Barely in the green for the year at the moment, the S&P 500 could slide 10% between now and October, says the technician, but there's a stealth bear market already happening in the Nasdaq, S&P Mid-Cap, and Russell 2000, and when support breaks (less than another 2%), those indices could see 20-25% declines.
The situation reminds him of 1994 when the Dow and S&P were in a trading range all year, but things were falling apart underneath the surface.
Following the washout into October, though, Acampora sees a "very, very strong Q4."
"The small cap valuation story has also deteriorated a bit," writes Credit Suisse's Calvasina and Mahaffy, noting the relative ratio between small caps and mid caps has gotten back in line with the long-term average.
A bigger issue though, is absolute valuations - small and mid cap stocks have become overvalued relative to large caps which themselves are overvalued.
Bottom line: The entire equity market has a valuation problem and the valuation of small and mid caps is little better or worse.