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Tech Cold War – White Swan #2

May 23, 2019

There’s something in the air…

When we come to new all time records and White Swans, they can behave in strange ways. Sometimes the extreme event fails to revert back to norm. Like it happened last week.

Today I was reading something about the potential commercial tech cold war among China and US.

We are used to this kind of articles. Anyway the recent poor overnight performances showed 14 nights with a total performance of more than -8% loss on SPY. It’s a huge overnight loss. It looks like the markets believe in this potential tech cold war.

Are we facing a new global recession and big bear markets?

Including today, looking back to 1993 (SPY inception), there are only 20 similar events. 19 of them are included in the 2 big bear markets of 2001 (in September) and 2008 (in October). Only one instance occured in 2011.

To sum up, there are 95% odds of being at the start of a 50% or more big bear market like those of 2001 and 2008. On both it happened at the final stage of the bear market. Now we are coming down from all time highs: this time it should be different.

This is what the stock market is telling us. Let’s wait and see!

Marco Simioni

Nightly Patterns



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