Market in long expansion: Morgan Stanley's Parker

Despite current earnings and U.S. dollar headwinds, the stock market is in the middle of a long expansion that could last until 2020, equity strategist Adam Parker said on Tuesday.

In fact, the Morgan Stanley managing director reiterated his belief that the S&P 500 could hit 3,000 by 2020.

That would make it the longest expansion in history, he noted.

"You've got to have some reason that's going to cause the market to decline," Parker said in an interview with "Closing Bell."

To make that top of the cycle call, "it has to be that the economy rolls over, corporate arrogance grows and they put costs in place that aren't merited, or the credit cycle deteriorates."

Read MoreGoldman's Kostin bullish on US equities

Right now, he likes energy stocks, noting that they must be bought two to three months before earnings revisions bottom.

"You cannot wait for Brent to go up, the analysts to raise numbers and then I buy the stock. We know that's too late," he said.

He also thinks the valuations for oil services companies and exploration and production companies are starting to look "pretty compelling."

"I think it's time to get in there. Capital spending reductions are the catalyst," Parker said. "I still think Brent can be higher in two or three years and unless that changes, I think I can stay involved in the energy sector."

Earnings recession?

Meanwhile, Parker is also not too concerned about an earnings recession battering the market.

According to Morgan Stanley research, an earnings recession without an economic recession has only happened three times over the last 40 years, he said. In all but three of the 16 quarters involved during that time period, the market was up, he noted.

"It's not necessarily a negative harbinger as long you think things can ultimately improve on the other side of it."

Read More This sector is 'under-owned' ahead of earnings

Parker also expects the pace of the U.S. dollar's strengthening to moderate.

That said, investors should be careful when picking stocks and avoid staples, chemicals, machinery and select tech and health care, he said.

However, he thinks the strong greenback is not necessarily bad at the market level.

"At the market level, what usually happens actually is the price-to-earnings ratio expands when the earnings contract because a lot of times they are both emblematic of a relatively better U.S. economy compared to Europe or other places," he said.

Disclaimer