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Market Outlooks: Volatility, 1,000 Point Dow Drop in Next Month

Stocks jumped at the open and kept climbing on Thursday, following the previous session's late-day selloff. Can the markets hold the gains until the close? Christopher Hobart, CEO and founder of Hobart Financial Group, and Tyler Vernon, chief investment officer at Biltmore Capital, offered their insights.

“I’d love to tell you that the storm is clearing, but I think that’s a dream right now,” Hobart told CNBC.

“We’re looking for significant volatility over the next couple of weeks and months, and the average investor needs to be very careful right now.”

Hobart said he sees a downside risk of 500 to 1,000 point drop on the Dow over the next month, if the global issues such as the sovereign debt crisis in Europe and lending policy rumors in China don’t get resolved.

In the meantime, Vernon said investors should take advantage of the volatility.

“Options strategies—especially in a volatile environment—are going to be outperformers,” he recommended. “But from a single-company perspective, Transocean has been blown out of the water with institutional investors not wanting the blood on their hands.”

He explained that despite the recent catastrophe involving the offshore drilling giant, Transocean has a “lot of upside” and recently raised its dividend.

“When there’s blood on the streets, it’s time to buy,” he said.

Scorecard — What He Said:

  • Vernon's Previous Appearance on CNBC (Apr. 30, 2010)

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Market Views — Bull, Bear & Other:

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CNBC Data Pages:

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CNBC Slideshows:

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Transocean Competes With:

Noble

Pride International

Nabors Industries

Diamond Offshore Drilling

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Disclosures:

Vernon, his family members and firm all own shares of Transocean.

No immediate information was available for Hobart or his firm.

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Disclaimer

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