As we process the 19-Feb -10.46% drawdown, I'd noticed various commentator's stating how this was a very quick correction (as if to imply there could be a quick recovery). The chart below illustrates a very specific point.
A deeper drawdown, requires progressively more time to recover. An important point, each of these recorded drawdowns are not a continuation of a larger drawdown, each have fully recovered their losses.
As an example, we've had 26 pullbacks ranging from -4% to -5% and on average it took 32 sessions to recover the losses.
At present, we are 22-sessions into this -10.46% Light-Correction.
The chart shows we've had 4 corrections in the range of -10% to -11% which on average took 124-sessions to recover the loss.
The technical definition of a correction is -10% to > -20%
Under those conditions we've had 10-Corrections which took on average 159-sessions to recover the losses.
I'm going to change the parameters to imply a -7.5% to -12.5% drawdown is a "Light-Correction"
Under these 17-conditions the average time to recovery is 88-sessions, with the shortest at 39-sessions.
As previously mentioned we are currently 22-sessions into this -10.46% Light-Correction.
The shortest Light-Correction on record was from Jul/Aug 1986.
The drawdown took only 9-sessions, and the top-to-top recovery 39-sessions.
If the Feb-2022 drawdown-to-recovery were to match the shortest on record from 1986, that would put our recovery date at 15-April.
Thanks for reading...Jason
A deeper drawdown, requires progressively more time to recover. An important point, each of these recorded drawdowns are not a continuation of a larger drawdown, each have fully recovered their losses.
As an example, we've had 26 pullbacks ranging from -4% to -5% and on average it took 32 sessions to recover the losses.
At present, we are 22-sessions into this -10.46% Light-Correction.
The chart shows we've had 4 corrections in the range of -10% to -11% which on average took 124-sessions to recover the loss.
The technical definition of a correction is -10% to > -20%
Under those conditions we've had 10-Corrections which took on average 159-sessions to recover the losses.
I'm going to change the parameters to imply a -7.5% to -12.5% drawdown is a "Light-Correction"
Under these 17-conditions the average time to recovery is 88-sessions, with the shortest at 39-sessions.
As previously mentioned we are currently 22-sessions into this -10.46% Light-Correction.
The shortest Light-Correction on record was from Jul/Aug 1986.
The drawdown took only 9-sessions, and the top-to-top recovery 39-sessions.
If the Feb-2022 drawdown-to-recovery were to match the shortest on record from 1986, that would put our recovery date at 15-April.
Thanks for reading...Jason
