Don’t count on tax reform to give this historic rally a kick, Oppenheimer says

One of Wall Street's most vocal bulls has grown less optimistic that tax reform will become a reality.

According to Oppenheimer Asset Management's John Stoltzfus, the chances of it passing are very slim.

"Tax cut, OK. But tax reform is much too dramatic considering all the different constituencies that are involved here and all the special interests," the firm's chief investment strategist said Monday on CNBC's "Trading Nation." "Just don't think it's going to happen."

The Senate may vote this week on the tax overhaul.

Even if tax reform isn't there to give the historic rally a kick, he still sees the stock market thriving over the next 12 months or more.

"We think stocks have a good chance of moving higher next year as fundamentals are likely to continue to improve even without any dramatic stimulus from those agenda items," he said.

Stoltzfus' S&P 500 year-end price target of 2,650 is just 1.9 percent away — a hurdle that doesn't seem impossible to clear if a Santa rally emerges.

The Stock Trader's Almanac finds stocks historically end the season on a high note. Since 1950, the index has seen average returns of1.4 percent in the final five trading days of the year and first two of the new year.

Stoltzfus is still crunching the numbers for his 2018 S&P forecast and expects to release it next week. He's indicating it'll be another bullish number — reiterating that earnings and revenues will continue to be strong into next year regardless of what happens in Washington.

"This may just be a continuation of a sweet spot for equities that we have seen running for years now since the financial crisis," Stoltzfus said.

Yet, he notes one casualty may emerge without a tax reform package: small cap stocks. They've ripped more than 10 percent since mid-August on speculation that the group would reap the biggest benefits.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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