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S&P 500 to 3,600? One chart analyst sees a path there next year

S&P 500's record-breaking rally just getting started, technician says

A rally in the new year could surprise even Wall Street bulls.

While analysts expect supportive fundamentals to take the S&P 500 to around 3,320 in 2020, Piper Jaffray chief market technician Craig Johnson says the rally could be even better.

"Bull markets don't die of old age," Johnson said Friday on CNBC. "We've got a model we've been running for years, and it's a bottoms-up model. And when we do that, we end up with a price objective of about 3,600 on the S&P. … There's more upside than I think a lot of people are giving this market credit for."

"Backing into it from the [earnings] perspective that suggests about a 20 multiple on next year's consensus earnings of about $180. So, it's about one multiple point higher than where we are now. I think it's reasonable and I think it's probably a minimum objective of what we could reach next year," Johnson said on "Trading Nation."

Analysts anticipate $177.65 in earnings per share for the S&P 500 in fiscal 2020, according to FactSet. That implies 10% profit growth. A move to 3,600 suggests 12% upside from current levels.

Gina Sanchez, CEO of Chantico Global, disagrees. She says the valuations support a middling 2020 for the S&P 500 rather than another major move higher.

"We've had a recent bounce, but what that would suggest is sort of another year of maintaining where we are. Now while I don't think it sounds unreasonable, you have to remember that long-term earnings for the S&P is actually somewhere around 18 or even lower. Some folks will peg it as low as 16.5," Sanchez said during the same segment.

The S&P 500 currently trades at 18 times forward earnings, its peak for the year. It trades with a 21-times multiple on trailing earnings.

"I'm not sure that in a slowing economy and given that we still don't yet see the resolution to many of these uncertainties and we don't know what new uncertainties will come into the market, I don't think we can maintain where we are and get to that 3,600 point," Sanchez said. "I think somewhere in the middle is probably the right number."