Wednesday, May 11, 2022

What You Need To Know About This Bear Market

Dow and S&P are racing to bear market territory. 

Watch for 20%: Market cycles are measured from peak to trough, so a stock index officially reaches bear territory when the closing price drops at least 20% from its most recent high (whereas a correction is a drop of 10%-19.9%). A new bull market begins when the closing price gains 20% from its low.

I have learnt in my 35 years in the stock market that when the macro turns and the market corrects, the weak get weaker. 

Always choose to short the weaker sector like the Nasdaq and Russell because they fall faster . 

Dow Jones is down 13% from the peak, S&P 500 17.5% , Nasdaq 100 down 27.6% and Russell 2000 down 28.6% from its peak 

Stocks lose 36% on average in a bear market. 

We are not there yet.

Bear markets tend to be short-lived. The average length of a bear market is 289 days, or about 9.6 months. 

We are not there yet.

Every 3.6 years: That’s the long-term average frequency between bear markets. Though many consider the bull market that start after the great financial crisis in 2008 and ended in 2021 to be the longest on record. 

Here’s is the danger , the longest bull market may begat an exceptionally long bear market much longer than the average 289 days .

This bear market still has Legs to go further and longer .

All posts and charts are for educational and illustration purposes only

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