Futures Now

These three charts could signal a pullback, according to Louise Yamada

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The S&P and Dow are within mere points of new record highs and the Nasdaq saw a new record close on Friday, but veteran technician Louise Yamada warns that the charts are flashing signs of caution.

On CNBC's "Futures Now" Thursday the managing director of Louise Yamada Advisors said there are three charts that show how the post-election rally has gone "a little too far, too fast."

According to Yamada, the is in a "sideways consolidation" that could signal "a pullback of about 5 or 6 percent." Her chart of the Dow shows that the index has traded in a range of about 19,800 and just below 20,000 from mid-December to early January.

Based on Yamada's predictions, this means the Dow could fall as low as 18,844, before picking back up and taking the next leg higher.


The also tell a similar story. "We'd like to see it a little more definitive breakout," said Yamada. She noted that the index got another "little breakout" from its December high to the high late last month, but it has since backed off by about 2 percent.

"Right now it's still in consolidation along with everything else. We'll see what happens, the buy signal is still in place, but you like to see follow through," Yamada said.


On the other hand, the has continued to grind higher, but Yamada says that this lack of a trading range actually points to an upcoming stall in the index. "You have this continued upward progression, which eventually does start to consolidate," she explained. The index "could pull back to the 2016 uptrend, which would only be about 5 percent down."

In other words, the Nasdaq could fall back to 5,371.


But Yamada also believes that the pullbacks could lead to another breakout for stocks. The consolidations are "normal," explained Yamada, and therefore she remains constructive on the market and sees another rally potentially in store.

The major averages haven't closed with a one percent move since December 7.