The 50% Retracment Rule

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Posted Jan 15 2008, 01:06 PM
by Richard Schwartz

Schwartz: As to a prediction of how far the stock market could go down over the next year or two, the old rule is that a bear market retraces 50% or more of the gains it made in the previous bull market. Since this bull market began back in October 2002 at a little above Dow 7000 and ran up to just above Dow 14,000, that’s a give back of ½of 7000 points or 3500 points or a downside target of Dow 10,700. In terms of other indices, we have a S&P 500 downside target of 1172, a Nasdaq Composite target of 1985, 648 for the S&P 400 Midcap and 308 for the S&P 600 Smallcap Please remember, the idea isn’t to get scared and obsess on these scary downside targets, just to realize more trouble likely lies ahead.

Filed under: Principles of the Stock Market, Richard Schwartz, Technical View, 50% Rule

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The 50% Retracment Rule
Posted to Principles of the Stock Market by Richard Schwartz on 01-15-2008

The 50% Retracment Rule

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