Top strategist: S&P to 1,750 this year

As stocks finished at fresh highs Monday and the Standard & Poor's 500 index ending higher for the eighth straight day, a leading strategist is betting the rally isn't out of steam.

Savita Subramanian at Bank of America Merrill Lynch told CNBC she has raised her target on the S&P 500 to 1,750 from 1,600.

The S&P gained 2.31 points, or 0.14 percent, to finish at 1,682.50. The S&P 500 closed higher for the eighth straight session and was up 4.24 percent in that period. The last time the index rose for eight straight days and was up over 4.24 percent was November 2004.

To Subramanian, though, there are several reasons to be bullish on equities, especially on the S&P. She expects earnings growth and a continued decline in earnings volatility, for example, as well as diminished headwinds to the U.S. economy. She actually thinks a few positive surprises are in store for the economy.

"Our call is mainly driven by fundamentals. … Sentiment and positioning are still fairly conservative and still suggest a lot more upside to equities from this point," Subramanian said on CNBC's "Fast Money." "We're seeing more upside based on a falling cost of equity capital. We think that the risk of equities has diminished over the last six months, and we think that this could continue going forward.

"We haven't necessarily seen the market rally on earnings. It's been all about an expanding multiple, and whatever earnings growth we get from here is upside for equities," she said.

Though Subramanian said the S&P has room to run, she warned that the index is not immune to pullbacks, especially since 2013 has had the 20th best start of any year since 1929. A 5 percent pullback occurs an average of three times a year, she added.

If the S&P does undergo a pullback, investors should avoid panic selling, Subramanian said. Instead, they should use it as a buying opportunity, because when the markets sell off, share prices fall, too, making stocks a bargain.

—By CNBC's Drew Sandholm. Follow him on Twitter @DrewSandholm

.—CNBC's Michael Newberg and Reuters contributed to this report.