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An October Bottom?

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Economist David Rosenberg called for a market bottom when the S&P 500 hit 666. So why does he think we’re now heading lower?

Unfortunately that low came earlier than expected and as a result the forecast was revised. "We are now leaning toward 600 (as a bottom) on the S&P," says the Bank of America Merrill Lynch North American economist.

That's right, according to Rosenberg the S&P 500 stock index could fall another 13 percent, to 600 points, by October when the bear market is expected to end.

End in October?

“I think we’re about half way through the current recession and markets (historically) recover around two-thirds of the way into a slump."

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And he suggests not investing any new capital until the S&P retests the lows. “I would wait for the retest, and if the lows hold that will be an important technical barometer,” he said on CNBC.

So what group takes the leads in the recovery?

Financials, "which led the bear market by six months back in 2007, will very likely be the group that leads us out with a similar lead time," he counsels.


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