Newspaper article THE JOURNAL RECORD

Market Completed Stabilizing `Correction,' Analysts Hope

Newspaper article THE JOURNAL RECORD

Market Completed Stabilizing `Correction,' Analysts Hope

Article excerpt

NEW YORK - If some analysts' hopes prove correct, the bull market on Wall Street has just about completed a ""correction'' and is r eady at least to stabilize.

Corrections, in the parlance of the financial world, are periods of declining prices that prove to be only transitory. In fact, they are supposed to be healthy developments, dispelling excessive optimism and setting the stage for new advances in stock prices.

The problem is, while a correction is in progress it is difficult to tell whether it is just that or something more ominous - perhaps an incipient bear market.

Such was the case when the Dow Jones average of 30 industrials took a 122.89-point drop in the 10 sessions from July 7 through July 18.

Technical analysts at Smith Barney, Harris Upham & Co. say they believe that period marked ""a well-deserved corrective respite'' for the market.

""We can define a bear market as a decline of 20 percent or more from the bull market peak,'' they said. ""Also, a bear market tends to develop over a period of months rather than weeks.

""Of course, what at first seems to be a correction could later develop into a bear market.''

Joseph Feshbach, technical analyst at Prudential-Bache Securities, argues that there are ways to distinguish between the two types of declines.

The recent selloff, which began with a record 61.87-point decline in the Dow on July 7, looked to Feshbach like ""a classic bull market correction.''

Such a correction, he suggested, needs to be sharp and dramatic to accomplish its purpose, creating the kind of fear and pessimism that prompts a buildup of cash reserves to provide the fuel for a new rally. When bear markets begin, he says, they are ""sneakier. …

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