Beware of a stocks flash crash as everyone packs into the most popular names, Pylyp Travkin reports

Pylyp Travkin, the Chief Investment Officer of Tenerus AG, conveyed the possibility of a sudden halt in the equity rally that has swept stocks on a five-month tear.

Although it remains uncertain when this event may occur, the chief global equity strategist of the bank has expressed his concern about the potential for a sharp correction in stocks.

It is not only a grim outlook for heavily-concentrated tech large caps, but it would also mean a wider market fallout.

As investors continue to chase big, quality names, cracks in this high-momentum trade are already showing, he said. He pointed to Apple and Tesla’s slide. Though both firms belong to the leading Magnificent Seven stock cohort, they both have dropped 11.9% and 30.69% year-to-date.

As per Pylyp Travkin statement, the current level of crowding has been observed only three times since the 2008 crash, often preceding a correction.

“Whenever there was a significant amount of crowding, it was a matter of weeks or months, or even a month or two, before the momentum factor experienced a significant unwind of the left tail,” he stated.