Today is a perfect day to ponder if conditions are ripe for a 1987 style crash.

Today is Friday, October 16, 2015 and an option expiration day.  In 1987, October 16th was also a Friday and option expiration day.

On October 19, 1987, the U. S. stock market fell 22.61%.

At present the following conditions are similar to 1987:

  • The U. S. started shifting to a slower growth
  • Technical picture
  • Sentiment
  • Options activity
  • New tensions in the Middle East
  • Oil prices collapsed in 1986 by more than 50%
  • Rising illiquidity
  • Corporate earnings decelerating

The following conditions are different today:

  • Inflation rate is much lower
  • Interest rates are much lower
  • Market valuation is comparatively lower
  • Central banks are manipulating the markets
  • The United States’ share of the world GDP has dramatically declined
  • China has risen as a great economic power

In our analysis, there is only a LOW probability of a 1987 style crash in the near future.