The Dow looks to keep its 5-day winning streak alive Wednesday after eking out a minuscule gain on Tuesday. The blue chip index and the S&P 500 both closed above their 200-day moving averages – a key bullish indicator for technical analysts.

Leave it to noted bear David Rosenberg to throw cold water on that fire. “There’s no question the technical position of the market is positive [but] I wouldn’t take that as a leading indicator,” Rosenberg says, noting stocks took a hit in April, the last time they breached the 200-day moving average. (Conversely, stocks rallied sharply after the presumably bearish "death cross" pattern was triggered in late June.)

“The market is overbought and there is a renewed sense of complacency in the marketplace that I think could get shattered pretty quickly,” says the chief economist and strategist at Gluskin Sheff in Toronto.

What About Earnings Season? Bespoke Investment Group research tells a bullish story. “So far this earnings season, 10% of U.S. companies have raised guidance while 2.7% have lowered guidance... the 7.3 percentage point spread so far this quarter is higher than any other quarter since 2001.”

Rosenberg doesn’t deny the facts but he’s concerned the job market and manufacturing data are weakening, with Wednesday's 1% drop in durable goods orders the latest in a string of weak macro economic news. He suspects jobless claims will soon be back above 500,000 per week and notes the latest manufacturing data from the regional Federal banks has been lackluster. “I think a lot of the earnings were front-loaded in April," he says. "They disguise, I believe, a slowing in May and June.”

Rosenberg also believes analyst earnings estimates for the S&P 500 as a whole are too high. Based on his projections, the S&P 500 should be trading a at least 20% lower. “I will start to more excited about the stock market once we get the S&P 500 down closer to 900 than 1100,” he says.

Editor's note: Stay tuned for part 2 of the interview where Rosenberg provides his advice for investing against a dicey economic backdrop.

part 2

Gluskin Sheff strategist David Rosenberg is one of the most vocal and vociferous bears on Wall Street. Rosenberg doesn't believe the recent rally - which hit a small air pocket on Wednesday - is sustainable.

"The market is overbought and there is a renewed sense of complacency in the marketplace that I think could get shattered pretty quickly," Rosenberg tells Tech Ticker in part 1 of this interview. Here in part 2, the strategist gives his recommendations for investing in a market he describes as a "meat-grinder":

Cash is Trash: Even if it feels safe to put your money under a mattress, "you can't be in cash" because of the Fed's ultra-easy policies, Rosenberg says.

Go for Gold: A longtime gold bull, Rosenberg says the metal is "looking very attractive" after falling 8% from the record highs reached on June 21. "It's a no-brainer" gold will rally again to new highs, Rosenberg says, putting a "conservative" upside target of $3000 per ounce on the metal. "Gold production peaked 10 years ago," he notes. "Tell me when production of fiat currencies will peak?"

‘SIRP' It Up: You've probably heard of GARP (growth at a reasonable price). Rosenberg advocates "safety and income at a reasonable price," or SIRP. "In a deflationary environment, yield and income are very important," he says, suggesting there is still value in credit market, BB-rated corporate bonds as well as the "high-quality sliver" of junk bonds.

Rosenberg is often criticized for having missed the big rally off the lows of March 2009, so many of you might dismiss him as a perma-bear. But he says that's an "unfair criticism," and details why in the accompanying clip.

another

The Fed's Beige Book survey provided some relief from the recent drumbeat of downbeat economic news - including Wednesday's durable goods report.

"Economic activity has continued to increase, on balance, since the previous survey," according to the Fed.

But David Rosenberg, chief economist and strategist at Gluskin Sheff in Toronto, isn't buying it.

"The economy is in the process of slowing down," he says. "Whether or not we have a ‘double-dip', it's going to be some pretty tough slogging as far as the overall economic backdrop."

Rosenberg's chief concern is the "post-bubble credit collapse," which continues apace. Meanwhile, "there's still no signs we have true organic growth" but the Fed is reluctant to re-expand its balance sheet and more government stimulus is politically unpalatable.

"If you get the tax increases next year, it's going to be a very tough economy and the chances of recession are much higher than the markets are pricing in right now," he says.

How high? Rosenberg says there's a 67% chance of a double-dip recession, up from 45% a year ago. His prediction is based on the sharp decline in the ECRI's weekly leading index, where the growth rate has fallen for 7 consecutive weeks.

Even while saying a technical double-dip isn't certain, Rosenberg makes a pretty compelling (and freightening) case that we're in a "modern day depression."

In a recent note to clients he made the following observations:

• -- Congress has extended jobless benefits seven times in the past two years and almost 50% of unemployed Americans have been looking for at six months.
• -- The FDIC has seized and shuttered over 100 banks so far this year and surviving banks are making money by cutting their provisions for bad debts. (Meanwhile, the household debt/income ratio is still near record highs of 120% and one-quarter of the consumer universe has a sub-600 FICO score.)
• -- A year into a statistical recovery, the Fed is still openly contemplating ways to stimulate growth.
• --- After two years of extraordinarily low rates and massive government stimulus, Treasury yields are at rock-bottom levels with 2- and 3-year notes yielding less than 1% and the 5-year yielding 1.70%.

"There's been a statistical recovery but" the NBER, the official arbiter of economic turns, still has yet to make the call, he notes. "Maybe we're not really out" the recession that officially began in December 2007.

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