(Bloomberg) -- A 10% pullback in U.S. shares seems “very plausible” with markets balanced on a risk-reward basis, according to Citigroup Inc.’s Tobias Levkovich.

“Our current caution reflects several factors, including ebullient sentiment readings, stretched valuation levels and slipping earnings revision momentum,” the bank’s chief U.S. equity strategist wrote Tuesday. “With limited upside even to others’ bullish targets, a neutral stance is realistic.”

Citigroup has a year-end target of 3,800 for the S&P 500 and the strategy team expects the index to trade in a 3,600 to 4,000 range. The benchmark closed around 3,933 Tuesday, just off an all-time high.

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U.S. stocks are not in a bubble and comparisons with the early 2000s don’t stack up as the economy is exiting, not entering, a recession and the Federal Reserve isn’t raising rates, according to Levkovich. That suggests a deep selloff in stocks is unlikely, he said.

“While they can back off 10%-20%, we do not envision a 50%-plus collapse,” he wrote.

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