Peter Oppenheimer—who correctly called U.S. underperformance and the global rotation—now sees elevated risk of a correction.

Traders are buying up protective puts or selling covered calls against the S&P 500, says Scott Nations of Nations Indexes.

Fear of rising defaults is spreading from the leveraged loan market to some of the retail funds that ultimately buy the debt as investors get choosier about taking on credit risk.

Forecasters are pointing to warning signs that suggest the market could be headed for another sharp drop, such as waning momentum and options activity.