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Two Ways: Will S&P Take a Dive?

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Strengthen your portfolio in good times and bad.

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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.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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