S&P 500   4,574.79
DOW   35,756.88
QQQ   379.12
S&P 500   4,574.79
DOW   35,756.88
QQQ   379.12
S&P 500   4,574.79
DOW   35,756.88
QQQ   379.12
S&P 500   4,574.79
DOW   35,756.88
QQQ   379.12

How to Brush-Up on Financial Terms During a Market Sell-Off

Tuesday, February 6, 2018 | MarketBeat Staff

The declines in the prices of global stocks that have been witnessed in the recent past have seen some technical terms being bandied about making it necessary for investors to take a refresher course on some of them.

One of the terms that has seen wide use in the recent past is ‘correction’. This is a phenomenon that occurs when an asset such as index, commodity, bond or stock declines in value by at least 10% from a previous high. A recent example of this is when the Dow Jones industrial average declined by 10% a few weeks back from the 26,616.71 points it had reached on January 26, 2018.

Market’s close

The common practice among market watchers is to wait until the close of the market before declaring that an asset has formally entered a correction (such as during a stock market holiday. And so far there have been no indications that the Nasdaq, S&P 500 and the Dow have entered this phase.

During bull markets corrections are common. In recent history there was one that ended two years ago in February per the S&P Dow Jones Indices. This means that the market has gone for a long time without having undergone a correction.

When stock indexes rise by 20% or more the situation is referred to as a bull market. According to experts the current bull market dates back to March 2009 when stocks started a recovery following the steep declines that had been witnessed during the global financial crisis. Since then the Standard & Poors 500 index has more tripled in value. 

Bear market

A bear market on the other hand occurs when the prices of stocks fall by 20% or more over a certain period. There was a bear market that started in October 2007 before ending in March 2009 following the bursting of the housing bubble.

Sometimes sell-offs in one market leads to sell-offs in other markets. This is referred to as a contagion since market disturbances have spread from one region or economy to others. Recently stocks in the United States witnessed a sell-off which as replicated in other markets in Europe and Asia and this was a good example of a contagion.

Algorithmic trading

Another financial term that has been gaining frequent use is algorithmic trading. The term is of course borrowed from algorithms and it refers to placing of trades by computers which have been programmed to do so. These computers are faster than humans and they can trade more frequently. Recently there was a sudden plunge when U.S. markets opened after a long weekend. This was blamed on algorithmic trading.

Should you invest $1,000 in Nasdaq right now?

Before you consider Nasdaq, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Nasdaq wasn't on the list.

While Nasdaq currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here



Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research.