These statistics show that the chance of this last, small, baby 5% correction of becoming a bear market is just 9.4%. Still have no clue why after a 70% rally in the market and most stocks nearly gaining hundreds and hundreds of percent in just a time frame of months, that just a small pull back has every bull whining like little bitches. Still question why a 70% rally followed by a short pullback always brings out the bulls to fully explain why its just a buying opportunity and that no rally should ever be sold.
From http://tickersense.typepad.com/ticker_sense/
Play the Odds: This Is Probably Just a Correction
Right now the S&P 500 is down 5.82% from its high close on 1/19. Market declines always bring out the bears, pointing to the economy, the government, the profits etc as reasons why the gains are all over. Birinyi Associates is keen on pointing out that these are the same commentators who called for declines when the S&P crossed 900 and 1,000.
We chose to look at these kinds of bull market moves objectively. First we define a bull market as a 20% gain off a low and examine each period visually for confirmation (the 20% gains that occurred in 2001 and at the end of 2009 were not included in our analysis as bull markets). Then we scanned each bull market since 1945 looking for corrections of 5% or more. This scan resulted in 117 so called corrections, which posted an average decline of 8.52% of 45 days. When we further pair down the list and look for corrections that declined over 10% there were only 31, and going one step more only 11 were bull market tops.
The point of all this is that bull markets experience corrections, and they are actually somewhat frequent. Based on the stock market's history, there is only a 9.4% chance that the current decline will turn out to be a bear market.
From http://tickersense.typepad.com/ticker_sense/
Play the Odds: This Is Probably Just a Correction
Right now the S&P 500 is down 5.82% from its high close on 1/19. Market declines always bring out the bears, pointing to the economy, the government, the profits etc as reasons why the gains are all over. Birinyi Associates is keen on pointing out that these are the same commentators who called for declines when the S&P crossed 900 and 1,000.
We chose to look at these kinds of bull market moves objectively. First we define a bull market as a 20% gain off a low and examine each period visually for confirmation (the 20% gains that occurred in 2001 and at the end of 2009 were not included in our analysis as bull markets). Then we scanned each bull market since 1945 looking for corrections of 5% or more. This scan resulted in 117 so called corrections, which posted an average decline of 8.52% of 45 days. When we further pair down the list and look for corrections that declined over 10% there were only 31, and going one step more only 11 were bull market tops.
The point of all this is that bull markets experience corrections, and they are actually somewhat frequent. Based on the stock market's history, there is only a 9.4% chance that the current decline will turn out to be a bear market.
