The stock market fell to another new multi-year low today. The Dow lost 427 point to close below 8,000 for the first time in over five years.

The major catalyst for today's sell-off was news that the Federal Reserve cut its economic growth forecasts.

Fed officials lowered their economic growth projections to 0 percent to 0.3 percent for 2008 from 1 percent to 1.6 percent previously, according to the median forecast of Fed governors and district-bank presidents. The predictions for GDP next year ranged from a contraction of 0.2 percent to growth of 1.1 percent. In June, the so-called central tendency estimate was an expansion of 2 percent to 2.8 percent.

The panel estimated 2008 inflation, excluding food and energy, at 2.3 percent to 2.5 percent, from 2.2 percent to 2.4 percent in June. The Commerce Department's so-called core personal consumption expenditures price index is seen rising 1.5 percent to 2 percent next year, compared with forecasts of 2 to 2.2 percent in June.

The S&P 500 made a new intra-day low, but the Dow hasn't. We're still bouncing along the bottom. In 2002 and 2003, we bounced along the bottom for seven months. A new rally usually begins with a 20% spike.

The Fed needs to cut rates now. The next meeting is scheduled for December 16, which is too far away.