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We're in a bear market: Carter Worth

It's been six years since the last bear market, which investors generally define as a peak-to-trough decline of 20 percent or more. But according to one highly regarded technician who has correctly identified past market tops, that's exactly what stocks are in now.

"We have generally declining prices with almost no sectors in uptrend," Cornerstone Macro's Carter Worth said on CNBC's "Fast Money." "We're in a bear market by my work."

According to Worth, the current price action in the market has failed to demonstrate some of the classic signs of a traditional bull market, which to him include broad indexes in an uptrend, broad support and generally rising prices.

"This market does not meet that definition," Worth said.

Looking at a 15-year chart of the S&P 500, Worth noted that the last three bull runs lasted about the same duration, but the magnitude of each time was slightly different. However, all three bull runs shared one common characteristic: They ended when the market broke its uptrend.

"Clearly by definition we've broken trend. That's not what a bull market looks like," said Worth. Technicians often look to trend patterns as confirmation of the market's general direction. A break in trend could signal a shift in the market's momentum.

To Worth, the S&P 500's broken uptrend underscores a broader decline in the equity markets. After briefly rising above its dotcom 2000 highs, the Nasdaq composite is now negative for the quarter. Worth also noted the S&P 500 has now registered two negative quarters this year.

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Even foreign markets are showing signs of strain. Worth pointed out that the Europe Stoxx 600 index, which is equivalent to the S&P 500, is under pressure.

"Look where it's struggling right in 2000, 2007 peak. That's not random," according to Worth.


By Worth's chart work, the S&P 500 will find support somewhere around 1,730, which is the lower level up a trading channel that started in 2009.

"It would represent a peak-to-trough decline of about 19 percent. I think that's a point you can reassess," said Worth.

According to Worth, the S&P 500 has shown signs of a breadth problem for the last 18 months. The index started losing key leaders like Disney and most recently lost biotech, which suggests a bearish turn of events.

"The areas that are the most vulnerable are quite diametrically opposed," he said.

Worth is no stranger to calling a top in stocks and commodities. In 2007, he declared the end of the bull market run. And in 2011, Worth called the top in gold as well.

"We're not in a rising market, [by] my estimation, we're in a bear market," said Worth.

Worth's chart work shows the S&P 500 — which is adjusted for inflation — peaking in 2000, then attempting to reach that high in 2007. Currently, the index stopped just a penny shy from the 2000 peak "which is far from random," said Worth.