Why a top strategist is sticking with his call for stocks to surge 22% even as the trade war roils markets

• Craig Johnson isn't deterred from his bullish S&P 500 call despite soaring market volatility.
• The Piper Sandler strategist said he still expects the S&P 500 to surge to 6,600 by year-end.
• "When people are vomiting up stocks, you gotta be in there cleaning it up," Johnson said.

In the aftermath of President Donald Trump's "Liberation Day," one strategist on Wall Street was unmoved.

The stock market had just experienced its worst two-day sell-off since March 2020, when the global economy was on the verge of shutting down due to the COVID-19 pandemic.

With the S&P 500 down more than 10% in two trading sessions, predictions of worst-case scenarios washed over Wall Street. Strategists across various Wall Street banks warned of an imminent recession and lower stock market returns due to Trump's sky-high tariffs.

But Craig Johnson, chief market technician at Piper Sandler, saw this as an opportune time to reiterate his view that the S&P 500 would finish the year at a fresh record high of 6,600.

That represents a potential upside of 22% from levels on Friday afternoon.

"Don't stop believin" was the title of Johnson's note to clients, reiterating his bullishness on the stock market despite the elevated volatility from Trump's trade tariffs.

Business Insider caught up with Johnson this week to better understand why he's sticking with one of the highest price targets on Wall Street.

It's only April

For one, Johnson was quick to point out that "it's only April,"and that there is plenty of time for the stock market to digest the recent losses, consolidate, and then move higher.

"I feel like let's give this market a little bit of time," Johnson said. "There's a lot of volatility and if we're going to start to see a more rational trade environment coming into play, then certainly multiples in this market can come back and the expectations of earnings cuts might not be as high as what people were trying to price into it."

Johnson's positive view, which hinges on the Trump administration back-pedaling some of its tariff initiatives, played out on Wednesday when Trump instituted a 90-day pause on "reciprocal" tariffs for most countries.

The stock market boomed about 10% following that announcement.

"We just put up one of the best days post World War II in the market and I don't think anybody was expecting to move that large, but at the end of the day, there's probably still more room for this market to ultimately I think work to the upside," Johnson said.

Investors are too negative

Investor sentiment, which has plunged over the past few weeks, is boosting Johnson's confidence that stocks are primed to rally.

The CNN Fear & Greed Index plunged as low as 4 last week, the second-lowest level in its history, only beaten by two readings in March 2020.

Another sentiment indicator, the AAII Investor Sentiment Survey, has also illustrated that investor bearishness is sitting at extreme levels rivaled only by the 2008 financial crisis.

"Negativity is just running so high," Johnson said, highlighting that recent flow data showed investors selling stocks and buying money market funds.

And when negativity gets this extreme, it typically serves as a contrarian indicator that stocks are poised to rise, Johnson said.

"If you're going to be emotional in the market, you will lose every time," Johnson said. "You just can't be emotional about it, you have to come in and you've got to, when people are vomiting up stocks, you got to be in there cleaning it up."

The technical setup

From a technical perspective, Johnson sees a lot to like even amid the trade-fueled turmoil.

For one, the S&P 500 got all the way down to 4,835 in pre-market trading this week. That's significant because it tests prior resistance as support, a key tenet of technical analysis.

The S&P 500 peaked at 4,818 in January 2022. The price memory of that level sparked buyers to rush the market.

"That was a pretty good area of support," Johnson said. "I mean, I don't know if I could ask for a lot more perfect than that with everything screwed down between sentiment, our gauges, levels of support; I mean, it was literally almost to the freaking penny."

Johnson also highlighted that the stock market flashed extreme oversold readings, which typically precede a strong bounceback.

Of all the stocks in Johnson's coverage universe, only 5% were trading above their 40-week moving average.

"What I will tell you is that I don't often see numbers this low," Johnson said. It would be bullish if that number experiences a sharp rebound, signaling that deeply oversold levels are improving.

Ultimately, the technical strategist expects the S&P 500 to test 5,500 as resistance, and then if successful, will probably be stuck in a sideways trading range of 5,500 to 5,800.

"And we end up sort of just chopping around there in a while until people get a great handle of what's going to happen with trade," Johnson said.

Any clarity in trade policies and potential deals could ultimately help clear uncertainty and catapult the stock market to record highs by the end of the year.

"I keep saying don't stop believing because again, when markets get this beat up, they get this sort of washed out," he said. "But when you get down to these sort of levels, this is where you have to buy stocks."