U.S. stocks may be poised to decline as much as 12 percent as market conditions bear similarities to what prefaced a tumble in 2011, according to Raymond James & Associates strategist Jeffrey Saut.

The Standard & Poor’s 500 Index sank 19 percent between April and October of 2011 as S&P’s downgrade of the U.S. government credit rating exacerbated a selloff. The benchmark index is vulnerable to a dip of between 10 percent and 12 percent in the weeks ahead before the bull market continues for years, Saut said in a research note.

“Coming into 2014 I have opined that following the kind of rally we have seen since June 2012 called for a 5 percent to 7 percent pullback in the first three months of this year (we got that), and a 10 percent to 12 percent decline sometime this year,” the St. Petersburg, Florida-based chief investment strategist wrote in a note to clients today.

The stock market’s “internal energy readings” are at levels last seen before the 2011 slide, Saut wrote on Raymond James’s website yesterday. The S&P 500 is trading for almost 18 times its companies’ reported earnings, near the highest level since June 2011. Price-to-earnings multiples have increased for eight of the 10 main industries in the benchmark index this year, Saut noted.

U.S. stocks fell a second day today, with the Nasdaq Composite Index poised for its biggest slide in more than two months, as investors sold Internet and biotechnology shares before the start of earnings season.

Stocks Fall

The S&P 500 lost 0.7 percent to 1,963.34 at 12:54 p.m. in New York. The Dow Jones Industrial Average fell 106.64 points, or 0.6 percent, to 16,917.57. The Russell 2000 Index sank 1.4 percent, while the Nasdaq Composite slid 1.4 percent, the most since May 15. Trading in S&P 500 stocks was 18 percent above the 30-day average at this time of day.

Saut is not the only one concerned about the near-term prospects for the market. Many investors wonder if the rally is over after the S&P 500 almost tripled since 2009, Tobias Levkovich, chief U.S. equity strategist at Citigroup Inc., said in a report today.

“As stock indices hit new highs, there are those that fear further gains, given defensive positioning, but more worry about buying in now just in time for a severe pullback,” New York- based Levkovich wrote. “It is fair to suggest that at some point in time there will be an event that causes a much more meaningful decline in broad indices but it may not derail the overarching bull thesis.”