A 2018 market bear sees reasons turn positive on stocks, but he warns a deep pullback threat remains.

Ned Davis Research’s Ed Clissold suggests investors shouldn’t get sidetracked by the year’s strong market kickoff.

According to Clissold, a bottoming process is still underway.

“We’ve been gradually getting more positive as the markets improved over the past month,” the firm’s chief U.S. strategist said Tuesday on CNBC’s “Futures Now.” “Retests are common, though, after major lows.”

He referred to the Christmas Eve sell-off that unleashed a historic plunge, albeit temporary, into bear market territory. Since then, the Dow and S&P 500 have rebounded by 15 percent.

However, Clissold warns it will be challenging to hold onto the bullish momentum.

“The China trade talk, earnings revisions [and] economic data could come in weaker,” he said. “All of those things could be drivers of a pullback.”

It may sound scary, but Clissold views the scenario as a brief setback.

With the Federal Reserve becoming more dovish, Clissold believes fundamentals point to a healthier market this year. Plus, he expects positive sentiment to overtake pessimism once the headline risks get settled.

Yet, he said it will take more than Fed policy and optimism to return the markets to all-time highs.

“We have to get back to the idea of we need better earnings. We need better economic growth,” Clissold said. “Another hurdle for the market is the downward earnings revisions which have been coming. There is probably a little bit more to go. And, maybe we can get passed that before we can make that run at those new highs.”

Clissold appears confident a bull run can eventually happen this year. His S&P 500 year-end target is 2,950 target — 10 points higher than the index’s record high.