A significant buying opportunity could arise on Wall Street.
Canaccord Genuity's Tony Dwyer believes the recent market turmoil will be followed by a record rally.
"We'll move from this summer of indigestion to the year-end opportunity," the company's chief market strategist told CNBC's "Trading Nation" on Tuesday. "We're just not quite there yet."
The Dow and S&P 500 both had their fourth consecutive negative session. The activity follows the sharp decline in the indices on Monday. Right now, the Dow is 5% off its all-time high, while the S&P 500 and tech-heavy Nasdaq are down 4%.
"It's a month-long correction in the broader market," said Dwyer. "We are neither extremely overbought nor extremely oversold at this point, given the nearly 2% decline yesterday."
Dwyer, a long-term bull who went on withdrawal watch last spring and downgraded the market to neutral in April, lists heated exchanges across Washington's fiscal cliff, Wednesday's Federal Reserve's decision on interest rates, and the impact of the Chinese developer's debt crisis Evergrande on as rational short-term downside catalysts.
"These are good excuses for taking profits," he said.
In Dwyer's research note to investors Tuesday, he indicated that the street is likely to experience a short-term reflex rally. However, he thinks the interim readings are more ominous.
“Monday's intraday low has already ricocheted off strongly and the catalysts for the correction have yet to be resolved. “Wrote Dwyer.
He assumes that the extent of the short-term pullback will be limited to a few percent.
Another downside, Dwyer plans to buy financial, industrial, commodity, and energy stocks. Right now, commodities and energy are firmly in correction territory, more than 10% off their 52-week highs.
He claims that the euphoria surrounding the economic reopening deals is now largely over and they will be the key to a record market breakout within months.
"It's more important to look at year-end opportunities," said Dwyer.
CNBC's Christopher Hayes contributed to this report.
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