Stocks were hit by a rush of selling this week that landed all major indices back in correction territory. The S&P 500, Dow and Nasdaq are down a respective 12 percent, 12.7 percent and 12.4 percent from their 52-week high. As investors weigh on whether stocks will resume their bull run, one technician warns there could be significant downside ahead.
"Our 2016 outlook was 'stealth bear market is revealed' and we think very quickly that it's becoming apparent that we are in a bear market," Jonathan Krinsky, MKM Partners' chief technician, told CNBC's "Fast Money" recently. "The S&P 500 is now down more than 11 percent from its May high."
"I think that ultimately this third test of the August low probably gives way and the next level [of support] is 1,820," added Krinsky. During Friday's swoon, the broad market index had its worst day since Aug. 24, and pierced that month's lowest levels.
"But more importantly, for the first time in three years we are in a downtrend," Krinsky added. "The 200-day moving average is firmly to the downside, so if you are trying to buy the dips it's equivalent of selling the rallies over the last three years."