Correction

A correction is a relatively small (compared to a crash) downward movement in a market. It is usually an interruption of an upward trend that has risen: the market rises too fast, this is corrected by a fall, and the market can then return to normality.

Unlike a crash, a correction has no lasting effect on sentiment and does not lead to a prolonged period of weak performance.

The term correction is sometimes used by commentators who wish to talk down the importance of a downward movement, and therefore avoid terms such as “fall”.

Copyright Graeme Pietersz © 2005-2020