It's been a banner year for mergers and acquisitions. In 2015, M&A volume and activity has set a record on both a worldwide and U.S. basis, according to Dealogic. But while that may sound like good news, it is actually an indicator that the market may be topping, according to one technical analyst.
"There are two things that companies tend to do towards the end of market cycles: Buy back their stock aggressively, and buy other companies aggressively," said Jonathan Krinsky, chief market technician at MKM Partners, in a Monday "Trading Nation" segment.
And indeed, "we've seen stock buybacks really pick up in the last couple years, and we've seen M&A activity pick up."
To illustrate his point, Krinsky furnishes a chart comparing a 20-week moving average of U.S. M&A transaction value with the S&P 500.