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.

Read MoreClassic theory could put the market in jeopardy

"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."

Read More Here's the silver lining to a flat year: Expert

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.

Want to be a part of the Trading Nation? If you'd like to call in to our live Wednesday show, email your name, number and a question to


Trades to Watch

Trader Bios


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.

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

Read more