that date. Any intra-day move below that level would likely trigger even more selling pressure, as once again, Dow Theory rears its head, predicating a primary trend change from bullish to bearish.
Confirmation would come from the Transportation Index, which closed on October 11 at 10,397.23 and Monday at 10,435.76. Monday's loss of just three points on the transports was a shallow shadow of what's been an ugly performance since mid-September. Any close below 10,413 would put the index in correction territory, which was not reported on the October 11 flush.
As the S&P approaches its October 11 low of 2728.37, it is still three to four percentage points above correction (-10%), but the index has been hammered down of late with lower closing prices in 11 of the last 13 trading sessions.
The aforementioned NYSE Composite needs a close of 12,273 to qualify for correction mode. Its high dates all the way back to January 26, when it closed at an all-time high of 13,637.02. The composite is down more than nine percent from the highs and is down 3.6% year-to-date.
NASDAQ watchers will be eyeing the level of 7329.06, the October 11 closing low, after the index reached an all-time high of 8109.54 on August 31. A close of 7298 would be a 10% decline from that level.
Since October is traditionally the most volatile month, companies and investors will be seeking scapegoats and already some corporate types have singled out the threat or imposition of tariffs by President Trump as the primary cause for poor third quarter results.
Some analysts have touted the recent selloff as technical in nature, without important underlying rationale. Taking the case further afield, a recent note by JP Morgan analysts infers that the selling is not only technical in nature, but driven by the lack of corporate stock buybacks, typically halted or blacked out during earnings seasons.
The MarketWatch article which references the analysis is fascinating and full of charts and figures comparing the October breakdown to February's quickly-accelerating descent.
What the analysts fail to point out in their notes is that stocks rose dramatically during second quarter earnings season, from the end of June to near the end of July, putting the lie to their thesis. Stock buybacks have been the main driver of stocks since the aftermath of the 2008-09 crash, and are poised this year to reach a record above $900 billion.
At least, when stocks rebound near the end of the month (as the analysis suggests), we can finally proclaim to know just who those infamous buy the dip punters have been. If indications of a bear market continue to emerge, America's finest corporations, led by the best and brightest managers, will be the ultimate bag-holders, repurchasing their own stock at grossly elevated prices.
Only in America...
Dow Jones Industrial Average October Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 10/1/18 | 26,651.21 | +192.90 | +192.90 |
| 10/2/18 | 26,773.94 | +122.73 | +315.63 |
| 10/3/18 | 26,828.39 | +54.45 | +370.08 |
| 10/4/18 | 26,627.48 | -200.91 | +169.17 |
| 10/5/18 | 26,447.05 | -180.43 | -11.26 |
| 10/8/18 | 26,486.78 | +39.73 | +28.47 |
| 10/9/18 | 26,430.57 | -56.21 | -27.74 |
| 10/10/18 | 25,598.74 | -831.83 | -859.57 |
| 10/11/18 | 25,052.83 | -545.91 | -1,405.48 |
| 10/12/18 | 25,339.99 | +287.16 | -1,118.32 |
| 10/15/18 | 25,250.55 | -89.44 | -1,207.76 |
| 10/16/18 | 25,798.42 | +547.87 | -659.89 |
| 10/17/18 | 25,706.68 | -91.74 | -751.63 |
| 10/18/18 | 25,379.45 | -327.23 | -1,078.86 |
| 10/19/18 | 25,444.34 | +64.89 | -1,013.97 |
| 10/22/18 | 25,317.41 | -126.93 | -1,140.90 |
At the Close, Monday, October 22, 2018:
Dow Jones Industrial Average: 25,317.41, -126.93 (-0.50%)
NASDAQ: 7,468.63, +19.60 (+0.26%)
S&P 500: 2,755.88: -11.90 (-0.43%)
NYSE Composite: 12,374.76, -82.51 (-0.66%)
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