As of Monday, 608 of the 2,558 companies in the tech-heavy Nasdaq Composite index are between 10percent and 19.99percent below their 52-week highs. Even worse, 1,327 of the index's stocks are 20percent or more below their respective 52-week highs.
In other words, 75percentof the companies in the Nasdaq Composite are either in a pullback or are outright bearish.
But it's the Nasdaq Composite's breadth – the amount stocks hitting 52-week highs versus those hitting 52-week lows – that has many worried. There are 158 companies in the index that have hit new 52-week highs in the last week. On the flip side, 245 have hit new 52-week lows since last Monday. Contrast that to nearly a year ago when there were 400 more new highs compared with new lows in a week.
Yet the Nasdaq Composite index continues to chug along higher, gaining 20 percent in the past 12 months.
Can this continue or is the rug about to be pulled out from under the Nasdaq?
Richard Ross, global technical strategist at Auerbach Grayson, is very concerned about the index, particularly because of its lack of breadth.
"This is a very important warning signal here, and it has left the Nasdaq extremely vulnerable," said Ross, a "Talking Numbers" contributor. "The generals are leading the charge; mega-cap stocks like Apple, Facebook, Microsoft, and Intel are doing the heavy lifting. But unfortunately, the soldiers have been retreating."
From 2011 to 2013, both the Nasdaq Composite and its breadth were rising. That change in October 2013, when breadth began declining even as the Nasdaq continued climbing.
"We're seeing new lows outpacing new highs," Rosssaid. "That's your breadth eroding since October 2013 even as the Nasdaq Composite itself continues to push out to almost the same level we were at the height of the tech bubble. That's your problem."
Though Ross sees some health in the shorter-term chart of the Nasdaq Composite, he sees some trouble ahead. The index had a correction at the beginning of the year but held its 200-day moving average and created a floor of support at 4,000, according to Ross. After rebounding, it made a run for 4,600 only to hit resistance. Since then, it has turned lower,and Ross thinks it has more downside to come—particularly if it breaks below its 50-day moving average, currently around 4,487.
"A breakdown below there would create some problems," Ross said. "It sets the stage for a move down to the 200-day [now at 4,272] and, ultimately, I think we get a retest of that key 4,000 level, a very inviting downside target. It's only 11 percent down from here. I know that sounds like a lot but in the past we used to get these 10 percent corrections all the time."
"Watch that key 4,500 level," Ross added. "The Nasdaq is in trouble,and it's problem starts with its breadth."
The fundamentals echo Ross' warnings on the Nasdaq Composite, says Gina Sanchez, founder of Chantico Global.
"The fundamentals for the Nasdaq have been unhealthy for some time," said Sanchez, a CNBC contributor. "There are very, very few stocks supporting this whole market at this point."
But this may continue only as long as the cost of borrowing money remains low due to the Federal Reserve's monetary policy, said Sanchez, adding "When will this correct? I'm not sure. All I know is this isn't sustainable."
To see the full discussion on the Nasdaq Composite index, with Ross on the technicals and Sanchez on the fundamentals, watch the above video.