Domestic and Foreign

The US stock market runs on domestic and foreign influences.  From the brief history of the last 25 years, down moves in the market have been of two main varieties.  The first is domestic.  Domestic sources tend to have a lasting effect on the stock market (1987 crash, 2001-2 dotcom crash, 2008 financial crash).  They are the real deal and are the fuel for a bear market.  Foreign influences are scary but not long lasting (1998 Asian crisis, 2010 PIIGS crisis).  They should usually be faded. 

The interesting aspect about the current weakness in the stock market is that it is different than earlier in the year which was due to the PIIGS crisis in Europe.  It is now domestic weakness which is the catalyst for pain.  This immediately makes me more wary buying the dips on this downleg.  The selloff this time around is due to weakness straight out of the USA.  That will make it much harder to shrug this off than anything coming out of Europe or Asia.