The bear market may have already begun, says technical analyst

2016 is shaping up to be a solid year for stocks, with the S&P 500 up about 5 percent year to date. But technical analyst Rich Ross of Evercore ISI warns that the market's best days are already behind it.

The market has risen while estimates have slid, pushing valuations higher "even as GDP estimates continue to fall, so that's a troubling backdrop for a market that's really stalling here post-Brexit," Ross said Tuesday on CNBC's "Trading Nation."

On the charts, Ross believes the S&P is contending with "critical support" at the 2,120 level — about 20 points below Wednesday's opening level.

Putting it all together, "I think there's a case to be made that we may actually have entered the early stages of a bear market," Ross said.

"I don't want to overplay that just yet, because we need that breakdown below 2,126, 2,120," he added. "But keep in mind — we have a market that's gone absolutely nowhere for the last 18 months but yet we've had two double-digit declines during that period, we've seen key sectors like health care and discretionary lose their leadership here."

And with valuations rising while economic growth continues to flag, the stage is set for a major break lower, according to Ross.

Yet while Dennis Davitt of Harvest Volatility Management agrees with many of Ross' points, he believes that this is already baked into many investors' expectations.

"People are underweight the U.S., and a lot of the active managers are no longer long the macro market," Davitt said on "Trading Nation." "Everyone is playing for this bear market scenario, and it comes back to —real simple — where are you going to put your money?"

With trouble in Europe and continued low yields in fixed income, Davitt doesn't see many better options than U.S. equities. And for that reason, "if earnings continue to be good, we're going to see the macro market accelerate to the upside."

Many managers could soon feel the need to buy stocks in order to avoid "missing the rally," he said.

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