NEW YORK (TheStreet) -- "Brazil is the epicenter of risk, more than China," said Jeff deGraaf, chairman and head of technical analysis for the specialized macro research firm Renmac.

DeGraaf, ranked the No. 1 technical analyst by Institutional Investor Magazine the past 11 years, is one of Wall Street's most sought-after analysts, who brings both fundamental knowledge and technical experience to his well-researched opinions. Here are some of the highlights from his presentation.

Speaking in midtown Manhattan Wednesday at a monthly meeting of the Market Technicians Association, deGraaf said, "If Brazil goes, then Santander (SAN) and then Spain and then the [European Central Bank] ECB."

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The first chart above shows the long and persistent decline in the exchange-traded fund that seeks to track the publicly traded securities in the Brazilian market, the iShares MSCI Brazil Capped Index Fund (EWZ) - Get Report .

The second chart above shows the erosion in the stock price of Banco Santander that started a year before the EWZ turned down. With both of these at or below their 2008-09 crisis lows, deGraaf may be right on target. To understand his approach we must understand his process.

"Step one is the trend. Test, test and test more," he said.

He admitted that there is an art to this research that can add context, flavor and experience, but that things need to be quantified.

One way to quantify analysis is to look at the various stages of a trend. For example, deGraff looked at the trends of the S&P 500 for insight into the current market.

"In early August, we got a signal that the trend was now neutral/bearish, only 3% off the high," deGraaf said.

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This signal was the first since 2011, he noted.

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"It all started in July of last year with the taper and the price of funding going up," he said, referring to the Federal Reserve's decision to reduce its monthly bond-buying program.

"The second item was the peaking of China's foreign exchange reserves last July," deGraaf continued.

These trends could impact earnings.

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"We're seeing no improvement in earnings estimates for the broad market," deGraaf said. "Lower yields are better now for valuation, but we need to see the rate of change for earnings per share go up faster."

With negativity looming, we often try to look back in time for a reference, for some other downturn to try to guess how long the bear market will last. DeGraff offered little solace, and warned about making comparisons.

"Be very careful about overlays," he said. "It can be a nice chart, but it is naïve. Our work shows that today has the highest references to 2011. Second was 1939-40 and third was 2007-08," he added.

Looking at the S&P, from the 2011 low, it only took about four to five months for the market to rally back up to the 2011 high in February of 2012. And from that same 2011 low in October, the market moved 15% higher by the end of the year.

DeGraaf felt a fourth quarter rally could be in the cards this year and was glad the model did not make a comparison to 1987 with its dramatic plunge. A similar 15% rally from current levels to close 2015 would put the S&P at new highs for the year, just above 2,200.