Wednesday, March 16, 2011

It's not time to panic. Yet.

So far there's no technical data to indicate that the current downturn in the market is anything more than a run-of-the-mill correction.Sentiment indicators are becoming more pessimistic as expected during a correction in a bull market. Of course stocks are still highly over-valued, and the world still owes more money in private and public debt payments than it can afford, but that doesn't mean this rally can't ultimately continue.

I'm curious to see, if and when the recovery occurs, whether or not the S&P 500 index will return to the oddly precise rising trend that it's been following for the past six months.

2 comments:

Keith Wilson said...

What amount of downward slide would still be considered a "small correction" on the way to higher prices? Does it have to be a 20% drop to be considered a definite longer term downward bear?

Jody Wilson said...

I call it a correction if it's a drop of between 5% and 20%. A short-term drop of more than 20% is a crash in my book, while most people think of a true "bear market" as a gradual, multiple-month drop of more than 20%.