The sharp drop in stock prices around the world has many traders wondering whether this action is simply a bull market correction or the beginning of a bear market. In a new report, Citi analyst Robert Buckland remains bullish on global equity markets and believes this price action is simply a standard correction.

Market Correction Versus Bear Market

It’s important that traders understand the distinction between a correction and a bear market. A correction is typically a sharp, short-term drop in prices that is less than 20 percent and lasts less than two months. Bear markets, on the other hand, last much longer and can drag share prices much lower.

For stock traders, the major distinction between the two is that pullbacks offer excellent buying opportunities because they allow entry at lower price levels during a bull market. Bear markets are typically not good buying opportunities until the cycle is at or near its end.

Market Correction? Bear Market? Or Neither?

With the MSCI AC World down 10 percent from its May peak, Buckland believes…

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