Wall Street bull expects the record rally to temporarily get tripped up

Oppenheimer Asset Management’s John Stoltzfus suggests investors may want to fasten their seat belts.

The long-time bull expects a wave of near-term volatility to pressure stocks. He’s blaming uncertainty surrounding this week’s Federal Reserve decision on interest rates, another big batch of second quarter earnings results and a fresh round of U.S.-China trade talks.

“Any kind of disappointment in a sense, okay, I can kind of take profits today without FOMO [fear of missing out] gripping my soul,” the firm’s chief investment strategist told CNBC’s “Futures Now ” last Thursday.

With the fear of missing out gripping fewer investors, Stoltzfus contends it’s not the time to get aggressive.

“We’re highly selective at this point with the S&P 500 up over 20%, ” he said.

The index, which closed the week at new record highs, has already surpassed Stoltzfus’ year-end target of 2,860 by almost 6%. He’s planning to tweak the number once there’s more visibility.

“It’s under revision at this time. We’re going to wait until after the Fed makes its decision on the 31st,” he said “At that point, we’ll put in our new target for the year-end, depending on how that goes.”

Stoltzfus notes a more favorable development in the U.S.-China trade war would be an integral part of his bull case. He believes it’s the biggest headwind holding back stocks from ripping even higher.

“It would be confirmation that indeed the markets thought things weren’t so bad, were actually pretty good,” he said.

For now, Stoltzfus is bracing for a 3 to 4% pullback to strike stocks near term. He’d look to add cyclical names such as consumer discretionary, industrials, financials and technology on weakness.

“Tech looks like a great place to be because technology flows into all of the eleven sectors. Every business needs technology,” Stoltzfus said.

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