When trying to determine when a market correction may be ending, it only makes
sense to look at past corrections to help determine a general guideline. This
really does not have to be a complicated process and the results from some
quick analysis can be quite helpful.
We believe that Silver is in its fourth intermediate term bull market correction
and we would like to see how it measures up to the other three.
The above chart helps us compare the percentage drop from the top of each
correction to their lows. This is remarkably helpful as it gives us a general
idea of what may be considered "normal" for a silver bull market pullback.
As we know, in 2008 the extreme circumstances of the Credit Crunch really
helped push down all markets. The lack of credit to consumers, investors and
institutions caused the volatile silver market to fall an impressive 55% from
peak to trough. Amazingly this massive correction did not end this impressive
bull market up trend. If a 55% correction is not the "maximum" percentage
drop that we should expect from a bull market correction, it should be somewhere
close. This 55% Aggressive and 41% Average percentage correction for this
bull market is a helpful guideline to compare our current low of 46% to.
But how long do these bull market corrections typically last?
In the above chart we can see how many days the current correction in the
price of silver has lasted compared to past intermediate term pullbacks. The
point at which a correction ends can be a little subjective as one may be
inclined to pick the extreme low of the correction or when a new high is reached
etc. For our analysis we picked the best buying opportunity just prior to
the following uptrend. We can see above that the current correction is getting
a little "long in the tooth" compared to other intermediate term pullbacks
in the current bull market.
In terms of depth and duration it appears that the current intermediate term
correction is closer to an end than a start. Note that we said "closer" and
not "at". These types of comparisons are only guidelines and assume that the
bull market itself is not over. Of course the price of silver can correct
further, it can last longer and it may never go back up. However, our proprietary
long term charts and other indicators lead us to believe the long term bull
market is well in tact and we find these kinds of charts both helpful and
bullish.
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