For months, many stock-market soothsayers have been prophesizing about a coming correction. Until recently, Mr. Market hasn’t taken that talk all that seriously.
 
But now, things do feel a bit different. The stock market’s long run of low volatility has given way to a week of big swings in the indexes; the latest one saw the Standard & Poor’s 500 index fall 2.07% on Thursday. In the past few weeks, the VIX, a widely viewed measure of market fear, has jumped from around 12 to almost 19.
 
In a story that appeared on Fortune’s Website Wednesday, following a strong up day for stocks, veteran writer Shawn Tully argued that when “stocks are this pricey, history tells us that prices swirl downwards in a continuous whirlpool that usually lasts about a year and goes to extremes.”
 
He writes that investors shouldn’t “count on a benign, downward drift of 10% or 15%, just enough to bring the kind of ‘healthy correction’ and ‘new buying opportunity’ that equity strategists are always touting. When you start from these levels, the fall is more often brutal than soft.”
What’s his proof?
 
Since 1876, he writes, U.S. stocks have experienced eight contractions that hammered prices from between 30% to 60%, in round numbers. “In the post-World War II era, where we have complete data, the crashes tended to follow similar patterns: Equities peaked with extremely high PEs, as measured by the Shiller Cyclically Adjusted Price-Earnings ratio (or CAPE), which adjusts for big swings in earnings that can greatly distort PEs based on today’s highly erratic profits.”
 
Tully argues that a CAPE of 26 tells us that “stocks are pricey—unless you think equities aren’t particularly risky. It also doesn’t help that the dividend yield is far, far below its historic norm at 2%.
 
“We don’t know if a crash is imminent, or if investors are happy with low yields and the modest capital gains that, at best, they can expect at these prices. It could break either way. But if a crash is coming, it will probably mirror those of the past,” he concludes.
 
A scan of the financial press also revealed some troubling stories about a few stocks.
 
A Lex column in the Financial Times argues that the Chinese market, once a source of profits and share-price gains for Yum! Brands, is now hurting the stock, which has lost about 15% of its value in the past three months. (Subscription required to view.)
 
Yum is best known for fast-food brands such as KFC, Pizza Hut, and Taco Bell.
 
“The market has salivated over Yum’s China business for much of the past decade. And with good reason,” the FT writes. “The country has grown to account for half of sales, from around one-tenth a decade ago. Sales outside the US and China have been flat; the US has been on a steady decline.”
 
But now operating margins in China have been on a steady decline, from 18% in 2009 to 11% last year.
 
“The slide in China is unsurprising,” writes FT. “Yum is not alone in its pursuit of the Chinese consumer.
 
Competition has forced up costs and put pressure on a fragmented supply chain already inadequately policed. And so, in July, one of Yum’s meat suppliers was exposed selling out-of-date and dirty product. The impact has been severe.”
 
The FT writes that Yum thinks that the effects will wear off after six to nine months, based on previous experience. “But this is part of the problem. China food scares are all too frequent. The company had similar scandals in 2005 and 2013. Even now, the brand may recover. But the latest scandal has emphasized the company’s big overseas weakness: lack of supply chain control. Should this indigestion keep repeating, low margins may move from being one-off to structural.”
 
But FT isn’t calling for anyone to short the stock. By contrast, StreetAuthority’s David Sterman argues that investors should bet against shares of GoPro, which produces a line of high-definition wearable cameras seen on ski slopes across America.
The stock, which went public earlier this year, has more than doubled in the past three months. The company’s June initial public offering was priced at $24 a share, and four months later shares are trading hands at $89.
 
“Yet as shares of GoPro keep rising, a simple question comes to mind: Is the company a hardware manufacturer, a social media site or a video editing software firm?,” writes Sterman.
 
Sterman contends that the main reason why this stock has shot up is technical – a tight supply of shares relative to demand. “There are just 20 million shares in the public float, which means that GoPro’s bulls are in a scramble to acquire a scarce amount of shares. And GoPro’s bears are having a very hard time locating shares to borrow as they attempt to short the stock. Meanwhile, the fact that more than 10 million shares of GoPro trade hands daily -- more than half of the float -- tells you that the stock holds greater appeal to traders than investors, many of whom see this as a momentum play and not a fundamental valuation opportunity.”
 
But Sterman adds that the supply-and-demand factor behind these shares can easily work the other way.
 
“When GoPro announces Q3 results later this month, management will be extremely tempted to sell more shares -- while they are richly-valued. Indeed over the past few years, we’ve seen many companies pull off IPOs, watch their shares soar and then quickly announce secondary offerings,” Sterman writes. “They’d be crazy not to, as shares have soared nearly 300% in just four months. In addition, millions of shares will enter the float in December as the lock-up period expires, altering the supply-and-demand imbalance in a big way.”
 
In addition, the competition should kick in soon enough. “It’s been widely noted on other financial sites that consumer electronics tend to invite me-too products from rivals, often at lower prices. That can lead to a downward spiral in gross margins and growth rates,” concludes Sterman.
 
I’ll close with a few words about JPMorgan Chase (JPM). If the stock merely traded on its nonearnings headlines, it would well be in the dog house. If billions of dollars of fines assessed against the company in the past year weren’t enough, JPMorgan had to confess recently that Russian hackers has accessed key contact information of 76 million household accounts and seven million small business customers.
 
Yet with all that embarrassing news, the company’s shares have gained 8% in the past three months while the S&P 500 index has been flat during that period.
 
And a piece by The Street points out that JPMorgan remains the bank stock most loved by analysts.
“Twenty nine analysts have Buy ratings on JPMorgan shares, while nine have Hold ratings and just one has a Sell rating, according to data compiled by Bloomberg,’’ writes The Street. “That adds up to a better consensus rating than any other U.S. bank among the 10 largest institutions, based by assets, including the three other U.S. banking giants, Citigroup, Bank of America, and Wells Fargo.”