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Don't worry, S&P rally is still intact: Technician

Trading Nation: Determine the downside

Stocks on Friday closed out their worst week since August, with major U.S. indices falling about 4 percent. However, one noted technical analyst said investors have little reason to be concerned.

Looking at the charts, Craig Johnson of Piper Jaffray said the recent sell-off is due to short-term profit-taking as investors cash out on the impressive October rally.

"What we're seeing is kind of a rotation, every sector is getting some profit-taking coming into play," Johnson said Friday on CNBC's "Power Lunch." "A month or two ago, it was the health-care sector; now it's starting to find it's footing. Now it's the consumer cyclical sector."

Despite concerns about consumer demand, energy prices and materials, Johnson said the primary trend for the is still up.

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"We've certainly lost momentum over the last week or so, and from our perspective not too surprising, given the October that we have seen," Johnson said. "So we're going to get a little bit of backing and filling here. Let's put this in the context that the bigger, longer-term, secular bull market is still intact."

Johnson said for the S&P to break its uptrend, the index would have to close below the 1,800 level, an 11 percent drop from where the S&P closed on Friday at 2,023.

Shorter term, Johnson said he sees support coming in around 2,020 and again at 2,000.

"We've got maybe another 1 percent downside before the market will try to rally," he said Friday.

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