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Don't Expect Pullback—Rally to Continue: Strategist

Friday, 11 Sep 2009 | 11:18 AM ET

Two bullish experts Rob Lutts, founder and CIO of Cabot Money Management and Jeffrey Kleintop, chief market strategist at LPL Financial said they see opportunities for investors to get into the market. They shared their outlooks and insights.

“We’ve seen an incredible return to the marketplace of investors here,” Kleintop told CNBC.

CNBC Market Edge
Rob Lutts, of Cabot Money Management, and Jeffrey Kleintop, of LPL Financial, share their investment strategies.

Kleintop said better earnings numbers and increasing M&A activity will help the markets rally further.

“Companies are dramatically revising their guidance and new buyers are coming into the market,” he said. “Just last week and a half, we saw it in technology, consumer discretionary and energy. These bids are coming in—20 to 30 percent premiums, that’s lifting target prices. The acquirer stocks aren’t going down either … If you combine that with better fundamentals on the earnings front, there’s more legs to this rally.”

Investors shouldn’t expect a big pullback because there not going to get them, said Kleintop, suggesting that 1,000 and upper 900s on the S&P are good opportunities for investors to start buying into the market.

In the meantime, Lutts said he is bullish on the alternative energy sector.

“I like very much what’s going on in Washington in terms of cap and trade,” he said. “We’ve got real change in the auto industry and we like a couple companies like Johnson Controls, Saft Group—they’re both in the hybrid battery business.”

Lutts said the auto industry has not seen dramatic changes in the last 20 to 30 years and so the next decade will be the year of change.

Alternative Investing - A CNBC Special Report - See Complete Coverage
Alternative Investing - A CNBC Special Report - See Complete Coverage

“I also like Chicago Climate Exchange, which is a way to play cap and trade,” he said.

There’s a lot of fuel to support this market today, said Lutts, adding that although the market climbs a wall of worry, the money is eventually going to come back to some other location—first to bonds, then to stocks.

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