Some people have started to open the discussion that the
market has entered into the bear zone. Is it so?
Let's see when market enters into a bear phase?
Let's see when market enters into a bear phase?
"A
bear market is a condition in which securities prices fall and widespread
pessimism causes the stock market's downward spiral to be self-sustaining.
Investors anticipate losses as pessimism and selling increases. Although
figures vary, a downturn of 20% or more from a peak in multiple broad market
indexes, such as the Dow Jones
Industrial Average (DJIA) or Standard & Poor's 500 Index (S&P 500),
over a two-month period is considered an entry into a bear market."
The keys
here are 2 months time and 20% down in index.
We had
highest index in 27.7.2016, which was 1881. Two months ago, in 18.9.2016, the
index was 1804. Now, yesterday on 17 December 2016, the index was 1658. The
Index is down by 12% from the peak in July 27 and 8% from two months ago that
is 18.9.2016. Hence, by definition it is simply correction and not a bear
phase. It is too far from bear as such.
The forums
are full of people with high voltage energy, hence they generally magnify the
facts and over play with reality. When it starts moving up they start saying it
will reach 2500 and when it starts falling down they bring it to 1200. This is
only reflection of amateurism and over reaction of the amateur participants. .
A market condition in
which the prices of securities are falling, and widespread pessimism causes the
negative sentiment to be self-sustaining. As investors anticipate losses in a
bear market and selling continues, pessimism only grows. Although figures can
vary, for many, a downturn of 20\% or more...
INVESTOPEDIA.COM|BY ROOT
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