Markets

Chart analyst Katie Stockton sees a 'minimum' 2 to 3 week stock pullback

Key Points
  • The market will soon experience a "minimum" two to three week pullback, the Fairlead Strategies founder says.
  • "After such an impressive relief rally off of the December low, we do have some signs of exhaustion," says Stockton.
  • She says the pullback would hit stocks broadly, including emerging markets.
Why this trader technician says the market could be flashing a sell signal
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Why this trader technician says the market could be flashing a sell signal

The stock market will soon experience a "minimum" two to three week pullback after the surge from the year-end sell-off, technical analyst Katie Stockton told CNBC on Thursday.

"After such an impressive relief rally off of the December low, we do have some signs of exhaustion," Stockton said in a "Squawk Box" interview.

The founder of Fairlead Strategies, which specializes in stock chart analysis, added that she still sees a "bearish bias" from the dip.

Stocks in December plunged in their worst Christmas Eve trading ever, with the S&P 500 sinking 2.7 percent and slipping into a bear market, defined as a decline in an index or asset of 20 percent or more from recent highs. The market had been in the soup since early October.

However, since the Dec. 24 close, the S&P 500 has rallied more than 16 percent through Wednesday's close, with more than 9 percent of those gains coming in 2019. The index remains about 7.3 percent below its record closing high of 2,930 on Sept. 20.

Stockton said the pullback would hit stocks broadly, including emerging markets.

Some market veterans, including CNBC's Jim Cramer, blamed the Federal Reserve for the market's end-of-year losses, arguing that Fed Chairman Jerome Powell stoked fears after his comments on Oct. 3 that rates were a "long way" from so-called neutral. Powell then walked back those remarks on Nov. 28, and he's since pledged that future rate moves would be approached patiently, based on the economic data.

Krishna Memani, chief investment officer at OppenheimerFunds, told "Squawk Box" on Thursday that a "short" pullback could keep the "Fed at bay." He added, "If the market just keeps going up, then it brings the Fed back into play. We don't really want that."

The major U.S. stock indexes were down around 1 percent Thursday.