Correction Is Coming—But You Can Still Buy: Strategist

Markets had a shaky start Thursday: Technology stocks got a boost from last night’s earnings reports as China fears weighed on the market. Christian Thwaites, president and chief executive of Sentinel Asset Management, and David Rainey, portfolio manager at FBR Focus Fund, shared their market outlooks.

“In the short-term, we think the markets are likely to move sideways for a while,” Rainey told CNBC.

“We own a handful of businesses…they’re small to mid-cap focused and we’re very excited about their 2010 prospects.”

Rainey said his fund’s largest holding is in American Tower .

In the meantime, Thwaites said the stock market has gotten ahead of itself.

“We’re in a 1,050 to 1,150 trading range, but it’s expensive,” he said. “What we haven’t seen is topline, demand-driven, revenue growth; these earnings reports which are coming through are not showing that.”

Thwaites said based on the bond market indications, the market is due for some correction. But he does see opportunity in specific areas.

“Without retail CPI inflation hitting numbers, that’s not a bad backdrop for some sectors—materials, energy and industrials—they can do well when nominal inflation is pretty low and real inflation is even lower,” he said.


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Top Materials Firms:


Applied Materials

Dow Chemical

Freeport McMoRan


No immediate information was available for Thwaites or his firm.

AMT, PENN, KMX, and ACR are personally owned by Rainey as well as shares in FBRVX.

FBR owns more than 1 percent in PENN, KMX and ACF.