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Jeremy Siegel: Bull market 'not over' yet, but …

Wharton School Professor of Finance Jeremy Siegel has been bullish on the stock market for years now and he's not ready to change his mind yet.

But he introduced a caveat Tuesday on CNBC: "We are creeping closer to fair market value [for stocks], which I think is approximately 18 times S&P earnings."

"We're not over with this bull market. I'm sticking with my projection [for the Dow Jones Industrial Average] of 18,000 by year end," he said in a "Squawk Box" interview. "Our economy is the best of the three major engines in the world, and that's why I have faith in U.S. stocks."

Siegel pointed to Friday's employment report for August—predicting additions "probably north" of 200,000 in nonfarm jobs. "This looks good for earnings. We're going to get about $120 on the S&P [earnings]. I like that."

With the S&P 500 around the 2,000 level, the market was selling at 16.5 times 2014 earnings. The 10-year price-to-earnings ratio average is around 14 times.

The S&P closed out August with its 32nd record of the year. September has traditionally been one of the worst months for stocks, but not in the last two years.

Last week, two market watchers—technical analyst Abigail Doolittle and Prudent Bear Fund's David Ticewarned on CNBC of possible declines of up to 60 percent on eventual fallout from the Federal Reserve's easy money policies.

Read MoreTwo experts warn correction could total 60%

Siegel said Tuesday he doesn't see interest rates moving much higher anytime soon, even if the Fed does start raising short-term rates in mid-2015. But he did say the market could see a "little ripple" if the Fed moves sooner than expected. "But my goodness, we've lived long enough to see Treasury rates at 5, 6, 7, 8 percent. I'm not scared of 3 percent. I'm not scared of 3.5 percent."

The 10 year yield could go up to the 3-to-3.5 percent range, he continued, but only if the economy "really booms at 3 percent or 4 percent and that means better earnings for corporations."

Currently, the 10-year yield trading around 2.39 percent.

Read More'Rigged' market may be nearing top: TrimTabs chair

In February 2012, Siegel achieved his legendary bull status when Barron's splashed the headline "Dow 15,000." It was a prediction for the blue-chip average two years from then, based on Siegel's work.

The Wharton professor has not wavered since.

Last month, Siegel defended his rosy views—saying he's not biased toward being bullish. He pointed out he was bearish on stocks in 2000, the market top before the 2007 peak.

—By CNBC's Matthew J. Belvedere

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