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This might be the beginning of a larger selloff: Yamada

In her storied career on Wall Street, Louise Yamada has seen many selloffs. But the most recent one, spurred on by a potential Greek default, is troubling her.

"I think this might be the beginning of a larger selloff," the legendary technical analyst said Monday on CNBC's "Trading Nation." Monday's declines pushed both the Dow and S&P 500 into the red on a year-to-date basis. The S&P was up slightly early Tuesday.

"We've been progressively more cautious over the months," said Yamada. But there's one chart in particular that she finds most troubling. Looking at the percentage of stocks above their longer-term 200-day moving average, Yamada noted that "you can see that the participation in the market has been declining for slightly over two years."

And according to Yamada, even as the market has continued to make new highs, there has been "diminishing participation" from each stock and sector.

"The new highs have been very paltry and new lows are starting to expand our volume momentum," said the founder of Louise Yamada Technical Advisors. By Yamada's chart work, the volume momentum appears to be oversold. "For this particular indicator oversold is empirical evidence of selling pressure and it's remained this way for over the entire month."

Yamada believes that even if we were to see a short-term bounce after Monday's losses, the technicals are indicating that "maybe something a little more substantial is underway here."

Of all the major indexes, Yamada said the Nasdaq is the only one "that doesn't have a monthly long-term sell signal."

While Yamada does express concern for the market, she doesn't necessarily think that could mean we close the year in the red. "We could have a correction and then end the year positively," she said. "But in the short to intermediate term we are cautious."

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