It's been a banner year for mergers and acquisitions. In 2015, M&A volume and activity has set a record on both a worldwide and U.S. basis, according to Dealogic. But while that may sound like good news, it is actually an indicator that the market may be topping, according to one technical analyst.
"There are two things that companies tend to do towards the end of market cycles: Buy back their stock aggressively, and buy other companies aggressively," said Jonathan Krinsky, chief market technician at MKM Partners, in a Monday "Trading Nation" segment.
And indeed, "we've seen stock buybacks really pick up in the last couple years, and we've seen M&A activity pick up."
To illustrate his point, Krinsky furnishes a chart comparing a 20-week moving average of U.S. M&A transaction value with the .
The M&A moving average "actually just exceeded its 2007 highs, which we know is essentially the peak of that cycle in M&A activity, and also the peak in the stock market," he said. "It's tough to say, just because we exceeded that level, that the market is at a peak. But it's interesting to note that [other indicators] are getting a bit frothy."
"You have to start to wonder, 'Is this the end of the cycle?'" Krinsky said. "We think the answer is probably 'Yes.'"
Read More We may have just seen the peak in M&A: Traders
Yet for Erin Gibbs, equity chief investment officer of S&P Investment Advisory Services, M&A activity is likely to abate somewhat but continue to be strong overall, based on the high level of cash on mega-cap companies' balance sheets.
This comports with her overall view of stocks right now. "We're expecting a muted but positive next year," she said in the same "Trading Nation" segment.
