S&P Could Gain 25% in 'Quiet' Rally: Strategist

The S&P 500 index could rally 20 to 25 percent over the next few months as stocks bounce in a quiet bear-market rally, Robert Levitt, CIO of Levitt Capital Management, told CNBC.

"It may be a bear-market rally, but I think it's going to last a while, anywhere from 3 to 4, 5 months. So we're going to become invested in it," Levitt said, adding that any down days are an opportunity to start building positions.

Stocks and indexes that have been beaten up the most are the ones set to make the best returns, according to Levitt.

"You could see rises anywhere from 20 to 25 percent in the S&P 500, even greater in some of the Asian markets and the same thing will happen in Europe," Levitt said.

The rally won't be long lasting and may not be evident straight away, but "it will be one of these quiet markets that slowly moves up," Levitt said.

(Watch the full CNBC interview with Robert Levitt above).

When the Ted spread -- the spread between 3-month dollar Libor and 3-month Treasury prices -- drops "to below one we'll be fully invested, at this point we're just beginning to be invested," Levitt said.

Indexes that offer high levels of liquidity are desirable, Levitt said, adding that he will be using stop losses (an automatic sell triggered when an asset hits a certain price), "because if we're wrong we're going to be exiting."

Levitt is steering clear of government bonds because he thinks interest rates will have to go higher in the long term. He also keeps a permanent exposure to gold as a form of insurance. Until this point Levitt has been "hiding" in dollar and yen.

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