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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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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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