GOLDMAN: The 'fragile' market might be primed for a drop

Goldman Sachs is getting nervous about stocks.

In a note to clients, equity strategist Chrisitan Mueller-Glissmann outlined the firm's fears that there may be significant risk to the downside for the market.

"There are generally more negative than positive 3-standard deviation moves for equities, indicating a negative 'skew' for equity returns," said Mueller-Glissmann.

"And recently the balance has shifted further towards negative moves."

This outlook comes after Mueller-Glissmann and his team downgraded stocks all over the world to "Neutral" in may, saying in part that Goldman think investors should "expect particularly poor returns in dollar terms."

Mueller-Glissmann outlined a variety of reason why the market has gotten riskier, but most of it comes down to the lack of growth for companies and countries.

"We think elevated equity valuations and the lack of growth acceleration since mid-2014 have made equity markets more fragile and there have been several drawdowns because of 'growth scares' or external shocks during that period," he wrote in a note to clients.

This fragility has so far not showed up on a consistent basis, according to Mueller-Glissmann, but if you look under the hood there are troubling signs that show instability.

"And while volatility has been relatively low on average, vol of vol has picked up with more frequent, sharp equity drawdowns," said Mueller-Glissmann.

"This might reflect changes in regulation and market microstructure, which has reduced liquidity across assets."

So not only do current business trends look worrying to Mueller-Glissmann, but the actual structure of the market itself is making things worse.

Be careful out there.