Link: Corrections, Bear Markets, and the Big Picture

Nov 12, 2007: 11:26 AM CST

Chris Perruna recently posted an excellent look at recent history’s corrections (which sometimes have been 10%) and then discusses full-blown bear markets and makes note of some key differences.

Specifically, he pulls the camera back to the monthly charts which, I assume, a minority of active traders do. It is important to view the major structure before investing, but also for trading short-term.

I particularly think this statement is important to understand:

“Market corrections and flat markets allow intelligent investors to study conditions carefully while they sit on the sideline patiently awaiting the defining trend. Money is made on the big moves, not the minor day to day moves. Corrections allow big moves to establish themselves.”

Chris then moves on to discuss five tips for the time period in which the market indexes experience a ‘bear’ phase and also provides eight potential signs to look for when a bear market might be on the horizon.

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