Teak railings known as 'bright-work' on large yachts and cruise ships, at periodic points lose their sheen; so require a new coat of lacquer. Applying that varnish is a tedious process of sanding and preparation. So it is for the stock market this year. And first it has to take a 'shellacking' before the final coat of varnish can be applied.

In the meantime, as if to forestall routine maintenance (corrections), money managers often have resorted to seeking out value stocks (makes sense to a degree) in hopes of offsetting the decline in their overly-loved FANG+, or similar stocks.  

Rearranging the Titanic deckchairs is what that behavior has been and is; with realization that they overstayed the heavy long side of momentum and tech issues. You're at the point of losing the 4th leg of the stool (tech) while the first three (Housing, Autos and Financials) are already gone as outlined quite often in the multi-month distribution process that preceded all of this.  

I'll leave the text as brief as possible; with expectations that Midterms and Tariffs/trade continue to be a 'cloud' over this market. I mentioned Italy as well; and we have a key EU statement coming too.  

You also can report good earnings and not get a favorable response; mostly because they're overpriced; the uncertainty about next year; and greed from those who have overstayed positions. So if or as they panic, that's fine from the standpoint of what we've encouraged investors to guide them this year.  

In sum: that guideline was to lighten up sufficiently so that you're positioned so that you're 'more excited about the bargains that will be created, far more than worried about further erosion in price of shares you continue retaining'.  

(I prepared the above chart last night but omitted posting it. Thought I'd just share it a day later, just for the realization of how long this cycle has been.)  

I thought (and still do) that's how you view 'repricing' of the market lower, in a calm and proper way, and then can calmly determined what and where to buy as things exhaust on the downside.  

As to when that will be; stay tuned. The message of the market is lower for now; and clearly the Midterms are a backdrop (per Kudlow agreeing with me it seems; when he said the market is concerned about the rollback of cuts in taxes and regulatory reform depending how the vote goes). Now sure that's political, but somewhat like before the 2016 Election; perception matters. It's not my view that the Republicans (or many politicians in general) deserve a lot of votes; it's the view of the market that this perception matters. 

And the China issue matters immensely. The strained confirmation that the two Presidents will meet in Argentina at G20 didn't impress anyone; neither does the possibility of Putin and Trump meeting in Paris again next month; though that too would be welcomes.  

For now stay nimble and defensive. We got our breakdown from the pattern around the S&P's 200-Day Moving Average; and Tuesday turnaround that I am very suspicious of. In fact if a couple rebounds fail very overtly, it could get particularly nasty soon; the possibility is there. There is no evidence of a sound base or even a 'real' V-bottom or any sort of 'floor' like that as yet.