The hair styles, music and fashion are very different.

But when it comes to sharemarket trading patterns, a prominent analyst has drawn worrying parallels between late 2016 and the same period of 1987, ahead of that year's infamous October crash.

HSBC's head of technical analysis, Murray Gunn, went out on a limb and made the connection in a report published this week.

The thesis of his note, titled "Ominous shades of 1987" is quite, well, technical.


But it's worth considering for anyone with investment exposure to equity markets, including through KiwiSaver.

Higher risk, growth-focused fund options for the savings scheme generally have sizeable allocations to shares, and have done quite nicely in recent years thanks to steadily rising stock markets.

There is always a risk of that situation changing, of course.

The HSBC report identifies a "head and shoulders" trading pattern in Wall St's Dow Jones Industrial index that also emerged over the Northern Hemisphere summer of 1987.

Such a pattern involves a market peak - which the Dow hit on August 15 in this year's case - with two lower highs on either side of it.

There is a school of thought in markets that views such patterns as a potential indicator of a severe sharemarket downturn.

"The Dow Jones Industrial index has turned lower from a head and shoulders neckline re-test," Gunn said in his report.

"A similar pattern occurred at this, often bearish, time of the year in 1987 before the index fell dramatically."

With other technical analysis also pointing towards a "significant" market top, he said movements in the Dow, which closed at 18,339.24 this morning (NZ time), should be monitored closely over the next two weeks.

Pressure would ease if the Dow rises above 18,449 but "a close in the Dow below 17,992 would be a clear warning that a steep fall could be underway", Gunn said.

While his analysis focuses on the American benchmark stock index, a major sell-off on Wall St would quickly spread to New Zealand's NZX and other exchanges, as was the case in 1987.

Many investors are already questioning how long an extended bull-run in equities can be sustained, particularly if the US Federal Reserve moves away from the ultra-low interest rates that have been lubricating sharemarkets over the past few years.

The S&P/NZX 50 has gained around 200 per cent since early 2009.

Commentators have noted, however, that there is a palpable lack of investor euphoria - an element that often precedes market crashes, the late 1980s being a case in point - in the current bull market.


Annual results from New Zealand's listed retailers, reported over the past couple of weeks, have revealed a close race in the push to grow online sales.

Hallenstein Glasson, The Warehouse Group and Kathmandu all reported online sales in the region of 6 to 7 per cent of total revenue for the past financial year.

The Warehouse, whose adjusted net profit rose to 12.3 per cent to $64.1 million, has been spending up big in recent years on increasing its online profile, including through numerous acquisitions such as outdoor equipment retailer Torpedo7.

The Red Sheds operator's annual online sales lifted 22 per cent to $185.8m, representing over 6 per cent of total revenue.

Hallenstein Glasson's, meanwhile, reported a 24 per cent lift in e-commerce revenue to around $15m (roughly 7 per cent of total sales).

Kathmandu reported the slowest rate of online growth of the three, rising around 15 per cent to $29.4m, or 6.9 per cent of the $425.6m in overall revenue the firm reported.

Given total online retail sales are growing at around 13 per cent in NZ, according to BNZ figures, it's good news for investors that the three firms are outpacing the overall rate of growth in the sector.

Reporting his firm's half-year result on September 19, Briscoe Group boss Rod Duke said the company's online channels were seeing "excellent" growth and now represented more than 5 per cent of total sales.

Safer ground

Goldman Sachs investment bankers on both sides of the Tasman appear to be safe from a staff cull in the wider Asia region.

Bloomberg reported that the New York-based firm is planning to cut 75 investment banking jobs in Asia, excluding Japan, following a poor performance in deal-making.

"The business in Australia and New Zealand is unaffected by this," a Goldman Sachs spokeswoman told Stock Takes.

Goldman's ranking in Asia equity issuance has fallen to 11th this year from second in 2015, its worst result in around eight years, according to Bloomberg.