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The stock market is likely to go higher because there are still many institutional investors who missed the current rally, Tobias Levkovich, chief equity strategist at Citigroup, told CNBC Friday.
The brokerage surveyed its clients two weeks ago and found that 16 percent still had cash positions, higher than about 12 percent earlier in the year, Levkovich told "Squawk Box." Institutional investors such as hedge funds and pension funds still did not believe the rally woudl be sustained, he said.
"Many of them missed this rally because they were worried about a head and shoulders formation two weeks ago," Levkovich said.
A head and shoulders chart pattern indicates a market reversal with spikes higher.
"It's the hedge funds in some instances who've really got caught short," he added.
One idea for investors would be to look at the CEOs confidence index and do exactly the opposite: when it's really low, they should go out and buy stocks, according to Levkovich.
"I always say that CEOs don't know that much," he said. The recovery will probably be very slow, Levkovich added. "I'm not talking about re-stocking, I'm talking about de-stocking at a slower pace. It will moderate and probably eliminate job losses."
However, the US consumer is far from being in such a desperate state as some reports suggests, he said. His bank looked at the period of the housing boom, between 2003 and 2007, and noticed that consumers still had reserves.
"The idea that we spent everything we had… is so flawed, and so false, but it's the most mythical argument put forward day in, day out," Levkovich said.
Data is a real-time snapshot *Data is delayed at least 15 minutes