This range for the S&P 500 'makes me very nervous,' technician says

The S&P 500 has almost completely recovered from the December slump.

The benchmark index has rebounded 17 percent from its lows late last year and sits just over 50 points from its Dec. 3 high.

Its next move higher is going to be harder to come by, saidTodd Gordon, founder of TradingAnalysis.com.

"This area right here makes me very nervous because there's actually four significant technical levels here," Gordon said Thursday on CNBC's "Trading Nation." "The 200-day moving average right here — we have tried it once, twice, three, coming back on a fourth time."

The S&P 500 broke above and below that long-term trend line throughout the fourth quarter, only resurfacing above it earlier this month. Its failed attempts to firmly go above that line has formed a quadruple top, Gordon said.

"This is going to be a deadly battleground," said Gordon. "I want to short it but I want to be very diligent and get a good price, stop out above 2,900, but again, don't think is going to be an easy trade. I think we sell off but it's going to be very volatile for a period while we decide what to do here."

Erin Gibbs, portfolio manager at S&P Global, said markets should head higher, but it will be difficult to harness the momentum of years past.

"We're right at a three-year average when it comes to valuations but we're in this environment of much lower growth, slightly higher interest rates and so we're cautiously optimistic," Gibbs said Thursday on "Trading Nation." "We're really not looking for much more than a 5 percent increase in the near term."

A 5 percent rise by the end of the year would put the S&P 500 at 2,883, above its December top. It would remain below its September record high.

"Right now we're at 16.5 times forward earnings which has been the major support over the past few years but again that was a completely different environment," Gibbs said. "If we can break above 16.5, we see some real positive sentiment going forward, some better growth than, yeah, we would be much more optimistic."

Gibbs anticipates 4.6 percent blended earnings growth for the S&P 500 this year, well below the 22 percent pace in 2018.

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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.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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