It's a danger zone on Wall Street this week.
Another volatile stretch sent the S&P 500 down to five-month lows before rebounding, while the Dow traveled more than 700 points over two days. And Wednesday's futures prices pointed to a 100-point gain at the open.
This is just the beginning as monetary policy conditions tighten the vise on this bull market, says Peter Boockvar, chief investment officer at Bleakley Advisory Group.
"My most important concern, and it's been for a while, has been the tightening of monetary policy, and now it's coming to a head," Boockvar said Tuesday on CNBC's "Futures Now."
The Federal Reserve has signaled a willingness to raise interest rates again in December, tapping the brakes on a U.S. economy juiced up by tax cuts and unemployment at 49-year lows. A year-end hike would mark the ninth increase of this tightening cycle that began nearly three years ago.
"It's not just on the rates side with the Fed but also the combined balance sheets of the Fed, the ECB, and the Bank of Japan," added Boockvar. "Starting October 1, the net liquidity injection from those three banks went to zero. It was $100 billion in the fourth quarter of last year, so this liquidity flood has basically stopped."
Once the European Central Bank tapers its quantitative-easing program at year-end, those liquidity flows dry up even more, says Boockvar. He expects flow to go from neutral to a draw on global markets at the beginning of 2019.
"It then creates a much more selective investor, a much more discriminating investor, and a much less tolerant investor for other issues such as tariffs, such as revenue or earnings misses, such as economic growth slowdowns overseas so to me that's the progression of worries," said Boockvar.
Those worries could extend this sell-off and drag stocks back down to 2018 lows, says Boockvar. The S&P 500 reached a year-to-date low of 2,532 on Feb. 9.
"That I think is a level that everyone is staring at as a test and we have to see how it goes," said Boockvar.
The S&P 500 is still an 8 percent decline from those February lows. If it were to drop to that level, it would mark a 14 percent decline from its record high set in September.