While acknowledging that concerns about company margins may be valid, he said implied earnings expectations are at a “big discount to prior averages.”
This is something that should be viewed as a bullish signal, not a bearish one, Mr. Levkovich said in a note to clients.
He also thinks investors are not complacent as they were during the technology bubble meltdown of 2000 to 2002.
Despite some concerns about merger and acquisition numbers that may distort related information for equity market direction, Citigroup has maintained its bullish stance for U.S. equity markets.
The firm expects the S&P 500 will reach 1,600 by the end of 2007, which represents upside of roughly 14% from it current level near 1,400.