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These two charts show the bull market is in its ‘final wave’: 'Northman Trader'

  • The Northman Trader Sven Henrich is back, and he's got two charts that show a pullback could be coming for the market.
  • Henrich has been calling for the end of the bull market for months, but now says recent market trends convince him a pullback is truly on the way.

Market watcher Sven Henrich, known widely as the "Northman Trader," returned to CNBC's "Futures Now" on Tuesday with two more charts that he says point to the "final wave" of the bull market.

Henrich has been calling for the end of the bull market for months, but now says that recent market trends convince him that a pullback is truly on the way.

The first of the indicators, according to the Northman Trader, is the number of "gaps" in the chart of the Nasdaq 100-tracking ETF (QQQ). In this case, "gaps" refer to a sharp move up in a price chart, often a sign of a stock being traded during premarket or after hours, and Henrich believes that their abundance even just this year points to trouble.

"It's not unusual for a gap or two not to get filled, but in this particular case, we've seen one gap after another not getting filled," said Henrich. "In fact, we've got 17 gaps now [dating back to 2016, including leading up to] the French election a couple weeks back, for example, and that basically implies that a lot of this price action has not been traded during market hours."

On top of that, the Nasdaq's new highs have been driven by a handful of big-cap stocks, mostly in the tech space. While stocks like Apple, Amazon and Facebook keep hitting new peaks, Henrich makes the point that "the fact that these big-cap market stocks keep driving higher is basically masking any weakness underneath" and aren't necessarily representative of the market's big picture.

Henrich's second source of worry lies with the fact that fewer and fewer stocks are participating in the rally. According to Henrich, the ratio between the S&P 500 equal-weighted ETF (RSP) and the S&P 500-tracking (SPY) has flattened while the SPY rises, which he takes as a sign that fewer stocks are driving the rally.

That said, the RSP has closely tracked the SPY over the past year, so the average stock in the S&P 500 is performing just as well as the overall index.

"From our perspective, as we move higher in price, it provides an opportunity to sell this market, especially with volatility being so low," said Henrich.

He believes that the S&P 500 could still run up to 2,500, but the technical levels suggested by the charts are signaling a pullback if that level is ever reached.

To be sure, this is not Henrich's first time making a bearish case. A year ago, he forecast that the S&P 500, then near 2,050, would fall to 1,573 in a matter of months. Instead, the index fell no lower than 1,992 before finishing the year at 2,239.

On Wednesday, the S&P 500 and the Nasdaq were both down from their record highs.

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