A ‘Lehman-like’ market disaster could happen this week, analyst warns

‘The U.S. stock market especially is facing its greatest test of the year.’ Bearish sentiment currently correlates well with sentiment before the collapse of investment bank Lehman Brothers in 2008, Takada argues. So investors should prepare for carnage in the stock market due to “panic-selling by fundamentals-oriented investors and systematic selling by trend-following technical investors.”

“The correlation between sentiment then and now remains quite high,” Takada said, referring to the Lehman collapse. “Even the passing risk-on phase after the initial shock of the yield curve inversion ... and the risk-off mood that struck on 23 August neatly track the pattern recorded in 2008.” “The continued liquidation of long positions in equities by trend-chasing investors could convince one global macro hedge fund after another that now is the time to start paring longs,” Takada wrote.

Stock jocks are 'bug-eyed and tense as dogs'.

Great haboob!

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