Rangebound Market Could Lure Bargain-Hunters: Pro

With U.S. corporate profits rolling over, the stock market is likely to remain stuck in a range — which could provide some bargains for savvy investors — David Rosenberg, chief economist and strategist at Gluskin Sheff Associates, told CNBC's "Squawk on the Street" on Wednesday.

Rangebound Market Could Lure Bargain-Hunters: Pro
Rose | Mueller | Stock4B | Getty Images

The Federal Reserve 's commitment to unleashing a new wave of quantitative easing recently sent the S&P 500 on a tear. The index "hit its high on September 14, the day after QE3 was announced, " Rosenberg said.

Now, however, "a lot of what is capping the market to the upside is that corporate earnings are now on the down escalator." Corporate earnings are one of the most critical drivers of equity markets, the strategist noted.

He doesn't expect the third-quarter earnings to be the trough, either. Corporate profit margins remain at record highs, and are at risk of retracing.

That could create opportunities beneath the surface, as investors hunt for the best bargains and helps to limit potential downside.

Rosenberg also sees a lagged impact from the slowdown in Europe. "I wouldn't be surprised looking at the deepening and spreading recession in Europe and the impact that's having on trade flows in Asia, I think there will be lagged impact on exports here, " he said.

While Rosenberg expects profits to come down over the next year, "I don't think that necessarily means we'll have a sizeable correction in the market, " he said. Increased liquidity from the Fed should put a floor under the market, according to Rosenberg.

He expects the market to be largely range-bound. That means "it's going to be a stock pickers market, " Rosenberg said.

The strategist continues to expect dividend paying stocks to do well as the Fed keeps interest rate volatility low. (Read More: Cramer's Top Dividend Stocks 2012 .)

"I still think this is going to be a great environment for dividend growth, dividend yield and dividend coverage, " he said. "That slice of the stock market will remain intact."