Technical trader Todd Gordon on Tuesday reiterated his call that the S&P 500 will hit 2,500 by the end of next year, with one caveat.
The backdrop for the nearly 15 percent rise over the next 16 months is a market that is expecting a "one-and-wait" interest rate cycle in which the Federal Reserve hikes rates once and then goes back on hold, the TradingAnalysis.com founder told CNBC's "Squawk Box."
The Fed raised rates by a quarter of a percent in December, but has yet to hike again. Expectations for more of the same continues to fuel equities and investment in riskier assets as interest rates remain low, he said.
"All the risk-on, Fed's-on-hold markets — nothing has changed," he said.
"Few people realize that [30-year] bonds and S&P 500 have a long standing net positive correlation," he told CNBC earlier this year.
At the same time, Gordon said he believes the dollar has broken its upward trend and is likely to move lower, creating a positive backdrop for multinational stocks.
The one thing that could derail the rally, he said, is if oil prices tank, he said. Stocks can likely move higher if crude futures stay within the current range of $40 to $50 a barrel, he added.
Gordon said he is waiting for investors to rotate back into consumer discretionary and technology stocks after energy led the gains this year. Energy stocks have led all other S&P sectors this year, but those gains will not be enough to move the index toward 2,500, in Gordon's view.