Power Lunch

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Power Lunch

A rough road ahead to hit some year-end targets

A trader works on the floor of the New York Stock Exchange during the morning of August 27, 2015 in New York City.
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A wild week on wall street. In the prior four days, the had an average daily movement of nearly three percent.

The Dow seeing its narrowest trading range since August 18.

Read MoreMarket volatility becoming new norm: Jean-Claude Trichet

Two money managers offering their take on the extreme volatility. Phil Orlando is Chief EquityStrategist and Senior Portfolio Manager with Federated.

Orlando says "the VIX was dramatically overbought on Monday." He goes on to say "stocks were significantly oversold, selling at only 13.8 times our estimated $135 EPS for 2016, which is nearly 74% below the value of Treasuries in the Fed model."

Orlando says "we have not seen a valuation imbalance – between stocks and treasuries – this significant since the bottom of the Great Recession in March 2009."

Orlando's bottomline, Federated's "2,500 price target remains intact for year-end 2016." That would imply total return of about 35% over the next 16 months from Monday's trough.

Orlando does admit the equity market may have sustained too much technical damage recently to rebound fully to his 2,350 target by year-end 2015.

Jordan Posner is Managing Director and Senior Portfolio Manager with Matrix Asset Advisors.

Posner says "while the market correction has been unsettling, we believe the pull-back is closer to ending than beginning."

Posner points out that many areas of the market have had much deeper sell-offs, with many stocks down 10 to 25%.

He feels the "damage has probably already been done." Posner goes on to say, "we aren't calling a bottom; this week's market action has shown, anything can happen in the short-term."

Posner advises using the volatility advantageously by getting bargain prices on solid companies with good long-term prospects.

Posner says, "look for the bigger losers, rather than sticking to recent strength."

Posner favors financials, especially banks and insurers, select healthcare and technology.