In my previous post I referred to Ned Davis Research who 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 S&p500 must print a lower low within a rolling six month window – if not – then it is a bull. The S&P500 from late 2012 through June 2016 charted bear is based on a simple 26 week price channel and note the 2 downward violations of Aug 22, 2015 and finally on Jan 22, 2016 – we are now past the 6-month window and so if not a bear then it’s a bull..