Bryn Mawr Trust’s Jeff Mills believes the S&P 500’s longest weekly win streak in two years is on the verge of ending.

The agency’s chief funding officer is on sell-off watch as a result of he is anxious market optimism is getting too strong.

“It really has to do with number one sentiment,” Mills instructed web’s “Trading Nation” on Friday. “Even though I wouldn’t characterize it as extreme, I do think it leaves the market a little bit more vulnerable to a pullback.”

He cites the newest BofA-Merrill Lynch month-to-month survey of fund managers as a significant sentiment studying that is elevating a purple flag. It discovered accessible money has dropped to the bottom degree in additional than six years as traders look to place cash to work in shares.

“Just tactically the market is overbought,” mentioned Mills.

On Friday, the S&P 500, Dow and Nasdaq hit all-time highs. The Dow crossed and closed above 28,000 for the primary time ever. The S&P 500 is now at 3,120, up 24.5% to this point this yr.

“If we were to get some kind of nasty trade headline or maybe a poor PMI [Purchasing Managers’ Index] print it could be a move for a little bit of a catalyst lower,” mentioned Mills. “Nothing dramatic but maybe in the 5% range.”

To put it in perspective, a 5% drop would erase 1,400 factors from the Dow.

Mills believes the setback will seemingly occur earlier than the tip of this month, and he acknowledges it might really feel scary for traders. But he would not be discouraged.

“I think we’re buying there. You know, we don’t think a recession is the base case for 2020,” he added. “When that’s the backdrop, we’re going to remain fully invested.”

Mills is bullish on 2020, and he expects a re-acceleration of financial development and a U.S.-China commerce conflict decision to finally to push cyclicals greater. His high concept is to go overseas, a extensively under-deployed play proper now.

“You’re going to see a more obvious bottoming in the global manufacturing cycle. I think finally you start to see lower interest rates act as a tailwind,” Mills mentioned. “When that’s the case I like value. I like more pro-cyclical. And, when I like that, I like international.”

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