Coined by investment advisory and asset management firm 4Thought Financial Group, ‘Wolf Markets’ are quantitatively defined as any period of 10% or greater downward price correction, starting with the day of the initial peak price and ending at the day before the initial peak price is reached again. This also includes any period with two consecutive 10%+ downward corrections (excluding periods defined as Bear Markets) with no increase in price from the trough of the first correction to the trough of the second correction (ending after the second trough on the day before the initial price of the first correction’s starting peak is reached). Consequently, Wolf Markets are characterized by volatile/sideways stock prices.
The Four Market Cycles: Bear, Bull, Wolf, Eagle
It is important to note that based on these quantitative definitions of the Bear, Bull, Wolf, and Eagle environments, markets can overlap with each other. With the exception of Bear markets, the other three market types can occur simultaneously. In effect, based on this “overlapping” set of definitions (which have been used to preserve the traditional mutually exclusive definitions of Bull and Bear markets), our newly identified Wolf and Eagle markets can be viewed as subsets or components of the traditional Bull market.
To learn more about “Eagle” and 'Wolf' markets, in addition to the traditional “Bull” and “Bear,” and how select investment methods tend to perform in each environment, Download The Analysis by 4Thought Financial Group CIO Jesse Mackey.