The S&P 500 ended last week at its highest close at 3,120.46, but Frank Cappelleri, Chief Market Technician at Instinet, thinks we should be on the lookout for a significant downturn.

The S&P has seen a gradual and persistent move higher over the last month, where the biggest drawdown has not exceeded 1% (Chart 1) and Instinet’s Bear Oscillator has been pinned to zero (Chart 2).

Cappelleri wonders whether the bulls have become too comfortable and he says that how the index fares near the upper trendline of the rising channel could be telling (Chart 3). Touching this threshold has triggered the biggest sell offs in 2019.

See Chart 1 / Chart 2 / Chart 3.