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Stocks set to rise another 10% by year-end: Piper Jaffray

Piper Jaffray views Friday's selloff as a "back-to-school" sale.

Analyst: Friday's pullback was a back-to-school sale

The S&P 500 fell nearly 2.5% on Friday - snapping a 43-day streak where the index didn't move more than 1% in either direction.

Investors reacted negatively following hawkish commentary from Boston Federal Reserve Bank President Eric Rosengren – where he repeated his desire for the Fed to raise interest rates.

But Craig Johnson, Piper Jaffray's Senior Technical Strategist, still sees an opportunity for stocks to gain an additional 10% by the end of the year.

Johnson believes Friday's downside move was just the signal investors were waiting for to "put on their buying shoes," after a month that saw the S&P 500 essentially flat.

"A lot of fund managers are slightly behind their benchmarks for the year, so any of these short-term 'selloffs' in the market they're going to view as an opportunity to be buying stocks," Johnson said.

Johnson points to market breadth – the amount of stocks advancing versus the amount of stock declining – as a sign that the longer-term secular uptrend of the broader market remains intact.

"Right now that breadth is still expanding, excluding what you saw on Friday," Johnson said, "but directionally [overall] it's still improving."

Market fundamentals also appear strong, according to Johnson, as he sees stocks being reasonably priced here, with companies nearing the end of the earnings recession.

"I think [stocks] are fairly valued right now but as you roll out into next year, there's going to be opportunities to see stocks move higher and not see a lot of multiple expansion."

Johnson has a 2,350 S&P 500 target for the end of this year; the highest currently on Wall Street.