Market Analyst Warns of Flash Crash Risk Amid Volatility

Word on the StreetTuesday, May 20, 2025 4:05 am ET
1min read

Jeff Bierman, a prominent market analyst known for his accurate prediction of the U.S. stock market bottom, has issued a stark warning about the potential for a flash crash. In a recent interview, Bierman discussed his current views on the U.S. stock market, highlighting the unprecedented volatility driven by the unpredictable nature of the current administration.

Bierman, who is the Chief Market Technician at Theo Trade and a visiting professor of finance at Loyola University Chicago, expressed his concerns about the market's future. He noted that the traditional fundamental analysis era is coming to an end, and the market is now more susceptible to sudden and severe movements. "The box" that has been opened, as Bierman puts it, contains a "capricious president" whose actions can significantly impact the market.

Bierman's warning comes at a time when the market is already experiencing heightened volatility. He advised investors to adopt a cautious approach, suggesting that they should reduce their positions and consider diversifying their portfolios. "Small position trading. Don't always put all your money into a single product. At the same time, you should also reduce your holdings. If you have always held a 10% concentrated position, you should halve it," he said.

Bierman also recommended considering international markets, precious metals like gold and silver, and commodities that have seen significant price drops, such as oil. He believes that these assets could provide a safe haven for investors in the current market environment.

When asked about his views on the S&P 500 index, Bierman noted that the index had fallen below 5600 points and reached a low of 4800 points. He explained that the index had since rebounded by more than 61.8% of its decline, which is a normal Fibonacci sequence. However, he cautioned that the market's future performance may not meet expectations.

Bierman also shared his views on specific stocks, recommending financial stocks like JPMorgan Chase, Goldman Sachs, Visa, Mastercard, and PayPal. He also mentioned pharmaceutical stocks like Bristol Myers Squibb, Merck, and Biogen. On the other hand, he advised investors to avoid stocks like Walmart, Costco, and most artificial intelligence-related stocks.

Bierman's warning serves as a reminder of the importance of staying informed and adaptable in the ever-changing market landscape. As the traditional fundamental analysis era comes to an end, investors must be prepared for increased volatility and the potential for sudden market movements. By remaining vigilant and adjusting their strategies accordingly, investors can better navigate the challenges posed by the current market environment.