This points to a bumpy road for stocks

Bumpy road ahead
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The first presidential debate between Hillary Clinton and Donald Trump is in the books, and with the race for the White House tightening, markets could be in for a bumpy road ahead in the near term.

The CBOE Volatility Index, a measure of short-term volatility, has fallen over 20 percent so far this year. But if history serves as a guide, that could be about to change.

Historically, October has been a volatile month for stocks during an election year. Since 1992, the CBOE Volatility Index has risen in each of the six presidential-year Octobers, spiking an average 21 percent. For context, all other nonelection-year Octobers since 1990 paint a calmer picture, with the VIX trading down 60 percent of the time and actually declining by an average of 5 percent.

To be sure, October 2008 skews the results quite a bit, when the VIX soared over 50 percent during the financial crisis. Excluding 2008, the average CBOE Volatility Index moved higher by an average of 15 percent, but still traded positively 100 percent of the time, with the S&P returning an average of just 0.34 percent during that same period.

Not surprisingly, the defensive consumer staples sector performed best in those election-year Octobers, trading positively 60 percent of the time, with an average return of 2.3 percent. Archer Daniels Midland (ADM), Clorox (CLX) and Colgate-Palmolive (CL) were the best-performing stocks within the sector, returning 11.6 percent, 6.6 percent and 6.3 percent, respectively.

Financials were next, gaining 2.2 percent on average, trading positively 80 percent of the time. Within the sector, Progressive (PGR) took the top spot gaining 16.2 percent during that period, with BlackRock (BLK) and Bank of New York Mellon (BK) rising 12.3 percent and 9 percent on average, respectively.

On the flip side, technology has historically been the worst performer in election-year Octobers, trading down 1.4 percent on average. Within the group, Western Union found itself at the bottom, down an average of 30 percent. Xerox logged the second-worst performance with an average loss of 15.9 percent.

Regardless of the outcome of the election, big moves in health care could also be on the horizon. Goldman Sachs released a note last week forecasting a spike in volatility within the health care sector. Nicholas Colas, chief market strategist at Convergex, supported that call, saying health care sector volatility could double and still be within the normal range for this period.

"If you look at the VIX of the health care group, it's currently running around 12 percent, very low levels and near the lows of the last 12 months. And if you go back to last October, it was 30 percent," he said.

Overall, this time around should be no different. With just six weeks to go until the Nov. 8 presidential election, traders have started to position themselves for a spike in uncertainty. Daniel Deming, money manager with KKM Financial, said, "You've seen a tremendous amount of activity in out-of-the money calls in the VIX for the month of October. There's significant demand for what could be perceived as disaster insurance should the market show any major sign of weakness."

Disclosure: CNBC's parent, NBC Universal, holds a minority stake in Kensho