Wednesday, June 15, 2016

So – just what is a bear market?

Ned Davis Research deems that “a  Bear Market requires a 30% drop in the Dow Jones Industrial Average after 50 calendar days or a 13% decline after 145 calendar days.”

Also according to Ned Davis Research during a study period from January 2, 1900 through December 31, 2010, (over 100 years) 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

The business media claim that a decline of 20% puts the market into “bear territory.”

At Getting Technical our historical market studies dictate that bear market prints a lower low within a rolling 26 to 30 week time window. In other words – in order to be a bear, a broad stock index like the TSX Composite must print a lower low within a rolling six month window – if not – then it is a bull.

The TSX late 2014 through 2015 charted bear is based on a simple 26 week price channel

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