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The chart that says the S&P 500 isn’t done rallying this year

Stocks continue to have serious upside, according to technical analyst Craig Johnson of Piper Jaffray.

The S&P 500 has already risen 9.1 percent this year. And the Dow Jones industrial average, which is up nearly as much, closed Wednesday at a record level. Stocks got a midweek boost thanks to congressional testimony from Federal Reserve Chair Janet Yellen that pointed to easier money policies than many had anticipated.

But Johnson remains an optimist, maintaining that the best is still ahead for the market.

"I hear so many people say that this is a market that is expensive and that we need to have some sort of price correction," Johnson said Wednesday on CNBC "Power Lunch." "Well you can have a correction one of two ways: Price or time. ... Since the election, we've had two time corrections."

In other words, the market has already "corrected" its prior excesses merely by staying flat for periods of time, in the technical analyst's view.

Following those "time corrections," the S&P 500 has "now broken out above of that last time correction in new highs and I think that we are setting ourselves up for further highs from here," Johnson said.

"The market has bought itself its time," he added. "So [there is] more upside to come, and we still remain bullish and optimistic."

After the S&P hit his 2,424 price target at the beginning of June, Johnson raised his 2017 year-end forecast to 2,575. That means he sees upside of 5.4 percent between now and the end of the year, which is roughly in line with the pace of the market's gains thus far in 2017.

On the other hand, Boris Schlossberg of BK Asset Management sees a traditional "price correction" as reasonably likely.

"Everybody is so complacent and so completely confident that we're doing nothing but going up," Schlossberg said Wednesday on "Power Lunch."

In order to protect against a potential drop, he advocates buying bearish put options, which will increase in value should stocks drop.

Since options prices are relatively low right now, making such a bearish bet in order to mitigate the risks of holding onto stocks makes for "a very intelligent insurance policy," Schlossberg argued.

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Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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