October 2018 is turning out to be a lot like October 2008. The S&P 500 has now fallen for 12 of the last 14 trading days, and it is on pace for its worst October since the last financial crisis. But the U.S. is actually in much better shape than the rest of the world at this point. Even though they have fallen precipitously in recent days, U.S. stocks are still up 3 percent for the year overall. On the other hand, global stocks (excluding the U.S.) are now down more than 10 percent for the year, and they are down more than 15 percent from the peak of the market in January. All it is going to take is a couple more really bad trading sessions to push global stocks into bear market territory.
And even though U.S. stocks are still outperforming the rest of the world, many are anticipating that the U.S. is definitely heading for a bear market as well.
According to Bank of America, 14 out of their 19 “bear market indicators” have now been triggered…
“Expect a long bout of volatility,” Bank of America strategists led by Savita Subramanian wrote in a report published on Sunday.
Bank of America keeps a running tally of “signposts” that signal looming bear market. The bad news is that 14 of these 19 indicators, or 74%, have been triggered. Two more were toppled earlier this month: the VIX volatility index (VIX) climbed above 20 and a growing number of Americans expect stocks to go up.
Of course not all 19 indicators need to be triggered in order for a bear market to happen. These indicators are simply signposts, and what they are telling us is that big trouble could be brewing for the financial markets.
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