Tax reform uncertainty holding stocks 'hostage,' and it could foil a Santa rally, longtime bull Art Hogan says

Veteran strategist Art Hogan on what tax reform means to the market now

Looking to see 2017 end with a Santa rally? It'll likely all come down to what happens inside the Beltway over tax reform, according to longtime bull Art Hogan.

"We're held hostage right now to the negotiations over the tax bill," Hogan said Monday on CNBC's "Trading Nation." "Any disappointment there I think that could be the reason for that first pullback we haven't seen yet this year."

The Santa rally phenomenon refers to the end of December and early January period when stocks historically end the season on a high note. Since 1950, the has seen average returns of 1.4 percent in the final five trading days of the year and first two of the new year, according to the Stock Trader's Almanac.

Hogan believes there's a good chance this season may not follow that pattern.

"We didn't have any sell in May and go away effect, and we certainly can't count on any real seasonality in a year that's been up and to the right with very few pullbacks. So, as we head into the end of the year, I think it's anybody's guess," said Hogan, chief market strategist at B. Riley FBR.

Hogan, who has spent more than three decades on Wall Street, has a 2,600 year-end price target on the S&P 500— almost exactly where the index stands now.

"I think they [lawmakers] desperately would like to get something called tax reform passed and I think they're working real hard to get that done," he said. "We're around Thanksgiving break right now and the senators will only have 15 working days to get something accomplished before the end of the year or so."

Once tax reform's future is determined, Hogan sees the stock market regaining momentum. He has an S&P 500 price target of 2,800 for next year — a 7 percent gain from current levels.

Art Hogan on the one factor that can keep the market rally afloat