Self-proclaimed 'stubborn bull' sees Santa Claus rally wiping out market losses

One of Wall Street's biggest bulls predicts a sharp Santa Claus rally will revive the stock market, which has erased its gains for the year.

According to Blackstone investment strategist Joe Zidle, a sentiment problem is behind the latest downturn — not warning signals from U.S. businesses or the economy.

"I'm a stubborn bull, and the fundamentals are not really arguing for this type of pullback," he said Tuesday on CNBC's "Futures Now." "If this cycle were to end today, it would mean that some really serious fundamental laws of economics and markets have been broken."

Yet, it appears investors haven't gotten the message.

The Dow plunged 551.80 points or 2.21 percent to 24,465.64 on Tuesday and is now down more than 1 percent for the year. The S&P 500 also skidded, tumbling 48.84 points or 1.82 percent to 2,641.89. Plus, the tech heavy Nasdaq is moving deeper into correction territory.

"Does it take a positive catalyst or is it the absence of another negative?" Zidle asked. "Earnings and interest rates, are still pretty favorable for stocks. I think it just takes the absence of a negative."

Zidle sees yield curves, leading indicators and average hourly earnings as the three strongest predictors of a bear market. Right now, he said, they're not suggesting trouble.

"Underlying fundamentals argue we should see a Santa rally, and we should be bullish," he said, suggesting the Street could shift its attention any day to the solid underlying economic picture.

Yet, he acknowledged his 3,000 S&P 500 year-end price target may be too ambitious.

"In order to get 3,000, we'd need a pretty massive rally to the likes of which we've only seen like in January 1987. That was a month when the market went up 13 percent in a month," Zidle said. "I don't know that we'll be able to do that."

Wednesday's futures pointed to a higher opening on Wall Street.

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