Warning signs appear to crop up beneath market’s surface

Warning sign under market’s surface?

The may be hovering near record highs, but the stock market may be weaker than it currently appears.

Over the past two weeks, nearly as many stocks in the index have hit 52-week lows as 52-week highs, with 59 in the former category and 72 in the latter. And the percentage of NYSE stocks currently trading above their 200-day moving averages (a technical indicator that averages the previous 200 closing prices) has fallen to the lowest in nine months.

The fact that these apparent indicators of submerged stock market weakness have come even as the S&P itself trades within 2 percent of record levels has led some strategists to ring the alarm bells.

Yet for Ari Wald, head of technical analysis at Oppenheimer, these indicators of the market's shrinking "breadth" actually point to more gains for stocks.

The "healthy rotations" are "allowing excesses to abate and should help extend the duration of the advance," Wald wrote to CNBC's on Monday.

The fact that the percentage of NYSE stocks above their 200-day moving averages has fallen to 50 percent — "on par with the lowest readings of the 2003-2007 advance" — shows that equities are currently "oversold," Wald wrote.

This means that the market ought to have more "firepower" going forward, according to Wald.

Erin Gibbs, a portfolio manager at S&P Global, struck a similar tone.

Speaking about the number of 52-week lows as compared with 52-week highs specifically, and the general market malaise more generally, Gibbs said Monday on "Trading Nation": "We really see this as a pause, taking a break, valuations coming down, and maybe a little shift in leadership."

With moderating valuations and still-strong earnings growth, Gibbs remains relatively optimistic about stocks.