S&P is just inches away from doing something bad: Technician

Trader shows how far the market will fall
A record for corporate payouts
Positive month for the financials

With stocks sliding Thursday, one trader says more pain is ahead for the .

The benchmark index has tumbled about 2.6 percent since hitting record intraday highs in mid-August. According to Evercore ISI technician Rich Ross, the market is set to drop another 4 percent.

Looking at a chart of the S&P 500-tracking ETF (SPY), Ross notes that the market has actually returned to the levels at which it was trading before the U.K. referendum to leave the EU.

Moreover, Ross takes the chart back one year and spots a "critical neckline of support" extending from November 2015, when the SPY was at $212, to present levels.

"You've essentially erased any of those post-Brexit gains, and you're sitting on that key neckline of support," said Ross. "Our call is that you break lower beneath the neckline," he added Thursday on CNBC's "Trading Nation."

Once that happens, how low could the market go? Ross subtracts $212 from the SPY's year-to-date highs at $219 to determine that another 7-point move down could still be possible, meaning that SPY could fall to $205 — a 4 percent decline from current levels.

That would almost completely take out all of the S&P's gains on the year.