Don't buy stocks — until you see this: Technical analyst

Technical analyst Rich Ross has a message for those considering buying stocks at record-high levels: Hold your horses.

As the S&P 500 rose to an all-time high for the fourth-straight session on Thursday, Rich Ross of Evercore ISI sounded a note of caution on CNBC's "Power Lunch."

"Anyone can trade the breakout, but you have to hold the breakout," Ross said. "So what you want to see is a Friday close above that old high of 2,130, 2,135. And in fact, we really want to see consecutive weekly closes above that level."

Ross' concern is that a risk-reward analysis doesn't favor buying stocks at these levels.

"If this is the beginning of the next secular multiyear bull market — of which I'm not convinced — then waiting two weeks is not going to kill you. But what will kill you, metaphorically speaking, is top-ticking a 7-year-old bull market … on a false, unconfirmed breakout to an all-time high."

"That would be bad," Ross added. "So let's wait before we get too excited about this breakout."


In addition, he warns that the "broadening top pattern" he spots "could suggest an impending reversal."


"Typically, I like a fresh breakout to an all-time high accompanied by strong breadth as much as the next trader," Ross said, "but in this case, not so much."

Prior to this week, the S&P had not closed at record highs in four consecutive sessions since November 2014, according to S&P Global.

Clarification: This story was revised to include dropped words "is a Friday close" in one of Ross' quotations.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect