Ned Davis Research Projects Odds of a Bear Market

By on August 9, 2011

From its intra-day high of 1,370 on May 2, 2011, until yesterday’s sickening plunge to 1,119, the S&P 500 index has plummeted over 18% in a mere 3 months.

Historical data from Ned Davis Research indicates the odds of a bear market increases when the market drops at least 15%.

Ned Davis Research looked at data going back to 1928. In 42 “severe corrections,” defined as drop of 15% or more, a bear market has occurred 60% of the time. The average decline in those bear markets was nearly 36%; twice the pain we’ve experienced so far.

Source: USA Today

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