Rick Bensignor, Morgan Stanley's chief technical analyst, said the stock market has reached its bottom for the year, after the blue-chip Dow Jones industrial average fell below its 5-year low Thursday morning.

Bensignor expects to see a rally that is more sustainable than the 3-week long gains for stocks following the July 24 low.

"It's not absurd to say the Standard & Poor's 500 will go back to the 900 level again," said Bensignor. "That is 17 percent higher than the current level. I think that's doable."

"I'm bullish," he said.

Following the July 24 low, the S&P 500 gained 25 percent in three weeks.

In a note sent out to clients early Thursday morning, Bensignor said investors should buy stocks when the Dow falls to 7200-7250 level, or several percent below its 5-year low of 7,286.27 reached on Wednesday at the close.

"We believe that we are shortly to get one of the best buying opportunities of the year," Bensignor wrote in the note. "It may not exceed the 25 percent rally that stemmed from the July lows to the August highs, but it should be worthy enough of a 'glad I didn't miss that move' feeling."

The Dow on Thursday morning at one point dropped to 7,197.49.

"That's it," said Bensignor. "This is a real kicker to me. I think today's low will hold as a low for the rest of the year."

"This (rally) won't be for a week or two, but it won't be a long-term one either," said Bensignor, "In this kind of market environment, I would say this is a mid-term one. (Compared with the rally following July 24)... this one will be more sustainable, and not that vicious."

On Thursday, the blue chips were up about 3.6 percent, at 7,548. The broader S&P 500 rose 28 points, or about 3.7 percent, to 805.31 after earlier touching a new 5-year low of 768.63.

The Nasdaq Composite Index was up 51 points, or about 4.6 percent, at 1,165, after scraping a new 6-year low at 1,108.49.

On Wednesday, the Dow Jones Industrial average ended at a 5-year closing low after Wall Street analysts slammed household names with sour predictions. The Wilshire 5000 total market index is down more than 50 percent from its March 2000 high, erasing more than $8.5 trillion in market value.

"I think we will stop the downtrend here," said Bensignor. "Then we will either move sideways or higher, that's still to be determined. I don't think that will be a pure trend."