Equity · Core
Market Correction
A correction is a drawdown that is large enough to notice and not yet large enough to be called a bear — folk usage is about −10%.
Definition
Media: a ~10% drop from a recent high. It can be a buyable dip in a bull or the first stair in a bear. The word is a size bucket, not a diagnosis.
Why it matters
Flows and headlines pause here. Vol-control and CTA de-risking can turn a correction into the next down-leg.
Case
Q4 2018 and Q4 2023 both tagged ‘correction.’ One needed a Fed pivot narrative; one was a rate-vol event. Same percent, different book.
How to read it
Ask what broke (liquidity, earnings, positioning) and whether credit agreed. Percent-from-high is not a thesis.
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