Monday, January 18, 2016

Defining Bear Markets:

The usual definition of a bear market is that a bear market happens when stocks decline at least 20 percent from their peaks. A correction is when stocks fall 10 percent. According to Ned Davis Research during a study period from January 2, 1900 through December 31, 2010, big corrections in the Dow Jones Industrial Average are actually quite rare.

Dips of 5 % or more totalled 378 or 3.4 per year
Corrections of 10 % or more was 122 or about 1 per year
Bear declines of 20 % or more was 32 or about I every 3.5 years

At Getting Technical our historical market studies dictate that bear markets print a lower low within a rolling 26 to 30 week time window.

Our chart – is a weekly of the S&P500 bounded by a simple 30-week high low price channel. Bull and bear or buy and sell signals on a weekly violation at the close – interim violations are ignored. The current bear in the S&P500 was signaled last August 2015 at the 1990 level. An Elliott Wave A-B-C bear suggests at least two downward violations of the lower price channel with this week testing the first 1867 level of the bottom price channel and then the second and final drop down to support at the October 2014 low at the 1820 level.


Shawn Severin said...

Do you think 1820 on the S&P 500 is the bear market low?


Shawn Severin said...

Good analysis. I hope you're right.


Shawn said...

Hi guys

Yes I think 1820 is a major support level

Bill C