The stock market entered "euphoria mode" late last year and has remained there, except for a week in February, as "speculative froth" bubbles around the market's hottest sectors, Citi's chief equity strategist told CNBC on Tuesday.
Tobias Levkovich said he remains generally bullish on 2014, which he thinks has a 90 percent chance of ending positive.
But he sees worrisome signs in Citi's "Panic-Euphoria" model, which crossed into "euphoria mode" in November and December. He said that indicates a high probability of markets swinging downward.
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Maintaining an end-of-year price target of 1,975 points for the S&P 500, Levkovich said only certain segments of the market suffer from near bubble-conditions. In the lead-up to the dotcom bust of the early 2000s, stocks surged without earnings following soon afterward. In the years since the 2008 financial crisis, corporate earnings rose, but investors remained wary over the European debt crisis and budget standoffs in Washington. Last year, stocks began catching up to earnings, Levkovich said.
"You could end up with that late '90s parallel," Levkovich said. "The question is do we have the broad-based speculative froth? And we don't. That's clearly not there."