HSBC: There's Now a Very High Chance of a 'Severe Fall' In U.S. Stocks

Or so says HSBC Holdings Plc technical analyst Murray Gunn. In a new note, Gunn says he is now on alert for a big dip in U.S. equities. "With the U.S. stock market selling off aggressively on October 11, we now issue a RED ALERT," he writes. "The possibility of a severe fall in the stock market is now very high," he adds, noting that volatility has continued to rise since the end of the summer and the recent sell-off was seen across many areas of the market, and not just select groups. 

The key levels that Gunn and his team are watching are 17,992 in the Dow Jones Industrial Average and 2,116 in the S&P 500. (As of 10:15 a.m. in New York, the Dow was trading at 18,147 and the S&P 500 at 2,140.) "As long as those levels remain intact, the bulls still have a slight hope," they write. "But should those levels break and the markets close below (which now seems more likely), it would be a clear sign that the bears have taken over and are starting to feast," they conclude.

DYI