Market’s biggest bull sees year-end rally, but warns it's setting up Wall Street for a scare next year

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New record highs are ahead, but 2022 looks rough, Wells Fargo's Chris Harvey warns (TradingNation)

Don't go bottom fishing

"That will put upward pressure on rates, and that's good for banks," said Harvey. "We want to buy things that are working. We don't want to go bottom fishing. We don't want to buy broken stories.""The funny thing here is a lot of people believe these are high tech and all tech-type stocks," he noted. "If you look at the momentum index and the Momentum ETF, 20% of it is in banks and three of the top ten names in the momentum ETF are banks.

Harvey estimates the market melt-up will last three to six months. In next year's second quarter, he expects a more hawkish Fed, decelerating growth and uncertainty surrounding the mid-term elections to start creating headwinds that could cause a 10% correction. "I hate this comment, but I'm going to give it to you anyway. I think it is a 'sell in May and go away,'" said Harvey. "By the time you get into late spring, early summer, you really want to turn more defensive."

It's still considered early for firms to deliver next year's S&P targets. Harvey's target is 4,715. The more bullish estimates so far include Credit Suisse's Jonathan Golub,

 

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