Perfect storm for market correction: Expert

Best mid-cap plays: ADS, SWKS & AET
Best mid-cap plays: ADS, SWKS & AET   

Current market and economic conditions have created the perfect storm for a 10 percent market correction, Strategic Wealth Partners CEO Mark Tepper said Thursday.

"We're looking at really stretched valuations right now," Tepper said in an interview with "Power Lunch."

He called the S&P 500's forward P/E [price-earnings] ratio of 17 a "red flag."

Plus, "we've got deteriorating earnings and we've got fading economic momentum," he added. Throw in the strong dollar and looming interest rate hikes, and "I do think that a pullback is very much in the cards."

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Tepper believes bonds will likely outperform equities over the next three to six months. However, he's constructive on equities on a 12-month basis.

Brian Lazorishak, co-manager of the 4-star rated Chase Midcap Growth fund, concurred that a 10 percent correction is not out of the range of possibility, but said he's constructive on the market.

Specifically, he likes mid-cap stocks. While they have enjoyed a recent run, he believes they can move higher.

His picks are Alliance Data Systems, Skyworks Solutions and Aetna.

For his part, Tepper likes banks, including Wells Fargo, JPMorgan and KeyCorp.

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—CNBC's Jackie O'Sullivan contributed to this report.

Disclosures; Lazorishak, his family and his firm do not own ADS, SWKS, AET. Tepper, his family and his firm do not own WFC, JPM and KEY.

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