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Market should rally another 10 percent next year, strategist predicts

Despite the big market moves of late, there is still time to buy into the rally, strategist Robert Pavlik told CNBC on Thursday.

In fact, he sees almost 10 percent upside for the S&P 500, predicting it will get up around 2,400 by the end of next year.

For one, the economic data continue to come in "pretty positive," the chief market strategist at Boston Private Wealth said in an interview with "Power Lunch."

"Then you have the potentials that the new administration brings along with it: tax cuts, tax incentives, the ability to repatriate some cash that has been made overseas, the ability to create more jobs here in the United States, reduced regulation," he said.

He believes all of this will boost consumer confidence and investor confidence.


Traders clapping on the floor of the New York Stock Exchange on December 18, 2014
Andrew Burton | Getty Images
Traders clapping on the floor of the New York Stock Exchange on December 18, 2014

The market has already had a big run up after President-elect Donald Trump's stunning victory Nov. 8, with the Dow Jones industrial average, Nasdaq and S&P 500 all hitting record highs.

Pavlik believes a combination of earnings growth, which he anticipates will be around 9 percent, and PE expansion will cause the market to rise next year.

But he cautions that it will not be a straight up move.

"We've been talking about a lot of different potentials that are going to create roadblocks or at least speedbumps. You have the U.K. and the exiting of the EU. You have people that are going to push back against tax cuts," he said. "People are going to push back against deregulation of some industries. So I think you have to be prepared for it."

Pavlik advises investors to start buying in now with a small percentage of their overall investable assets, and if the market goes up, add to that position.

He specifically sees opportunity in the tech sector, which has been hammered since Trump's win, and financials. While financials have already had a huge move, Pavlik thinks earnings growth will be able to support current valuations and higher valuations going forward.

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