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Published On: Mon, Apr 8th, 2013

Correction

A change, usually negative, of at least 10% in the markets.

Stocks, bonds, commodities and indexes can all be affected by a reverse movement to adjust for an overvaluation.  While usually temporary in nature, corrections can cause an interruption in the upswing of the asset or market.  Although a correction is typically short, as compared to a bear market or a full blown recession, it can be a forerunner or indicator to either long term scenarios.

Analysts will check various international market indexes to gauge whether a market is headed for a correction, as in one index’s performance may tip off indicators for a similar correction elsewhere.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.

 

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