France wakes up with a hangover. After the Black Saturday of the mobilization of October 17, another specter looms over the week that opens: that of a Black Monday on the stock market. This Monday, October 19 marks the 39th anniversary of the 1987 crash, and calls for a new “Black Monday” have been spreading on X since Saturday. October has never had a good reputation among speculators. Mark Twain ranked it among the “particularly dangerous” months for playing on the stock market, before mischievously adding the eleven others.
However, bitcoin is holding around $81,600 this Sunday morning. It had fallen below $81,000 in the middle of the week in a bath of liquidations, and Wall Street has just signed its worst week since June. Should we fear a Black Monday from the opening?
Key Points
The anniversary of the 1987 crash falls in the midst of a stock market depression.
The Nasdaq has lost 4.5% in five sessions and a barrel of WTI exceeds 101 dollars.
Bitcoin has fluctuated between $79,700 and $84,400 since last Monday, without capitulation.
First test Sunday at midnight, Paris time, with the reopening of American futures contracts.
Wall Street is coming out of its worst week since June
Friday evening, the S&P 500 closed at 7,659 points, down 1.1% over the session and 1.9% over the week according to figures from the AP agency. The Nasdaq dropped 2.1% on Friday and 4.5% in five sessions. It remained on four weeks of increase.
The fuse was lit by AI. CoreWeave, which rents graphics servers to industry giants, plunged 11.9% on Friday. Its more than $51 billion in debt is worrying and its bonds maturing in 2031 now yield more than 16%. Semiconductors posted an eighth session of decline, their longest series since 2008 according to Bloomberg.
Oil doesn't solve anything. WTI ended at $101.41, up 3.5%, after Iranian strikes near the Strait of Hormuz. Brent is close to $110 and the yield on 10-year US Treasury bonds remains above 5%. The VIX volatility index jumped 21% on Friday, to almost 20 points.
CNN's Fear & Greed Index went from fear to extreme fear in a week. Enough to fuel the prophecies of a crash, which The Kobeissi Letter takes on the wrong foot. For this American financial analysis letter, the surge in calls for Black Monday rather announces an S&P 500 at 8,000 points, or 4.4% above its Friday close.
The crypto market is cashing in better than the Nasdaq
Bitcoin is trading at $81,616 this Sunday morning, around 2.6% below its weekly opening last Monday ($83,773 on Binance). The Nasdaq lost 4.5% over the same period. On Thursday, the cryptocurrency briefly fell below $80,000, touching $79,694 before climbing back above 82,000 during the day.
Some of the fuel from a crash has already burned. According to CoinGlass, $929 million in positions were liquidated in 24 hours on Thursday, including $777 million in bullish bets. A liquidation is a leveraged position forcibly closed by the platform when the market goes in the wrong direction. The less there is left, the less a waterfall has to feed itself.
Ether suffers more. At $2,407, it has fallen by around 10% since October 1. Listed crypto values held up less well than the tokens themselves, with Strategy down 9.2% during the session on Friday.
Crypto investors did not follow the Wall Street panic. The Crypto Fear & Greed Index shows 53 this Sunday, in the neutral zone, compared to 63 on Friday.
Black Monday or wet squib for bitcoin
The first verdict will come before Wall Street even opens. Futures contracts on the S&P 500 and those of the CME on bitcoin reopen on Sunday at 6 p.m. in New York, or midnight in Paris. Asian places will follow. On Thursday, the Kospi fell by 9% during the session in Seoul and triggered a circuit breaker.
The week has no shortage of detonators. Netflix publishes its accounts on Tuesday, then Tesla and Meta on Wednesday, two direct tests for AI spending that are shaking the stock. The Fed then meets on October 27 and 28, with a status quo widely anticipated by CME FedWatch and a rate increase still feared for December.
$80,000 remains the support to defend on the chart. CoinGlass identifies clusters of liquidations between $80,000 and $80,800 below the price, and between $84,400 and $84,800 above. The breakage of one of these zones will quickly get out of hand.
The situation is currently nothing comparable to 1987. The Dow Jones lost 22.6% in a single session, without any safeguards. Since then, Wall Street has suspended trading as soon as the S&P 500 loses 7%, then 13%, then 20% during the day.
