"Stock-market selloffs come in different sizes. The smallest are less than 4%, and aren’t considered material. They usually consist of a few down days that quickly reverse. Bigger ones from 4% to 10% are classified as pullbacks. They are common within ongoing uplegs, scaring away greed so the upleg can continue higher with rebalanced sentiment. And the largest selloffs over 10% are known as corrections.
Corrections don’t occur within uplegs, but between them. Greed grows excessive enough after major uplegs that a serious injection of fear is necessary to restore balance. And only sharp and large selloffs can introduce real fear. These corrections run between 10% and 20%, and generate so much fear that the majority of traders wrongly assume the bull is over. And anything above 20% is a new bear market.
Note in this cyclical bull’s chart that pullbacks have been fairly common. There were 10 selloffs between 4% and 10% from March 2009 to November 2012, a 44-month span. Add in the 2 full-blown corrections between uplegs, and that is a dozen major selloffs. This averages out to one every 3.7 months or so. Today we are up to a bull-record streak of 6.0 months without even a single pullback or correction!"
I support this idea. Although in the near future(1-2 month) stock market might be good, a correction (10%-20%) even a bear (>20%) could emerge as early as this August.作者: aimei 时间: 2013-6-10 10:18
