Chart says to buy stocks now: Top technician

Talk about a holiday hangover.

Stocks sold off Tuesday as a strong U.S. dollar spooked investors and major indexes across the board fell more than 1 percent. But despite the sharp move lower, one top technician is urging investors to use the opportunity to buy.

"When you step back and think about the rise in the dollar and the fact that the Fed is going to hike rates—it's going to happen this year. But that isn't necessarily a bad thing, I actually see it as a sign of confidence," said Craig Johnson, senior technical research analyst for Piper Jaffray.

Johnson pointed out that historically, a move higher in the dollar actually coincides with a move higher in stocks. "Just because we're going to see a little bit of a headwind on the earnings front, does not mean we are going to see the S&P 500 roll over and fall off a cliff," said Johnson on CNBC's "Futures Now" on Wednesday. "That's not the case at all."

Johnson has a year-end target on the S&P 500 of 2,350 which is an 11 percent rally from current levels.

"You've got a lot of people calling for a pullback in this market, but they are missing one thing," Johnson said to his naysayers. "They are missing that this market has shrunk dramatically." According to Johnson, from the year 2000 to the present, the existing number of stocks with a $25 million market cap and $2 price has decreased by 25 percent over that period. According to Johnson, that lack of supply should force investors to buy stocks, particularly given the lack of alternatives in the fixed income markets. "Money is going to come out of fixed income and flood into stocks," he said.

To Johnson, the message is very clear, as the trend remain intact, investors should "take advantage of any pullback as an opportunity to own equities."

Contact Futures Now

  • Showtimes

    Watch Futures Now Tuesdays & Thursdays 1p ET exclusively on cnbc.com!

Sponsor Links

  • CME Group brings buyers and sellers together through its CME Globex electronic trading platform and trading facilities in New York and Chicago.

  • Take your trading to the next level with a platform that lets you trade stocks, options, futures and forex all in one place with no platform or data with no trade minimums. Open an account with TD Ameritrade and get up to $600 cash.