With a 17 percent decline in 2014, General Motors is one of the worst-performing stocks in the this year. But Sterne Agee's chief market technician, Carter Worth, says it's set to get even worse for shares of the automaker. And according to Worth, that actually spells stormy weather for the market as a whole.
After breaking its attractive uptrend in January, GM shares have had a rough go of it.
"It broke trend months ago," Worth said on Friday's "Options Action." "It's one of the biggest laggards around."
Worth says the stock is trading in a head-and-shoulders pattern, which indicates that the stock is going to run into a lot more trouble.
"You can draw your tops in many ways—this is a well-defined way," he said. "This is not cool. Sell."
But if GM's weakness continues, that could be a problem for more than just the automaker's shareholders.
"We've constructed a composite of about 20 auto manufacturers worldwide, and another 20 housing-related stocks. And look at the correlation between this composite and the S&P, and then, of course, the recent breakdown," Worth said, referring to the chart reproduced below.
"These are highly cyclical assets, and they are starting to diverge from the market. The presumption, of course, is that the market's going to follow them."
For Worth, who has long been bearish on the S&P 500 as a whole, this simply provides one more reason to stay away from the market rather than buying on the recent dip.
—By CNBC's Alex Rosenberg
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