Why Markets Will Continue Rallying: Strategists

Next week's mid-term elections, coupled with the Federal Reserve’s expected announcement on quantitative easing (QE)—buying bonds to increase the money supply—are likely to have a major impact on your investment strategy.

How should you be prepared? Gordon Charlop, managing director at Rosenblatt Securities and CNBC markets analyst and Terence Dolan, CEO of Benjamin & Jerold Brokerage discussed their insights.

“The point of QE is more psychological,” Dolan told CNBC. “[The Fed is] talking about a stronger dollar, but we really need a weaker dollar to make our goods more comparable overseas so it’s a mixed bag on how effective the Fed is going to be.”

However, Dolan said the markets are coming out from a transition phase and are formulating a basis to move upward.

“Right now, I’d be looking at some of the technologyfirms, biotechs and some stocks that are decent on the dividend side as well, just for defensive purposes,” he suggested.

In the meantime, Charlop told investors to watch out for major economic news coming up including Friday’s GDP report, next week’s ISM data, elections, Fed’s announcement, and government payroll numbers.

“To me, all these things will be a springboard to a market that will continue to rise to the end of the year,” he said.

Scorecard—What They Said:

  • Charlop's Previous Appearance on CNBC (Oct. 21, 2010)
  • Dolan's Previous Appearance on CNBC (Oct. 5, 2010)

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No immediate information was available for Charlop or Dolan.