Futures Now

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The stock market is getting closer to a critical juncture — one that could significantly derail the so-called 'Trump rally.'

It involves both the Federal Reserve's next policy meeting and President Donald Trump's pledges, according to Russell Investments client strategy director Mark Eibel.

"You could enter into a really interesting period where the Fed is raising rates and some of the promises don't get delivered in a market that's arguably at least fairly valued, but we would say 'overvalued,'" Eibel said recently on "Futures Now."

He added: "That's the moment that maybe you start seeing this market move down."

Eibel acknowledged that just when you think stocks won't break any more records, they do. However, he believed the odds of repeat performances are dwindling.

"Could the U.S. market continue to go up higher? Sure. But we seem to be priced for perfection," he said — citing valuations, a strong dollar, corporate earnings and the President's business friendly address to a joint session of Congress last Tuesday.

Eibel's latest forecast comes less than two weeks before this month's Fed meeting. It will deliver its decision on interest rates and issue a statement on March 15th, and many analysts expect a rate hike.

"We thought two rate hikes starting in May or June. We think that March is definitely on the table now," said Eibel.

The Wall Street consensus has also been pointing towards a March hike. On Friday, Fed Chair Janet Yellen dropped a strong hint that an interest rate hike is on the way.

'No wiggle room'

The chances have been climbing as the markets make fresh highs. The Dow hitting another milestone this week, closing over 21,000 on Wednesday for the first time ever. The has also been on fire, soaring more than 11 percent since President Trump's election win last November.

Yet Eibel is keeping his excitement at bay over the S&P's historical bull run. He saw the S&P falling ten percent from current levels to 2150 by this time next year.

"You have no wiggle room on perfection," he said. "Buy low, sell high. That's what we're trying to do."

He suggested looking thousands of miles away to weather the potential storm.

"Why not move some of that money offshore within a multi-asset framework? Look what are doing this year. And, even with five elections around the table, look what Europe is doing right now, holding up quite nicely," said Eibel.

"We just think there are better places to put your equity money right now."