Louise Yamada’s stock chart patterns show we’re well overdue for a big correction

Top Wall Street technical analyst Louise Yamada said her models suggest stocks are well overdue for a big pullback.

“The run from 2009 to 2015 was probably the completion of a whole chunk of the bull market. We had a pretty decent corrective trend, it wasn’t a cyclical bearish, but it was close,” Yamada said. . “But we’re running about 18 months without even a 10% correction.”

Yamada is founder and principal of Louise Yamada Technical Research Advisors, a research firm that provides in-depth technical analysis of US equity markets and interest rates, as well as educational and thought-provoking materials. CNBC’s Mike Santoli spoke with Yamada in an exclusive interview for CNBC PRO.

“You had one [correction] in 2010, you had another one in 2011, so I think we might be late for something. We’ve started to see, periodically, negative divergences that make you a little suspicious as to whether the market might be due for some kind of pullback, more than just 2%.”

The technician is in good company to worry about stocks. Widely followed, Bank of America Merrill Lynch strategist Michael Hartnett said last month that he was ready for a “meaningful moment” later this fall when the market corrects “quite significantly.”

“It’s not going to be your average fix. It’s going to be something a little more meaningful. It’s going to depend on a lot of factors,” he said. These growing concerns follow a long period of bullish news in the market, with the Dow Jones Industrial Average and S&P 500 hitting record highs throughout the summer months and as recently as this week.

Yamada is heralded on Wall Street as a leading voice on market techniques. She has been the highest ranked market technician several times during her career by Institutional Investor. Prior to founding her own company in 2005, she was a lifelong leader as head of technical research at Smith Barney for 25 years. She is the author of the book “Market Magic: Riding the Great Bull Market of the Century”.

If investors are getting too nervous about their holdings, Yamada has a number of questions to determine if it’s time to dump an individual stock.

“Does your action have something to reverse? Did she achieve her goals? Did it violate an uptrend? .”

“Did he violate the support? Is the distribution meaningful? the stock at the time you can answer this question with a “yes”. “

See here for CNBC PRO’s full report and video of the interview.

WATCH: Yamada sees big breakthrough for gold

Karen J. Nelson