Stocks Likely to Pull Back Into Next Week: Pro

Stocks drifted lower Friday as investors worried about the effects of slower growth in China and debt troubles in Europe. Wayne Kaufman, chief market analyst at John Thomas Financial, and Kim Caughey, VP and senior equity analyst at Fort Pitt Capital Group, shared their best plays.

“Valuations still remain very attractive, based on 2011 estimates,” Kaufman told CNBC.

He said he expects the markets to pull back—but no more than 5 percent—as stocks digest the recent rally since September.

“We got over-bullish in terms of options buyers and whenever we have that, you have to pull back,” Kaufman explained. “Options expire next week, so I think we can continue some weakness into next week, but I don’t think it goes much more than that.”

In the meantime, Caughey said she is in favor of tech stocks, such as Intel and Sandisk.

Raising the dividendis a really bullish move,” she said of Intel’s recent news. “They know they can sustain this and I think that’s great bullish news for this stock—the market is expanding dramatically and it isn’t over yet. This is the very beginning of the tablet craze and we’ll see what other new products they come up with—and Intel has a bit to catch up in this market.”

Meanwhile, Caughey said Sandisk also has a big footprint in the tablet market.

Scorecard—What They Said:

  • Caughey's Previous Appearance on CNBC (Sept. 8, 2010)
  • Kaufman's Previous Appearance on CNBC (Sept. 17, 2010)

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Caughey owns shares of INTC and SNDK via ownership of the FPCGX Fund.

Kaufman does not own shares of HAR, WLT, BIDU.