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Two Ways: Will S&P Take a Dive?


Strengthen your portfolio in good times and bad.


Renowned economist David Rosenberg said the S&P 500 could breach the 12-year low it reached in March. Why so glum? Because the economy hasn't recovered and consumer spending remains weak.

In a Bloomberg television interview, Rosenberg said he's keeping an open mind and doesn't know for sure if the index will test a new low. But he isn't convinced the US is in the midst of an economic recovery, either. He called this latest 9-week rally a "gargantuan short-covering rally."

Rosenberg, who gained fame as an economist at Merrill Lynch and is now the chief economist and strategist at Gluskin Sheff & Associates in Toronto, said he sees no revival in consumer spending in the second quarter (he isn't sure where the buying power would come from). He acknowledges there's a large amount of cash on the sidelines, but believes it will be used to pay down debt rather than to chase equities.

Our own former chief economist at Merrill Lynch, Jack Lavery, looks at today's economic reports in this article and provides his economic forecasts and analysis in our Lavery Insight newsletter.

Click here to see last week's Toddo on TV.

From the Bull Pen: Notice how the euro dropped against the dollar early this morning when Standard & Poors announced it was considering lowering the UK's credit rating. But the strength in the dollar quickly rolled over. One can consider playing the Currency Shares Euro ETF (FXE). A sell stop can be set 2 points from entry.

From the Bear Cave: Props to Professor Smita and Professor Cooper for noticing on Buzz & Banter that the S&P was testing its 20 DMA for the fourth time. Bears playing the downside can use the Ultrashort S&P 500 (SDS). Remember to set a tight stop.

One more day until the long weekend. Have a great night, Minyans!

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No positions in stocks mentioned.

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