This is a 'crucial time' for the bulls: Technician

Stocks are skating on thin ice.

The Dow and S&P 500 are down a respective 3 percent and 2 percent year to date, with the Dow tracking for its first annual loss since 2008. With just 7½ trading sessions left in the year, one technician warns this is a "crucial" time for the bulls.

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"If you look at the S&P 500, it's basically gone nowhere for the last 14 to 12 months," Jonathan Krinsky told CNBC's "Power Lunch" on Monday. The market has traded in a historically tight range for much of the last year. "There simply aren't enough stocks participating to keep the indices at these levels, and the longer it stays this way, the more concerning it becomes."

According to Krinsky, the S&P has gone an eye-opening 5½ months, with less than 60 percent of its components trading above its key 200-day moving average, the longest streak since 2012. Furthermore, Krinsky said that "since 1990, only four such streaks have exceeded the six-month mark, three of which occurred during the 2000-03 bear market, and the fourth during the 2008-09 bear market."

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Other historically long streaks were in 1994, 1995 and 2011-12, which Krinsky noted stopped just before the critical six month mark. "In our view, pushing into mid-January without an improvement in breadth would suggest we are already in some type of bear market," said MKM Partners' chief market technician. "In other words, it's a crucial time for the bulls," he said in the "Trading Nation" segment.

For Krinsky, it's imperative for investors to pay attention to just how many stocks are participating in the rally. As even with Monday's gains of roughly 1 percent, only 40 percent of stocks are above the 200-day moving average. "If the bulls are going to make a stand they have to do it in the next few weeks," he added.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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