Time to prepare for a market correction: Technician

The S&P 500 has traded in a tight range this year, struggling to break to new highs. And as U.S. stocks declined almost 2 percent last week, one technician said it's time to take action and protect against a coming market correction.

"Investors are more eager to sell than to buy, and this has us concerned. We are setting up for a bull market correction," Ari Wald, head of technical analysis at Oppenheimer, said Friday on CNBC's "Trading Nation."

The Dow Jones industrial average fell for the seventh day straight on Friday, closing down 1.8 percent. The S&P fell 1.3 percent last week, but is still up almost 1 percent this year.

According to Wald's chart, the S&P has been trading in a sideways range, while the volume on the New York Stock Exchange has been declining. He said this signals trouble for the stock market, as more investors look to sell.

Wald said he sees the S&P falling another 5 percent to the 1,970 level. To prepare, investors should take several precautions to hedge risk, he said. Wald's suggestions included buying exposure to volatility, adding short positions to long positions and rotating investments into safer sectors such as consumer staples. He also recommended building up cash to invest in bargains after a correction.

Read MoreCommodities point to a stock market correction: Expert

Managing director Boris Schlossberg of BK Asset Management said historically, September and October have proved to be strong months for stocks. He said with the exception of 2008, stocks have risen from August into September and October every year in the past 10 years.

"There's no doubt about it that we're seeing some distributive price action in the market. But on the other hand I went back and looked in the last 10 years," he said. "Any kind of correction I think you see here is probably going to be a good opportunity to load up on equities."

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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