U.S. stocks could drop another 17% as big tech shares falter, commodities soar and credit spreads break out, according to Evercore ISI.
The S&P 500 is no longer oversold, commodities are rising as the dollar strengthens, credit spreads -- the extra yield over Treasuries investors demand to lend to a company -- are breaking higher and action in stocks like Alphabet Inc. is worrisome, said Rich Ross, a technical analyst at Evercore. He has a “high conviction” that this is consistent with a level of 3,800 on the S&P 500 -- about 17% below current levels.
