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Market won't bottom until stocks fall at least another 5%, top Wells Fargo strategist says

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S&P 500 will fall another 5% or more before bottoming, Wells Fargo predicts

Wells Fargo Investment Institute's Scott Wren believes stocks are on the cusp of another leg lower.

Wren expects the market will tumble at least another 5% before hitting bottom.

"[It's] probably a buying opportunity if we get down to the 2,700, 2,740 area in the S&P 500. That means we go through the 200-day moving average," the firm's senior global equity strategist told CNBC's "Trading Nation" on Wednesday.

That level is more than 10% from the S&P 500's record high of 3,027 hit on July 26.

But Wren isn't abandoning his bull case for stocks.

"Our year-end target is 3,030 on the S&P. So, clearly we're constructive here," he said.

The big near-term challenge is the escalation of the U.S.-China trade war, according to Wren. Even if an imperfect deal is reached between the two countries, Wren speculates stocks will break out of the painful slump.

"It's something like you remove the tariffs. You take away the promise that more are coming," he said. "You get back to some kind of certainty."

Until then, Wren makes it clear that he's staying away from stocks. He's more comfortable parking some money in cash and short-term Treasurys while waiting for an entry point around the 2,700 level.

'Immediate gratification is not in the cards'

In his latest weekly note, Wren advised investors to reduce risk in their portfolio. According to Wren, it's no man's land in terms of picking out a profitable spot in the market right now.

"The negative risks to our outlook have increased meaningfully in recent weeks," Wren wrote. "The uncertainty likely will not go away soon. Immediate gratification is not in the cards."

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Top Wells Fargo strategist expects stocks to fall 5% or more due to trade risks