After a big sell-off on Wall Street, charts expert Ralph Acampora sees the latest unsuccessful rally as the possible beginning of a bear market.
"Failed rallies are anathema to the stock market," Acampora, director of technical research at Altaira Capital Partners, told CNBC's "Futures Now" on Tuesday.
To Acampora, the closing below 2,700 on Tuesday was proof of another failed attempt to rally, one of several since the January highs. This is a major concern, he said.
"You're starting to see more and more churning and tops being formed in some big-name stocks and I'm fearful that if we do break down you're going to have the beginning of what would be a major downtrend. It would be a bear market," he said.
The next sign of technical damage to markets would be a return to levels hit during some of the year's worst sell-offs, said Acampora.
"If I had to zero in on a very, very important level you'd have to look at the February and the April low in the S&P 500," he said. The February low of 2,532 "is the floor on this market."
The S&P 500 is roughly a 6 percent sell-off from its February lows. A drop to around 2,300 would put the S&P 500 on the cusp of a bear market, a level marked by a 20 percent drop from a 52-week high.
A shift in market leadership would also signal the start of a major downturn, according to Acampora. The energy and financials sectors, which led markets alongside tech through most of this year, have begun to break down.
Defensive stocks are emerging as possible market leaders and are a sign of the markets' shift, Acampora points out.
"Look at the Dow Jones utility index," said Acampora. "As rates go down, the leadership becomes a little bit more defensive and I'm not saying that the utilities are about to take off but ... if the Dow utility closes above [711] then I think you have a market that's really very, very defensive."
The Dow Jones utility index is still a 3 percent rally from Acampora's key level of 711. The index briefly broke above that level in intraday trading at the end of April.
