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Stocks are off their highs, but BofA says keep buying

Annie Pei

The pullback in the stocks over the past few sessions doesn't worry Bank of America's Stephen Suttmeier, he says, and any dip in the markets should be bought.

The S&P 500 bounced in and out of negative territory on Thursday, but according to Suttmeier, it could actually be playing into a trend that will eventually give way to another leg higher for stocks.

"We really think the market's going to follow that traditional December pattern, where you're sort of weak in the first half of the month and then have that Santa Claus rally in the back half," he said Tuesday on CNBC's "Futures Now." "So it would not surprise me one bit to see the S&P pause."

According to the technical strategist, even if a steeper pullback were to occur, the index wouldn't fall below 2,600 given that the S&P has "respected round figures over the last year or so." And in fact, 2,600 would be the main support level for another leg higher before 2017 ends. Part of this is thanks to an uptrend channel in the S&P 500 that has been in the works since February of this year.

"We think that [support] can hold ahead of a year-end rally back up into this 2,650, maybe even 2,700 on the S&P," he said.

As to what sectors could lead that rally into year-end, Suttmeier says tech will be one of the main drivers of that rally. In the last 10 trading days, tech has actually lagged the market and fallen 2 percent, but Suttmeier says based on the sector's recovery from every pullback this year, he thinks tech will soon be ready for another comeback.

"You've had several of these pullbacks this year between 2 to 5 percent. They lasted about 2 to 18 days and then they found support somewhere near that 50- or 100-day moving average before going to new highs," he explained.

Suttmeier says, however, he is still conscious of the recent sector rotation that saw investors pulling out of tech and piling into more value-based trades such as financials. As a result, he says the financials, materials, transports and some old-school tech names are actually worth buying at the moment.

As of Wednesday midafternoon, the S&P was trading at around 2,632.