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Why the market could see serious headwinds

Talking Numbers

Don't call it a comeback just yet, but the market benchmark S&P 500 index is thisclose to breaking even for the year.

At one point in Wednesday's session, the S&P 500 traded at 1,847.50, just 3.34 points below its highest-ever price. That's a pretty good bounce considering that less than three weeks ago, the index closed a session just below 1,742. 

(Read: US futures remain lower after weak Wal-Mart earnings)

So, is the worst over? Well, maybe not.

"Nothing really has changed if you want to talk about a correction here," says Jeff Tomasulo, Managing Partner of Belpointe Alternative Investments.

Tomasulo notes that the S&P 500 has been trading in a well-defined trend channel for the past year and a half. "We've gone to the top of the channel and then we'd sell off," says Tomasulo. "The difference in this last selloff is that, instead of going down 3.5% - 4%, we went down 7.5%."

Now with S&P 500 at the top of the trend channel once more, Tomasulo is concerned. As well, he is keeping close watch on the 20-week moving average. "If we start to close below the 20-week moving average, that's going to be a sign of trouble," says Tomasulo. "We really haven't closed for any significant amount of time under that 20-week moving average."

(See: CNBC's Market Insider with Patti Domm)

One source of trouble could a continuation of bad economic data, according to CNBC contributor Gina Sanchez, founder of Chantico Global. While earnings continue to grow, sales numbers aren't growing at the same pace. According to Thomson Reuters, fourth-quarter 2013 earnings are up 9.5% but revenues are up 1%. 

"Sales numbers haven't been so great," says Sanchez. "A lot of the macro data has been disappointing and that's really I think what spells a little bit of trouble in the near term for the S&P."

"I'm still actually quite constructive for S&P for the whole year but we're going to have a rocky few months."

To see the rest of the discussion on what's next for the markets with Tomasulo on the technicals and Sanchez on the fundamentals, watch the video above.