When a market is making a strong move, it sometimes seems as if the trend can continue forever — especially if you’re on the wrong side of that move. But no trend — regardless of how strong — is without corrections.

The stock market’s run in the latter part of 2006 is a perfect example: The advance from mid-July to mid-December. was truly robust, pumping up the S&P 500 index and the E-Mini S&P 500 futures (ES) nearly 17 percent (Figure 1).

Price charts are deceptive, though. Visual analysis typically leads traders to focus on what they want to see and attach significance to "patterns" that aren’t what they first appear to be. Quantifying price action is virtually the only way to provide solid reference points for trade ideas and systems.