Talking Numbers

This chart shows why the market is in trouble

This chart shows why the market is in trouble

Stocks were down Thursday, though the market is still near its all-time highs. That may change should one big hedge fund manager and one chart turn out to be correct.

David Tepper, founder of the $20 billion Appaloosa Management hedge fund, told attendees at the SkyBridge Capital SALT 2014 conference, "I'm not saying go short. I'm just saying don't be too fricking long right now." Tepper is putting his money where his mouth is; he has cut his equity exposure to 60 percent, from 100 percent, in the past six months.

(Watch: Tepper: Have cut equity exposure to 60% from 100% 6 months ago)

Portfolio manager Chad Morganlander of Stifel Nicolaus' Washington Crossing Advisors is also cautious, though not outright bearish.

"When you look at valuations on the S&P 500, you're trading between 15 and 16 times forward" earnings, said Morganlander. "That's not particularly expensive nor is it particularly cheap. That's why he's not making the call to go short."

Morganlander believes there are good stocks to be had in individual companies, particularly some HMOs and old tech stocks like Cisco. But he says many other sectors are looking to be overvalued.

"We have roughly about 20 percent in cash," Morganlander said of his value portfolio. "We are finding it difficult as value managers to find opportunities."

Though Morganlander expects a 6 to 8 percent total return on the benchmark S&P 500 index for 2014, he anticipates a bumpy road ahead. "If you get a downdraft of 5 to 10 percent, that wouldn't be a great shock considering the fact that you've had roughly about 18 months where you haven't had a real market correction," he added.

(Watch: Stocks end near lows in 2-day selloff, Dow declines 1%)

The charts are pointing to just this sort of correction, according to Ari Wald, head of technical analysis at Oppenheimer & Co.

"Our longer term work is still positive," Wald said. "But, in the near term, we are expecting some speed bumps for the S&P 500 and I think we could be setting up for a bull market correction."

What worries Wald is the chart of the S&P 500 overlaid on a measure of net new 52-week highs in the NYSE.

"What has really gotten me concerned is that the S&P 500 is indeed [near] a new high," Wald said. "But the number of stocks on the New York Stock Exchange making new 52-week highs has actually been declining since March."

The level Wald is looking at is 1,740, around the S&P 500's February lows. That would be roughly around 8 percent from its recent peaks. However, there could be buying opportunities should the market decline.

"We are buyers of weakness," he said, "but we think in a selective market you do have to be selective."

Energy and big-cap tech stocks are what Wald would select. As for small cap, consumer discretionary, and highflying momentum stocks, Wald adds, "We're avoiding them."

To see the full discussion on the S&P 500, with Morganlander on the fundamentals and Wald on the technicals, watch the above video.

Follow us on Twitter: @CNBCNumbers
Like us on Facebook: