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Technical analyst Katie Stockton: The stock market retest of February correction is 'actually a positive'

  • "It's not often that you see the S&P 500 gap down in the way that it did," says Katie Stockton, founder and managing partner at Fairlead Strategies.
  • "To me, it's actually a positive," she adds.
  • Stocks sold off Thursday, pressured by worries of a potential trade war and a decline in tech shares.

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."

Jeremy Zirin, head of investment strategy at UBS Wealth Management Research, told CNBC that President Donald Trump's announcement Thursday on tariffs on up to $60 billion in Chinese imports didn't seem that bad.

"The economic impact of [the tariffs] is less than one-tenth of 1 percent," Zirin told "Squawk Box."

"It's actually pretty bullish what we heard yesterday," he added. "If you look at the steel and aluminum tariffs as a template, things got watered down and then scaled back. So, if you look at the whole economic backdrop, still a very good profit momentum."

Jason Trennert, chairman of Strategas Research Partners, told CNBC he was being cautious because of other factors happening in the market, including Facebook's recent data leak scandal.

However, "I'm not sure I would be running around with my hair on fire either," he said. "These are things that are going to be a process."

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