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The stock market is having a sugar high that could lead to a massive hangover, market watcher warns

Not all market watchers have cheered Wall Street's bounds from record to record this year. Max Wolff, chief economist at The Phoenix Group, sees a potential end for the S&P 500's meteoric rise.

"A string of sugar highs feel better and look better than a longer sustainable kind of run, but a longer sustainable run has been elusive," Wolff said on CNBC's "Trading Nation" on Tuesday. "My guess is the second half of 2018, you start having to pay for it, some of this partying is going to produce more hangover than bliss."

Wolff expects the current upward trend to hang on a little longer, though, especially given the sentiment surrounding this bull market.

Just look at the market's gains during the government shutdown drama, he said. The S&P 500 shook off any worries in the week heading into the Friday deadline for a deal to fund the government. Instead, the index clocked a weekly gain of nearly 1 percent. Then, when the shutdown was approaching its conclusion on Monday, the S&P rose another 0.8 percent to new records.

"So long as you have that kind of sentiment and you have a little bit of magical thinking with really good numbers to back it up and everyone's a little bit high at the party here, I think it goes a bit longer," said Wolff.

Boris Schlossberg, managing director of FX Strategy at BK Asset Management, also harbors concerns over how quickly the S&P 500 has risen this year.

"The S&P reminds me of bitcoin," Schlossberg told "Trading Nation" on Tuesday, alluding to the cryptocurrency's rapid rise to a December record before pulling back and languishing between the $10,000 to $11,000 mark in recent days. "We're going to be able to see very soon if the S&P begins to crack, that some sort of an intermediate top is going to be set in."

The S&P 500 ended Tuesday's session with its 12th record close of the year — big session gains and minimal losses have meant all-time highs for every positive trading day this year. What's more, the S&P 500 is currently in its longest streak without a 5 percent drawdown.

No matter the market conditions, Schlossberg says it's unlikely that the S&P 500 can sustain the pace of gains. If the index were to continue at this pace, it would double in value by year's end, he said.

"If you sort of project just in perpetuity what's been going on for the last 10, 15, 20 days … the valuation becomes absolutely ridiculous," said Schlossberg. "We're going to stall for whatever reason."

January's gains have already put the S&P 500 halfway to the majority of analysts' year-end price targets. The median year-end price target for the S&P 500 among major brokerage firms sits at 3,000, a nearly 6 percent rise from current levels. At the beginning of the year, that gain would have marked a 12 percent rise.

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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.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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