'Cleansing correction' will likely hit stocks within weeks, Federated's Phil Orlando warns

Federated Hermes' Phil Orlando believes a "cleansing correction" could spark a 10% drop or more within weeks.

"You've got some investors who are bearish by nature and got sucked into this 36% rally," the firm's chief equity market strategist told CNBC's "" on Thursday. "If the market starts to pull back in coming weeks, they'll throw in the towel and say 'Ah! I knew I shouldn't have gotten into the market. The market is going down. This coronavirus is killing me.' And then, they will wash their shares into the market.

"A cleansing correction washes out the weak hands, and it allows the strong hands that understand the economic cycle to participate in the next up leg," he said."We've got a couple of big fundamental things on the horizon, meaning second quarter GDP and second quarter corporate earnings," he said. He also sees stocks are hitting resistance after pushing up into the 200-day moving average. On Thursday, theDue to the latest pullback risks, Orlando reduced his overweight position by one percent last month. But he remains

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