The stock market rally that's been in place since March was led by the banking sector, but financials are now starting to underperform and that could spell trouble for the wider market, Edward Loef, chartist at Theodoor Gilissen Bankiers, told CNBC Wednesday.
"This is the first sign of underperforming banking stocks and I think this is a worrisome sign for the short-term future," Loef said.
Stocks have now recovered most of the ground lost in the sharp selloff of last year and are back to break-even levels. Investors are now hesitating at these levels and that could lead to weakness, according to Loef.
The Dow Jones STOXX 600 Index has been in a trading range for the last two months, but has now hesitated about 240 points and is breaking to the downside, Loef pointed out.
"I think this is a sign of weakness we have to be aware of," he said.
- Watch the full interview with Edward Loef above.
For the Investor: