Next year could be good for both stocks and municipal bonds, says Suni Harford, who oversees Citigroup's North American sales, trading and business origination of premium securities.

Plenty of people are holding cash they can put into stocks, she tells CNBC.

"We still have $9 trillion in household cash. I think a lot of it needs to be put to work," Harford said. "So, I think there's more of a technical play on equities. People haven't gotten in yet, especially ahead of January, which is going to be a very telling month."

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Meanwhile, munis have struggled this year.

"I think a lot of it is overblown because of the headline risk that's out there," Harford said.

"I think Detroit and Puerto Rico and Jefferson County [Ala.] get a lot of play, but I think we have historically seen a big bounce-back after a market like that in municipals, so we're watching that one."

Detroit initiated a filing for bankruptcy in July, and a U.S. Bankruptcy Court judge Tuesday permitted the city to proceed. Concern arose during the summer that Puerto Rico will have trouble repaying its $70 billion of munis. And Jefferson County went bankrupt in 2011.

The court decision concerning Detroit Tuesday represented a victory for muni bond holders because it allowed the city to seek pension reductions, BTIG Research analyst Mark Palmer tells Forbes.

"The fact that the judge in the Detroit bankruptcy case ruled that pensions are not sacrosanct, and they can be cut, translates into higher recoveries for bondholders in future bankruptcies," he said.

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