The markets should see a correction ranging from 3 to 5 percent in mid-January as the year-end rally loses steam and indexes veer away from their moving averages, UBS' Art Cashin said Monday.
"It's been a heck of a run, and it's time for a rest," Cashin said on "Squawk on the Street." "But given the seasonality, the conventional wisdom is that you'll stay relatively strong going into around the 10th or 15th of January and then you might see a correction."
Cashin said the new year could start strong when markets open Thursday after New Year's Day, with investors pre-loading IRAs and pension funds. Still, he called the markets "overextended" and said the continuing economic recovery couldn't compare to past recoveries because of its ultralow interest rates.
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Market watchers should also continue to monitor the low level of mortgage applications and volatile global hotspots going into the new year, Cashin said, referring to bombings in Russia and .
"Geopolitics are beginning to heat up," Cashin said. "This thing in Turkey could be a real incendiary event if it goes out of hand."
—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street."