It's always interesting to look at stocks and sectors that are under accumulation during strong markets and look at stocks under distribution during weak markets. When market conditions change, these areas often provide the best opportunities as the accumulation or distribution are harbingers of institutional activity.

Currently, the stock market is quite strong from a top-down perspective with the S&P 500 (SPY  ) and Nasdaq (QQQ  ) at new, all-time highs. However, a deeper look under the surface shows that many parts of the market are not participating in this move higher. Within this group, certain stocks are quite vulnerable to selling pressure that would emerge with a broad-based market, and markets with weak breadth are more vulnerable to sharp reversals.

Here are 3 sectors that could experience steeper declines:

Travel Stocks

Many travel stocks such as airlines and cruises have had spectacular recoveries at their stock price especially given that the coronavirus basically took their businesses offline for most of the past 15 months. While these stocks remain below their pre-coronavirus levels, they are trading higher on an enterprise value basis given that they raised debt and issued equity to raise cash to make it through the downturn.

This will be a headwind in terms of eroding EPS. Further, it's possible that many of these stocks have priced in the economy bouncing back with increasing vaccinations. Now, they face challenges in terms of rising fuel prices and labor costs. So, they may find it challenging to even meet higher levels of demand by increasing capacity.

SPACs

The market went through a period of weakness with growth stocks and tech stocks from mid-February to mid-May. Since then, many stocks in this group have posted spectacular rallies with a handful even managing to make new highs. However, one laggard has been the SPACs, whether they are still hunting for a target, announced their buyout target, or already completed the process.

The sector has not delivered great returns for investors. We can see its underperformance with the EXOS SPAC Originated ETF (SPXZ  ) which is up 15% from its May lows and nearly 30% off its February highs. Given this underperformance, it's fair to say that if the market turns lower, SPACs could be making lower lows.

Crypto Stocks

For the past few years, many crypto stocks achieved incredible valuations due to a lack of investment options and the bull market in cryptocurrencies. However, these stocks remain overvalued by many measures. Investors would simply be better off buying the underlying currency rather than buying companies at a high multiple - mining a cryptocurrency.

Thus, we can expect weakness to continue as more liquid options and ETFs become available to investors. Additionally, more institutional methods to buy crypto assets is also increasing. Therefore, many of the crypto stocks could see steep losses if cryptocurrencies continue to slide and even if they remain solid, many of these will underperform as investors will invest in the underlying asset rather than miners.