The debt-ceiling agreement is in place, the government will not default on its obligations and the market is moving higher. Well, two out of three ain’t bad.

Sure, there’s no more uncertainty over the debt ceiling, and that’s a good thing. But rather than rejoicing over the removal of a huge unknown, Wall Street trained its eyes on more important metrics, such as the drop in June consumer spending, slower than expected manufacturing data and second quarter Gross Domestic Product (GDP) that generously can be described as anemic.

As of midday today, the Dow was heading into its eighth consecutive day of losses. Those losses were really heavy with Tuesday’s sell-off, as the Industrial Average plunged 265 points, or 2.19%, in the session. The broader S&P 500 sustained even greater damage, as the benchmark domestic index fell some 2.56% on an extreme day of declines.

The downward spiral in stocks nearly across the board pushed the market below key support levels. Take a look at the chart below of the S&P 500 Index. As you can see, the broad measure of the domestic equity market now is below both the 50- and 200-day moving averages.

The breakdown in equities definitely has caused a change in investor disposition, and there’s now a whole lot of fear wafting on Wall Street over what’s going to happen next. Will this prove to be another correction similar to the ones we saw in February and June, or will this be the beginning of a new bear market?

I think this correction is real; however, I think it’s too early to call this the beginning of a new bear market. In fact, what could be happening is the clearing of the decks in equities, a clearing that could prove to be a great buying opportunity for stocks once the selling calms. If we see some decent employment numbers on Friday, and if we continue to see strong earnings going forward, this market is likely to see a nice rebound.

Breakdowns in the market of the sort we’ve seen during the past two weeks can be very unnerving, and investors with a lot of exposure to equities would be well served to ratchet down their risk. As I told you last week, your job as an investor is to act in your own best interest, and sometimes that means playing defense in the face of a declining market.