A study by the New England Complex Systems Institute did a Abstract earlier this year hypothesizing that market correlations, when reaching extremes, precede a crash.
Are markets more correlated now than last year? Last decade? It sure feels that way. Just watch the equity markets; it’s all up or all down. I’m afraid that as the correlation reaches above 90%, combined with HFT, that instability will dominate, then overtake.
And how about today’s action?! End of quarter markup interrupted by a bit of headline risk…And precious metals are up on the thought that the Euro Bailout must come from somewhere. What if it doesn’t come? Care to think about that?If you enjoy the content at iBankCoin, please follow us on Twitter