One Bank Warns Of Imminent "Fragility" Shock After Last Week's Fastest-Ever Market Recovery

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by Tyler Durden
Tuesday, Sep 28, 2021 - 06:45 PM

How fast was the market rebound from last Monday's "Evergrande", 3-sigma shock? So fast, that as Bank of America's derivatives analysts show in the chart below, it was the fastest recovery in 93 years, "as the markets Pavlovian buy-the-dip response trumped any fundamental concerns." 

According to bank calculations, the S&P recouped its Sept 20 decline in just four trading days, tied with October 1936 for the fastest recovery since 1928 following a one-day 3-sigma shock. Moreover, as also shown below, the average recovery time from 2-sigma or bigger S&P drawdowns in 2021 is the fastest in history at 4.6 days, and of the 20 fastest recovery periods since 1928, 7 have occurred post-GFC. We live in a world where any dip is bought ferociously, indiscriminately and with leverage.