September may look much calmer than Wall Street anticipates.
According to CFRA's Sam Stovall, an election year trend going back to the 1940s suggests volatility won't make a comeback in this month.
"A lot of strategists are saying that as we head into the election, markets are likely to get a lot more volatile," the firm's chief investment strategist told CNBC's "Trading Nation" on Tuesday. "But actually history says the opposite."
Stovall builds his case in a special chart showing volatility during presidential election years versus non-election years since World War II.
"If you look to the volatility in the three months prior to the election compared with the non-election years actually volatility typically is less," said Stovall.
That doesn't mean the index is in the clear. Even though the S&P 500 kicked off the month in record territory, Stovall warns history points to some weakness.
In a recent note, he points out September has been the weakest month overall for stocks since 1945 — declining an average of 0.51%
But the trend has improved over the past 25 years. Stovall finds the S&P 500 has gained an average of 0.1% in September since 1995.
This year, Stovall speculates the odds are higher the market's historic rally will stumble from exhaustion closer to November. According to Stovall, it typically happens around 5% above the new bull market all-time high.
"The market is vulnerable to some sort of digestion of recent gains," said Stovall. "History would imply that in the next two to three months we probably could see a decline of anywhere from 5% to 15%."
For now, he has a S&P 500 12-month rolling price target of 3,650, which implies a 4% gain from current levels.
"I don't think it's going to be a straight shot obviously because we're rising pretty rapidly toward that number already," Stovall said.
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