US stock market getting bearish signals amid “bullish tailwinds”

The S&P 500 was flat on Tuesday.

Some technical indicators are pointing to further trouble ahead for US stocks.

One is that while the S&P 500 rose in September, small cap stocks fell, with the performance gap between the blue-chip index and the S&P Small Cap 600 in particular being unusually wide.

Jodie Gunzberg, managing director and head of US equities at S&P Dow Jones Indices, wrote that “there may be a bearish signal from the inability of small-caps to keep up with the large-cap momentum”.

Meanwhile, another indicator, investors' cash allocations, have dropped to “rock-bottom” levels, according to Callum Thomas, founder of research firm Topdown Charts.

“Basically where cash allocations are at this point is entirely consistent with the type of signs you see toward the end of a market cycle,” said Thomas.

In contrast, Jim Cramer at CNBC said that the US stock market may be getting a boost from “two hugely bullish tailwinds”: a cyclical boom in hiring and a widespread stock shortage resulting from mergers, acquisitions and corporate buybacks.