Stocks tumbled on Friday as reports that former national security advisor Michael Flynn was prepared to testify that President Donald Trump directed him to make contact with Russians had investors hitting the sell button.
But despite the sell-off, Ryan Detrick, senior strategist at LPL Financial, says the plunge will do little to alter his bullish thesis on the market.
“Although [Friday’s] Washington drama could cause some near-term volatility, the overall economy is on very firm footing and we don’t expect this to lead to a major dip,” Detrick wrote in an email to CNBC on Friday.
“At the same time, a record 13 months in a row of gains for the S&P 500 (when including dividends) and the longest streak ever without a 3 percent correction makes the odds of a normal pullback quite high. But we would use any weakness to continue to add to positions.”
And even looking forward to December, Detrick still maintains that the market will continue to make new highs through to the end of the year based on a historical trend.
Going back to 1928, December has never been the worst trading month of the year, and instead the market has seen some of its biggest gains during the final weeks of the calendar year. Since 1950, the S&P 500 has trended higher 75 percent of the time in December with the average gain at around 1.6 percent, the best out of all 12 months of the year.
And Detrick believes that this year will prove to be no different.
“When you consider the worst month this year was March, down 4 basis points [or that’s 0.4 percent], if history holds true we could have another green Christmas and another green December here,” he said Thursday on CNBC’s “Trading Nation.”
This data, of course, is independent of much of the political drama coming out of D.C. that also includes prospects of an impending government shutdown and a tax plan vote on the Senate floor. But Detrick emphasizes that at least up to this point, the market is still on track to make a historical record.
“We could have the first year in history of stock markets, at least in the U.S. here, where all 12 months are positive on a total return basis,” he said. “January through December, that hasn’t happened before.”
“We’re seeing truly historic markets this year,” added Detrick.
Despite Friday’s sell-off, all three major indexes are still up double digits for the year.
