The market's recent sharp losses are healthy, and stocks are still in a bull market, technical strategist Katie Stockton told CNBC on Friday.
"It's not often that you see the S&P 500 gap down in the way that it did," said Stockton, founder and managing partner at Fairlead Strategies. "To me, it's actually a positive."
Stocks sold off on Thursday, pressured by worries of a potential U.S.-China trade war and a decline in tech shares. The Dow Jones industrial average closed down more than 700 points after briefly dipping into correction territory. The S&P 500 closed below its 100-day moving average for the first time since early February.
Stockton, a former BTIG strategist,told CNBC that stocks needed "a bit more of a shakeout ... to see the correction phase mature." Stocks had sold off in early February and eventually bottomed out on Feb. 8 on a closing basis, briefly plunging into 10 percent correction territory.
Thursday's market drop was "the retest process," she told "Squawk Box," adding that the S&P 500's 200-day moving average of 2585.49 is still intact. "For the first time, we have an oversold condition this month and the last time we had that was at the February lows."