bear market?

Ned Davis Research firm found that drops of 5 percent or more in the Dow Jones Industrial Average have occurred 355 times since 1900, or an average of 3.3 times a year. Only 31 times did the decline worsen into a bear market, defined as a drop of 20 percent or more. A bear market occurs about once every three years.

So, more than 90 percent of all 5 percent declines don't turn into bear markets.

Ned Davis Research conducted a similar analysis on the Russell 2000, going back to 1979. The small-stock index has experienced 74 dips of 5 percent or more, and nine bear markets. The frequency of declines and bear markets is about the same as for the Dow.

If the decline resumes and worsens, dragging the Dow and the Russell down more than 10 percent from the May 10 peaks, then history suggests there is roughly a 50-50 chance of an outright bear market.