UPs and Down in Stock Market

Nothing goes up or down in a straight line, every bull market is full of pullbacks. However, in order to differentiate between a normal correction and a change in trend, the accepted norm is that a fall of 10% is considered to be a correction. Any correction is a buying opportunity, as it is a dip in the larger bull phase. But, when the fall extends to 20%, it is considered a change in trend.  This is when the markets are considered to have shifted from a bull phase to a bear phase. The stock market goes up the stairs, but comes down in an elevator, as the common adage goes.  This analogy is often used to define the behavior of both market types. The bear markets are vicious, quick and leave a bad taste in the mouth of investors.

As we know, a market is officially into bear territory, after a correction of 20% from its peak, whereas, the average bear market’s fall is 32% or last for 15 months. So, by the time a bear market is officially announced, more than half of the fall is already over. You need to be ready for it, when the indications on the horizon point to an imminent fall.