Why One Technical Analyst Warns The Market Is Headed For A Near-Term Pullback

The market could be in for some pain ahead. Here’s why.

The three major indexes may have just notched fresh record highs, but according to one expert technical analyst, we could be in for some pain ahead.

JC O’Hara, chief market technician at MKM Partners, told CNBC that the stocks market is “a little overbought in the short term,” and now the question is whether it’s “a good overbought or a bad overbought.”

To answer this, O’Hara examined how much time the S&P 500 has spent above its short-term, 10-day moving average.

Source: CNBC.

“We found the streak to be 30 days,” O’Hara said, adding that while that streak ended late last week, it’s still “one of the longest streaks on record.”

Over the last decade, the S&P has seen five similar streaks.

“What we found was the market had a very minor pullback, consolidated for a few weeks before ultimately, in most cases, resuming its uptrend,” the technical analyst said. “So, I don’t want to get too negative here. Yes, we’re up a bunch, but I think if we repeat history here, we’re due for a short-term consolidation before resumption of the uptrend.”

O’Hara isn’t alone in anticipating pain in the near-term. 

RBC chief U.S. equity strategist Lori Calvasina warns that a pullback is on the horizon on the basis that many of the biggest money managers are more positive on stocks than they have been in months.

“This keeps us on guard for a period of significant consolidation near-term, and will be an overhang on 2020 performance if not resolved before year end,” Calvasina wrote in a note.

“We expect 2020 to be a year of moderation, turbulence, and transition in the U.S. equity market,” Calvasina continued. “Risk of a pullback near-term is quite high in our opinion. If a pullback doesn’t occur by the end of 2019, as we’ve anticipated, then we suspect it will come in 1Q20.”

By the way, if you liked this article, you'll LOVE this Meaty free training I just published on the top 3 questions and challenges every investor faces AND how to overcome them. It's titled "10k into $2.4 Million in 18 months" and you can grab it for free here


There are risks inherent in all investments, which may make such investments unsuitable for certain persons. These include, for example, economic, political, currency exchange, rate fluctuations, and limited availability of information on international securities. You may lose all of your money trading and investing. Do NOT enter any trade without fully understanding the worst-case scenarios of that trade. And do NOT trade with money you cannot afford to lose. Past performance of an investment is not necessarily indicative of its future results. No assurance can be given that any implied recommendation will be profitable or will not be subject to losses. Information provided by the Company is not investment advice. The Company is not a registered investment adviser, stock broker, or brokerage. You agree that the Company does not represent, warrant, or take responsibility that any account will or is likely to achieve profit or losses similar to those shown. Examples published by the Company are selected for illustrative purposes only. They are not typical and do not represent the typical results of all stocks within the Company’s software or its individual scans and searches. No independent party has audited any hypothetical performance contained at this Web site, nor has any independent party undertaken to confirm that they reflect the trading method under the assumptions or conditions specified.

FREE TRAINING - TRADERSPRO PRESENTS: Retire In 18 Months With $2.4 Million?

Join Us Now
X