Intra-stock correlation among the top 50 stocks in the S&P 500 is currently at its highest point since the 2011 European sovereign debt crisis. According to Citi analyst Tobias Levkovich, this phenomenon has likely created a lot of value in segments of the U.S. market.

The Brexit selloff was an excellent time to buy high-quality stocks on the dip, as most top names were sold off alongside low-quality names. The S&P 500 top 50 realized one-month correlation versus the S&P 500 is currently at 81 percent, a level last reached in December 2011. Not even the recession scare earlier this year resulted in such high a correlation.

Levkovich noted high correlation numbers have been a good bullish indicator in the past. In addition, Citi has seen anecdotal evidence from clients that market sentiment is extremely low, another typically bullish indicator.

Despite Brexit-related economic slowdown fears, Citi is projecting that the S&P 500 will reach 2,250 by mid-2017.

“In this context, a 10 percent total return is…

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