Investing.com -- The S&P 500’s recent surge to retest its prior highs around 6,100 suggests a period of consolidation is imminent, according to BTIG analyst Jonathan Krinsky.

After a roughly 5% rally in just seven sessions, the index has reached a pivotal level, with the next move likely to be a pause or pullback, according to the firm.

“Our sense is the latter,” Krinsky said, emphasizing that the complacency in transactional indicators points to a potential downside.

Specifically, the firm believes the CBOE composite put/call ratio (5-day moving average) closed at 0.78, marking its lowest level since late 2021.

“While survey data had gotten bearish, the corresponding transactional data hasn’t really confirmed that. In other words, ‘watch what I do, not what I say,’” the BTIG analyst wrote.

The timing of the S&P 500’s approach to 6,100 could also be significant, according to BTIG.

“The fact that we approached 6,100 today on a ‘gap up’ after six of seven daily gains suggests that today could be an ‘exhaustion gap,’” the firm said. They believe this makes a downside reversal more likely in the short term.

BTIG advises caution for investors eyeing the rally. “Chasing strength today is unlikely to be rewarded in the short-term, and lower prices will be seen in the days/weeks ahead,” the note stated.

Other indexes are also signaling potential pullbacks, said BTIG.

BTIG notes that the IWM broke through resistance at 226 but needs to hold that level during any pullback.

Similarly, the SMH semiconductor ETF broke out of its base but is nearing resistance at the July gap of 270.54, where BTIG expects a pause.