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Rosenberg: Dow Could Fall to 5,000

Friday, 09 Jul 2010 09:59 AM

Gluskin Sheff analyst David Rosenberg says the Dow could go to 5,000.

Rosenberg's reasons: Even if an economic double dip is avoided, the market is not priced for slower growth, and the intense volatility in the major averages over the past three months is consistent with the onset of a bear phase.

“Bob Farrell believes a test of the March 2009 lows is likely,” Rosenberg points out.

“I don’t think anyone is in a position to debate five decades of experience, not to mention his track record. Louise Yamada, a legend in her own right, not to mention the likes of Bob Prechter and Richard Russell, are on this same page.”

“Notice how none of them work at a Wall Street bank.”

Assuming inflation averages 2 percent annually and that 2016 marks the end of a secular bear episode that began in 2000, then the historical pattern would suggest a test of 5,000 on the Dow as the ultimate trough, Rosenberg notes.

“At that point, gold will likely be 5,000 too,” Rosenberg says. 

Rosenberg says this forecast does not preclude cyclical rallies along the way, but these will be bear-market rallies, such as happened between March, 2009 and April, 2010.

“Investors should not be tempted into any other strategy than to rent these rallies and not own them,” Rosenberg cautions.

CPA Tim W. Wood maintains the upward market swing since is a bear market rally.

“All the while, the politicians think that their printing spree, bailout plans and stimulus packages have put a bottom in the economy,” Wood writes at howestreet.com.

“According to my analysis, we have entered a global debt crisis.”

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Gluskin Sheff analyst David Rosenberg says the Dow could go to 5,000. Rosenberg's reasons: Even if an economic double dip is avoided, the market is not priced for slower growth, and the intense volatility in the major averages over the past three months is consistent with...
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