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Investing.com -- The S&P 500’s recent weakness could have further to run, with BTIG analyst Jonathan Krinsky warning in a note Wednesday that key technical signals point to a deeper pullback before any recovery.
“We have been quite vocal of late about the downside risks for equities,” Krinsky wrote, citing “a combination of extreme upside metrics, significant breadth divergences, and complacent sentiment” as “a very risky mix.”
The analyst believes that despite the market’s resilience this year, the index has not “so much as touched its 50 DMA (6654) nor has it had a -3% drawdown on a closing basis since April.”
According to BTIG, both would represent “a minimum objective,” with “a move towards the 6,400–6,500 level” seen as a strong likelihood.
The note also highlighted that the S&P 500’s 143-day streak without touching its 50-day moving average is the third-longest since 1990, behind only 2007 and 1995. “We think a 50 DMA (6654) is the minimum downside for the current pullback,” BTIG said.
Other market signals are said to reinforce the cautious view. The CBOE Equity Put/Call ratio is “bouncing off lows of the year,” and Krinsky said it needs to rise “meaningfully before we start thinking about looking for a tactical low.”
BTIG also pointed to weakness in related asset classes, noting that “Bitcoin testing the psychological ~100k level” and a potential “bear flag” in gold suggest broader cross-asset pressure.