Correction flexion

Yesterday in the Daily Report, there was a blurb about the Nasdaq Composite falling into a correction, simply using the accepted definition of a 10% pullback from a high. It's one of the quicker corrections in the Nasdaq's history, and while the larger sample didn't show much of a bias either way, faster corrections did have a positive skew. Th next year, in particular, was notable, with only a single loss, though it was a painful exception.

Most notably, the drawdown during the next year averaged -8.4%, while the maximum gain averaged a whopping +43.0%.

The Nasdaq study is using closing prices. Using intraday high-low values, the Shanghai Composite also flipped into correction mode. As we've very often seen with this index, it does not have a very good mean-reversion tendency.