A key technical indicator (Bollinger Bands) for the S&P 500 ...

A key technical indicator (Bollinger Bands) for the S&P 500 is sending a bearish signal: If history is any guide, U.S. stocks could be down about 14%.

A well-known technical indicator has just issued a bearish signal for the S&P 500. The index has been accurately predicting market downturns before. The technical indicator was developed by John Bollinger and is called Bollinger Bands. Selling situations, potential price breakouts and trend reversals.

When the price reaches the upper band of the Bollinger Band (two standard deviations from the moving average), it indicates a sell signal, while touching the lower band indicates a buy signal.

On Friday, June 2, the S&P 500 , represented by the SPDR S&P 500 ETF Trust, broke above the 4,250 level, more than two standard deviations above its 50-day moving average.

Based on the latest five observations, the S&P 500 bottomed out approximately 35 trading days after the Bollinger Bands indicator triggered a sell signal.