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A Wall Street veteran who’s bullish on stocks sees one more major leg down, and China’s the reason

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The S&P 500 Index may be coming off its best week since March 9, but long-time bull Art Hogan doesn’t believe the market’s wild swings are safely in the past.

B. Riley FBR’s chief market strategist predicts stocks will retest to their October 29 correction lows, he recently told CNBC.

“We are going to see one more test before we escape back up into bullish territory — probably the middle of November and into December,” he said Friday on CNBC’s “Trading Nation.”

He expected U.S.-China trade tensions, which whipsawed stocks on Friday, will be the overwhelming factor in the next leg down. President Donald Trump is expected to meet Chinese President Xi Jingping at the G20 Summit in Argentina next month, amid conflicting statements from the administration on whether progress had been made between the world’s two largest economies.

“The most difficult headwind for this market to get over is China,” Hogan said, making clear that his case is contingent on how long the trade war lasts — and whether it intensifies.

“The most important thing is to get some clear and concise constructive news on China,” Hogan added.

Hogan had expected that a deal would be reached around the midterms. But with the key elections set for this Tuesday, Nov. 6, he acknowledges the probability is extremely low.

Yet, Hogan said he’s still in the camp a trade resolution will eventually come. “Any whiff of good news, any whiff of constructive news is actually going to propel this market forward,” the Wall Street veteran said.

If true, that would be welcome news for Wall Street.

The S&P 500 is 7.4 percent away from its all-time intraday high of 2,940.91 hit on Sept. 21. After gaining 2.4 percent in the week ending Nov. 2, it’s now up 1.85 percent so far this year.

For now, Hogan is maintaining his S&P year-end forecast of 3000, which would be a gain of almost 10 percent from current levels. He expected the index to be trading at 3300 by the end of next year.

“If we get into the middle of November and we’re still in this tit for tat or if we get to a point where we increase the number of tariffs we put on Chinese imports, that target has got to come down not only for this year, but for next year as well,” Hogan said.