TDA Analyst: 'Legislation Drives The Market In 2017'

"Most of this year, it was pretty boring," JJ Kinahan, TD Ameritrade's chief market strategist, told Benzinga in a phone call. "Where there was news, people were drawn to because they wanted to trade."

Analysts expect fairly predictable disturbances in the 2017 market.

Commentary On 2016, 2017

"This was the event-driven year — much of it driven by the Fed or other circumstances. I think next year it'll be a legislation-driven year," Kinahan added. "As we head into the new year, much has been said about foreign relations turmoil, and that's a possibility, but I really think the true volatility will come from legislation."

Kinahan will be watching the fresh dynamics of Congress, the White House, the Securities and Exchange Commission and the Commodity Futures Trading Commission — the last of which still has two vacant chairs.

"The primary thing that we're all waiting to see is tax legislation and tariff legislation," he said, adding that these factors will help return volatility to "more normal levels."

"I think you're going to see by the end of next year VIX more in the 18-to-20ish area as an average throughout the year, because I just believe there will be more events. I think that's where, as tax policies, as regulatory policies are sort of negotiated out, I think that's going to cause a lot of intraday volatility or maybe intraweek even. With that, I do believe at the end of the day we'll be in a better position business-wise and market-wise, but I think getting there is going to be a very uneven path."

Kinahan anticipates legislation and domestic politics to affect not only volatility but also initial public offerings.

"I think we're going to go through a little bit of a lull here after the new year until we figure out who's approved by the senate [and] what's going to be the three or four things we're working toward," he stated. "Once that is spelled out, then I think you can start to see more IPOs, but nobody wants to go to market at a time of questioning, and I think this year, you saw that."

But the questions are diminishing in volume and impact, and Kinahan expects a bullish investment year prompted by the solution of previously unknown variables — including the American presidency and interest rates. These certainties will allow investors to predict yet-undetermined policies that may influence market activity.