Correction, Technical Correction, Technical Decline-courtesy investopedia.com

[Muhammad Noman Ansari]

Correction

What Does Correction Mean?
A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index. Corrections are generally temporary price declines, interrupting an uptrend in the market or asset.

Investopedia explains Correction
A healthy market will correct from time to time.

Technical Correction

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What Does Technical Correction Mean?
A decrease in the market price of an asset or entire market after extensive price increases. A technical correction occurs even when there is no evidence that the increasing price trend should cease. It is often caused when investors temporarily slow down their purchases of securities, which commonly leads to a pullback toward a short-term support level.

Investopedia explains Technical Correction
A technical correction is a drop in stock or market prices when there is no fundamental reason for a decrease. After a steady increase in value, investors may become more cautious buyers at the higher prices and look to reevaluate the market, resulting in a decrease in purchases. The drop in purchase volume will stop the upward price trend from continuing while the market re-evaluates the short-term direction.

Technical Decline

What Does Technical Decline Mean?
A technical decline is a fall in the price of a security caused by factors other than a change in the fundamental value of the security. Typically a security is said to experience a technical decline when the security or the overall market are trending upwards overall and the price dips downward based on technical factors. Generally the connotation is that a technical decline will prove to be only a momentarily dip in demand, followed by an appreciation back to the fair market value suggested by business fundamentals.

Investopedia explains Technical Decline
Proponents of the efficient market hypothesis dismiss the concept of a technical decline as being inconsistent with what they see as the rational price-setting mechanisms of the stock market. These theorists contend that if the price of a security were to deviate significantly from its fundamental value, market participants would quickly recognize an opportunity for profits and buy the security, increasing its price until it returns to its fundamental value. By contrast, many other investors believe that with sufficient research, it is possible to identify temporary windows in which undervalued securities can be bought, allowing for significant gains from the return to fundamental value.

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Muhammad Noman Ansari