The traditional media is taking note today that the S&P 500 is now in ‘correction’ territory which is defined as a drop of 10% from highs but less than 20%. At 20%, the correction becomes a bear market.
It is not clear where these definitions come from, but it is likely that journalists that needed a convenient shorthand for characterizing the market in a headline were involved.
Most of the time, the ‘correction’ and ‘bear market’ definitions do provide some good insight into market conditions, but as I’ve been discussing for nearly a year now, there is a giant disparity between the indexes and various sectors and calling the current state of the market a ‘correction’ is a joke.
This graph provides a much better picture of what market participants are dealing with. Over 50% of the stocks in the S&P 500 and nearly 80% of Nasdaq stocks are already down at least 20%…
