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InvestHub.com's
Finance Dictionary and Glossary of Investment Terms

Correction  

Definition 1.

Reverse movement, usually downward, in the price of an individual stock, bond, commodity, or index. If prices have been rising on the market as a whole, and then fall dramatically, this is know as a correction within an upward trend. Antithesis of a technical rally. See: Dip, break.
 

Definition 2.

A price reaction (usually negative) of at least 10% for a stock, bond, commodity, or index.
 

Definition 3.

A reversal of the prevailing trend in price movement for a security. The term is most often used to describe a decline after a period of rising prices. A correction is often considered beneficial for the long term health of the market, in that the prices had risen too quickly and the drop put them back to more realistic levels.
 

Definition 4.

A sharp, short drop in stock prices, after which the market resumes an upward climb. Of course, when the correction is happening, it''s hard to distinguish from the beginnings of a bear market. That''s what makes things so interesting.
 
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