There has been much talk of the relative stability in US stock markets and a lack of volatility in recent months.
But that hasn’t stopped other markets like gold, oil, interest rates, and on Friday, the British pound from exhibiting the volatility lacking in the S&P 500.
That reality, and the identification of the similarity between recent price action in the S&P 500 and that which proceeded the 1987 stock market crash, is enough to give a team of technical analysts at Citibank “the chills”.
Citibank says that the confluence of elevated concerns about Europe and its banks, the most polarising US Presidential election in modern times, and increased taper talk in Japan and Europe along with questions about the efficacy of central bank policy have combined into some big market moves recently.
So with “a 20 basis point move in US 10 year yields in 5 days; a 16% move in Oil in 7 days; a $90 move in Gold in 9 days; a chart on USDCNY that looks to be breaking to the topside and a huge GBPUSD move overnight in minutes” they wonder if the S&P 500 “is the next shoe to drop”.
Here’s their chilling chart: