Yesterday was another bad one. The market is now below its 200-day moving average, and the selling toward the end of the day wasn't a good sign.

It’s time to think through what this "correction" might mean.

After I wrote Friday’s post, the market proceeded to drop even further, and it opened today with another dip. Time to reevaluate where we stand.

First, as always, it’s important to keep things in perspective. As I write this, the S&P 500 is down just over 6 percent from the peak. We’re still up about 2.5 percent for the year, and more than 11 percent for the past 12 months. Even with the drop, we’re in a pretty good place.

Over the past few days, the market has taken investors on a roller-coaster ride, and I suspect many of us are feeling a bit queasy. No one likes to be jerked down and up and back down again.

What’s going on?

This week’s market melt-up has been widely attributed to the release of the Federal Reserve’s meeting minutes. More or less, the Fed said it was worried about global growth and would probably be slower in raising rates than many had expected.

The effect on the market was substantial, which prompts a number of questions. But the one I want to talk about this morning is why the Fed is so worried.

Yesterday was a bad day for the stock market, which dropped sharply on fears about European growth. So they say, anyway.

Pinpointing a single reason for market moves has always seemed misguided to me, when you think about all the factors behind any investment decision. Even so, taking it at face value, what should we make of European growth and yesterday’s market decline?

One of the joys of my job is that I’m constantly learning new things. A great way to do this is to go to a conference, listen to smart people speak, and then sit down and chat with them. That’s what I’m doing right now at Commonwealth’s National Conference.

How big of a concern is Europe to the ongoing U.S. economic recovery? Hear what I discussed with CNBC Worldwide Exchange in an interview yesterday, October 6.

In my latest Market Thoughts video, I provide an update on the difficult quarter-end for the markets, international volatility, and the status of the U.S. economy. 

It’s time for our monthly update on risk factors that have proven to be reliable indicators of economic trouble ahead. As expected, the data hasn’t changed that much from last month—it remains encouraging in almost all areas, and has continued to improve in many cases—but it’s still important to keep an eye on things.

As we enter the month of October, though, the economic forecast remains good.

As I noted a couple of days ago, if you look at average future stock returns from our current valuation level of 26.3 on a Shiller P/E basis, they don’t seem all that bad. Historically, 10-year returns should be in the range of 7.5 percent and 5-year returns around 5 percent, on average. Not too shabby.

Averages conceal a multitude of sins, though, so let’s look a little closer. One question I have is whether the return spreads are consistent over time. If not, we have to ask whether the overall results are applicable to today.