Some of my clients in the Stock Signals Philippines have been asking whether we’re already in a bear market or still in a correction mode. Before I drop a straight-cut answer, let’s define the two.
Many believe that a local bourse or the main index is in a bear market if it has gone down by more than 20% for more than two months.
Some say an index should go down by more than 20% for three to six months for it to be officially considered to be in the bears’ territory.
On the other hand, if the 20% (more or less) downturn did not last for 2 months, that means the market only experienced a correction.
There’s really no official rule whether the downturn should go beyond 2, 3, or 6 months. But I take the 2-month rule.
From the all-time high of 8,134.38 last April 10, 2015 to January 15, 2016’s closing score of 6,449.50, we got a downturn of 26.12 percent. It’s been 9 months. Citing the 2-month rule and the 20% minimum downturn, where do you think the Philippine Stock Exchange Index (PSEi) is?
Please post your questions in the Private Clients Forum if you’re my client in the Stock Signals Philippines.
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