Charts: Bonds Strong, Stocks Could Surge 25%

Last week's attempt of a counter-trend rally in the stock market was thwarted by central banks lowering interest rates further and incorporating quantitative easing into their monetary policies, making investments in Gilts and Treasurys more appealing, Robin Griffiths, technical strategist at Cazenove Capital said.

"What we learned last week when equity markets tried to begin another counter-trend rally was that it got crowded out straight away by the easing that central banks are doing," Griffiths told CNBC. "They have become the buyer of Gilts or Treasury bonds. And from a private client point of view, that is sort of good for investment. You get a return of your money, taking as little risk as possible."

If interest rates near zero, investors can make "quite a decent capital gain," according to Griffiths.

"In terms of getting a reward against the risk that you take for that reward, it's virtually impossible to beat Gilt-edged securities at the moment."

If investors want to get involved in stocks at the moment, Griffiths suggests buying into franchise companies with good dividends and longevity during the current financial crisis.

"The type of equity you should be looking at has to be a franchise that whatever else, you're sure it's going to survive and it better pay good dividends," he said. "Those dividends have got to be a long way greater than a government security. Luckily, you can make quite a long list of global stocks that come into this category. They all look a bit wobbly at the moment, but you're pretty sure they are going to survive."

British American Tobacco (BAT) is one of these companies, Griffiths told CNBC.

As far as stock markets are concerned, Griffiths sees potential in China's Shanghai Composite, but is a bit mixed about the S&P 500 index.

"The overall idea that Asia looked good, led by China is still the correct story," he told "Squawk Box Europe" Monday. "In the continuing bear market, which is what we're in, there will be several rallies of at least 20 maybe 25 percent. One of two of them may even be bigger than that."

Looking at the S&P 500, Griffiths sees the index falling lower before it will enjoy a short-term rally.

"We're almost certainly going to go to lower levels, get even more oversold before we get one (a rally)… For the S&P 500, it will get into the range between 600 and 650 and then have another rally lasting say three months, or something like that," he said.

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