These statistics show that the chance of this last, small, baby 5% correction of becoming a bear market is just 9.4%. Still have no clue why after a 70% rally in the market and most stocks nearly gaining hundreds and hundreds of percent in just a time frame of months, that just a small pull back has every bull whining like little bitches. Still question why a 70% rally followed by a short pullback always brings out the bulls to fully explain why its just a buying opportunity and that no rally should ever be sold. From http://tickersense.typepad.com/ticker_sense/ Play the Odds: This Is Probably Just a Correction Right now the S&P 500 is down 5.82% from its high close on 1/19. Market declines always bring out the bears, pointing to the economy, the government, the profits etc as reasons why the gains are all over. Birinyi Associates is keen on pointing out that these are the same commentators who called for declines when the S&P crossed 900 and 1,000. We chose to look at these kinds of bull market moves objectively. First we define a bull market as a 20% gain off a low and examine each period visually for confirmation (the 20% gains that occurred in 2001 and at the end of 2009 were not included in our analysis as bull markets). Then we scanned each bull market since 1945 looking for corrections of 5% or more. This scan resulted in 117 so called corrections, which posted an average decline of 8.52% of 45 days. When we further pair down the list and look for corrections that declined over 10% there were only 31, and going one step more only 11 were bull market tops. The point of all this is that bull markets experience corrections, and they are actually somewhat frequent. Based on the stock market's history, there is only a 9.4% chance that the current decline will turn out to be a bear market.
I wonder what their proprietary system odds were for a bear market in 2007-2008? Probably around 5% too. Wall st. makes no money telling people to sell. It's all one giant scam.
1) 11 divide by 117 equals 9.4 percent. 2) The "9.4% statistic" would only apply only if the market were in new all-time high territory, wouldn't it? 3) A "problem" with those numbers is that one's focus can be drawn to the previous average decline and average duration of decline. What happened in 2008 until March-2009 isn't given enough "weight" in the calculation and re-writes the Record Books.
Quote from S2007S: Market declines always bring out the bears, pointing to the economy, the government, the profits etc as reasons why the gains are all over. Birinyi Associates is keen on pointing out that these are the same commentators who called for declines when the S&P crossed 900 and 1,000. Sound familiar? Thats the problem, everyone thinks the bears come out and start complaining about those reasons when they are the main reasons. The FACT is that if it were not for government intervention, trillions in stimulus, extremely low interest rates, programs to keep those who cant afford a house in their house, extended unemployment benefits for months and months and months, more stimulus to create even more jobs, $8000 tax credit, cash for clunkers, cash for caulkers, and every thing else they sink into the economy to prop it the fuck up there would be no gdp growth or economy, the latest gdp report is all AIR, its all due to stimulus and nothing else, this economy cannot grow unless its stimulated and propped up. Growth is non-existent as of now.