Several signs indicate the current bear market rally is nearing its end, and the next imminent sell-off of equities could finally break investors' spirit, according to Barron's columnist Michael Kahn.

"Whether the March low turns out to be the ultimate low or not, it is a fairly safe bet that a new bull market has not yet begun," Kahn wrote. "There must be at least one more sell-off coming."

Kahn said there are several factors that make him think another drop will come soon, namely the unrealistically high level of investor confidence in the markets despite any real signs of improvement, the lack of a prolonged rally lasting more than a few consecutive days and the falling average market volume.

"When we examine volume, we see that the number of shares changing hands each day has been declining," he said. "This leads to the conclusion that it was a lack of selling, rather than a surge in buying, that is behind the gains."

Mediocre market gains and losses suggest that while investors may want things to get better, they are not willing to take big risks, and most are still waiting for the next shoe to drop.

"I think that the next decline that takes place will be psychologically devastating for investors, and devastated investors will stop looking for a bottom," he said. "They will turn off the financial media, resign themselves to their losses and work on their hobbies instead."

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.