The rebounded smartly on Tuesday after touching a key technical level. But rather than use the opportunity to buy stocks, one highly regarded technician says now is the time to sell.
"The trends are now in question," said Carter Worth of Cornerstone Macro on CNBC's "Fast Money," who noted the 150-day and 200-day moving averages are basically flat, which is signaling more pain for stocks.
Most disturbing to Worth is the fact that the number of stocks hitting 52-week lows are surging. In short, the number of stocks participating in the rally are shrinking. Worth said the decline in the overall breadth of market isn't a good indicator for the market. "Internally, it's really worse than this," said Worth.
Even more telling of the technical damage is seen by his chart work of the S&P 500 compared to the percentage of stocks trading above their respective 150-day moving average. While the markets are marching to new highs, there's a smaller number of stocks in an uptrend.
According to Worth, there are a select group of stocks pushing the index higher, but lately the markets have been losing leaders like Apple. To make matters worse, with weaker sectors such as energy, materials and industrials on a downtrend, there "aren't many players left on the board to carry the rest of the team," said Worth.