Watch S&P for 'Crash' Warning Pattern: Charts
The next couple of trading sessions could spell disaster for the S&P 500 and investors should watch the index very closely for early warning signs of a crash, technical analyst and independent trader Bill McLaren told CNBC Friday.
"If the index goes to 1,040 and only bounces one day and the next day goes to a new low, be very careful because the time cycles in that pattern indicate there could be a crash scenario," McLarer said. "I doubt it, but if it occurs, look out."
"The manner in which we got down has me really cautious. We had a large gap down, followed by follow-through, that's not a very pretty picture," McLaren said.
"I'd like to see the market hold in here today and then rally into September," he added.
Even though there is a risk of a severe decline, McLaren expects stocks to remain range-bound in the near term.