On Wednesday, Murray Gunn, the head of technical analysis for HSBC — one of largest banking and financial services organizations in the world — announced his team had gone on “RED ALERT” due to a forthcoming sell-off of stocks. The alert comes in the wake of the price action that occurred over the past few weeks.
Gunn used a form of technical analysis referred to as the Elliott Wave Principle to reach this conclusion. It works by tracking alternating patterns in the stock market in order to pinpoint investors’ actions, as well as determine potential next moves.
On October 19, 1987, the Dow Jones Industrial Average, which creates deals with the 30 biggest American publicly traded companies, lost 22.6% of its value. Gunn referenced that stock market crash in late September, acknowledging that the current stock market’s behaviour strongly resembled the 1987 crash. He announced that the stocks were under an “orange alert.”
Now, due to a 200-point decline for the Dow on Tuesday, Gunn says the “RED ALERT” has come.