Citigroup's strategists have moved to "overweight" on U.S. equities.
Tobias Levkovich, Citigroup's U.S. strategist, is expecting the market to enter a 'raging bull' market next year.
While he continues to stick with his 2013 year-end target on the S&P 500 of 1, 615, that would take the index above the prior peak of 1, 558 reached in 2007.
"To some degree people are realizing housing is turning, we continue to see the expansion of technology through smart devices, we see growth in our energy boom and we're seeing manufacturing competitiveness return, " Levkovich told CNBC Friday.
The U.S. stock market is also not as dependent on Federal Reserve liquidity to continue higher as emerging equity markets are.
"Is the market up solely because of QE? Or are earnings up, is consumer spending at levels above those of 2007 and are margins continuing to show impressive gains? All these things are happening too, " Levkovich said.
What Fed liquidity does is put a floor under the market, the Citi strategist said.
On a sector basis, Levkovich likes diversified financials, technology, telecoms and utilities.
Citigroup's U.S. stock picks include Aetna, CSX, Goldman Sachs, Google, Qualcomm, and Starbucks .
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