History suggests that a tough month is ahead for stocks

After three great months for stocks, February could bring some market gloom, according to MKM Partners chief market technician Jonathan Krinsky.

Krinsky points out that over the past 40 years, February has been the S&P 500's weakest month within the generally strong November to April period; stocks have risen a mere 0.06 percent in the average February, according to his work.

The short month has been crueler in years following elections. In the postelection Februaries since 1977, the S&P has fallen by 1.85 percent on average.

To his historical analysis Krinsky mixes in the fact that the market has gone 75 days without a daily decline of 1 percent or more. To him, this suggests that a slide of such magnitude is ahead — and "once you have that, you tend to see weaker-than-average returns over the next couple weeks."

All in all, Krinsky expects to see the S&P slip 3 to 6 percent in the weeks ahead. This dip would serve as a "welcome buying opportunity," he added Monday on CNBC's "Trading Nation."

The S&P 500 actually was trading down 1 percent for a bit on Monday, but managed to close the day 0.6 percent lower. That marked the market's third-straight losing session, but the S&P is still up about 1.9 percent in January. It rose 1.8 percent in December and 3.4 percent in November.

Taking a value investors' perspective, Eddy Elfenbein of the Crossing Wall Street blog agrees that the market could be set to slide 5 to 7 percent as earnings estimates come down, which would break a long period of placidity.

Like Krinsky, Elfenbein made clear that he doesn't want to "overstate this."

"It's probably a February and March story … and once that's out of the way, I think it looks very good for stocks," he said Monday on "Trading Nation."


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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.

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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