The man who called the summer crash warns on US

America's fourth quarter GDP failed to chime with analysts' expectations, possibly an early warning sign that the pick up in US equity markets could be about to soften.

Dmytro Bondar, the technical analyst who in the summer of 2011 spotted a crash was set to hit world markets, fears there is potential for America's S&P to fall off again after it opened the year in strong fashion.

Using five key charts Bondar predicted in August that the Dax, FTSE, S&P and Nikkei were set to face a bout of severe turmoil, warning of the crash almost to the day. 

Now he says that although there is still some upside to be had by investing in the S&P, he can see longer-term risk ahead.

Bondar says an analysis of seasonal patterns, model forecasts and momentum tools suggests investors will be able to capture upside until the S&P hits roughly 1,360.  The Royal Bank of Scotland (RBS) analyst expects the index to find support to stay at this level for the next few weeks, but says that afterwards there is a 'high risk of a sell off'.

Before the US opened for the trading today the S&P was sitting on 1,316.

Bondar explained: 'My model based on long-term statistical analysis of the price action focusing on major trends and cycles suggests a correction/sell off from this level around March, which coincides with seasonal patterns pointing to generally weaker performance of equity markets in March.'

Time to short the States

Like Bondar's statistical models, looking at momentum the analyst feels there are some alarm bells worth listening to. He says that largely these indicators do still look bullish, but are starting to point to a fall in the value of equities.

Although technical analysis sceptics might dismiss charts like the one that Bondar uses (below), looking at the wider picture rather than just comparing the US growth numbers to the dismal data coming from elsewhere, supports his view.  Namely:

• GDP came in shy of economists' 3% prediction for quarter four, with commentators like Markit Economics Chris Williamson warning this could set the scene for further softening;
• Corporate balance sheets are awash with cash but few US CEOs are spending, aware this money may already be committed towards other commitments; and
• As argued by Capital Economics, while Q4's 2.8% annualised growth rate could show the recovery is gathering momentum, inventories contributed more to this figure than consumption, pointing to slower growth in the current quarter.

All this comes before key risks like the potential of the sovereign crisis in Europe worsening.  Put together, it may be time for investors to line up their S&P and Dow Jones shorts.  Exchange Traded Fund (ETF) Ultrashort S&P 500 ProShares ETF is an idea for the bravest, as the inverse instrument will double the daily performance of the S&P 500.