Replies to post #1000 on The Black Box

[augieboo]

Thanks wahz! (: eom

[sylvester80]

Acampora Sees Stock Rally to Year-End
Sunday April 13, 11:07 am ET
By Haitham Haddadin

http://biz.yahoo.com/rb/030413/markets_stocks_acampora_1.html

NEW YORK (Reuters) - Stocks could have scraped bottom last month and are poised to rally to year-end, based on several bullish signals from across financial markets, says Prudential Securities' star analyst Ralph Acampora.

But the top technical analyst, who shot to fame in the 1990s with his famous "Dow 10,000" call, believes that stocks are still locked in a long-term bear market, or what technicians refer to as a "secular" bear market: a reverse image of the spectacular 1990s bull run.

"I think we could rally to year end, and we rise 20, 25 or 30 percent, but after that we correct," Acampora told a press briefing in lower Manhattan this week. "We really have economic problems and (corporate) earnings problems."

But he added: "Your next bull market could last a year."

Going against conventional Wall Street views, the star analyst stunned investors when in the mid-1990s he forecast the Dow Jones industrial average (CBOT:^DJI - News) was entering a huge bull market. He said the gauge would climb to 7,000 from 4,500, which it did, and after that, went on to correctly forecast the gauge would go to 10,000. But he missed big when he predicted the tech-laden Nasdaq (NasdaqSC:^IXIC - News) would hit 6,000 by June 2001.

BULLISH SIGNS

Acampora, one of Wall Street's best know gurus, bases his market calls on technicals such as stock prices and trade volumes, unlike "fundamental" analysts, who look at how interest rates and corporate earnings impact stock prices.

Among bullish technical signs, Acampora said the New York Stock Exchange (News - Websites) Composite index (NYSE:^NYA - News) likely is tracing out a so-called "Triple Bottom," when it hit lows at roughly the same level of 4,400 in July and October last year, and this March.

"These are three failures to go down, and volume is falling, which means selling pressure is falling," he said.

Meanwhile, the tech-packed Nasdaq Composite (NasdaqSC:^IXIC - News) may be forming a "Reverse Head and Shoulders," he said.

This is formed when an index sinks then rises, followed by a steeper decline then recovery followed yet by a decline roughly of the same magnitude as the first one. The second bottom is the "head" and the first and the third are the "shoulders." This signals a declining trend will reverse.

A third bullish sign, Acampora said, comes from the MACD indicator for Nasdaq which has experienced a so-called Golden Cross, formed when a near-term moving average crosses over a long-term moving average, or resistance level. This is seen as a buy signal. A moving average is an indicator tracking an index's trend by averaging its value over a period of time, say 50 days or 40 months. The MACD is a widely used tool to gauge market momentum and can help forecast uptrends or downtrends.

"For the first time in two years we see momentum pick up," he said, noting this signal was spotted about two weeks ago.

Still, he pointed out that the broad Standard & Poor's 500 index (CBOE:^SPX - News) is still in a long-term down trend, the telltale sign that any rallies will be within a broader bear market.

"What we need is the down trendline to be broken. This will be if S&P rallied above 965 and Dow broke 9,000," he said.

The bullish scenario is not valid if five- and six-year lows hit in October are broken, he said. This makes the October lows major "support" at Dow 7,197, S&P 768 and Nasdaq 1,108. They stood at 8,254, 873 and 1,368 on Friday, respectively.

BIOTECH, FOOTWEAR & OIL DRILLERS

Of the more than 100 sectors in the S&P 500, Acampora said he likes a few like biotechnology, footwear and oil drillers.

"There's no real theme in the marketplace," he added. "But there are a lot of individual issues."

Acampora likes stocks like Abercrombie & Fitch (NYSE:ANF - News) and The Gap Inc. (NYSE:GPS - News) among retailers, and in the oil sector Apache Corp. (NYSE:APA - News), ConocoPhillips (NYSE:COP - News) and Ocean Energy (NYSE:OEI - News). These picks are based on technicals, fundamentals and quantitative analyzes.

Others include Amgen Inc. (NasdaqNM:AMGN - News) in biotechnology, Avon Products (NYSE:AVP - News) in beauty products and Foundry Networks (NasdaqNM:FDRY - News), in network equipment. A group that Acampora likes purely on the basis of their charts include health insurer Aetna Inc. (NYSE:AET - News), Web firms Amazon.com (NasdaqNM:AMZN - News) and Yahoo! Inc. (NasdaqNM:YHOO - News) and retailer Best Buy (NYSE:BBY - News).

Among stocks he doesn't like, he named payroll services firm Automatic Data Processing (NYSE:ADP - News), casino operator Argosy Gaming (NYSE:AGY - News), and BellSouth Corp. (NYSE:BLS - News) and SBC Communications (NYSE:SBC - News) in telecommunications.

Finally, he said he was also bullish on the basis of the so-called Presidential Cycle, named for what some believe is a link between stocks and the economy and U.S. elections.

According to the Stock Trader's Almanac, there hasn't been a down year in the third year of a presidential term since 1939, when Dow fell 2.9 percent. The only big decline in such a year over the past 84 years was in the Depression year 1931.

"I don't think you will have a down year this year. I think we break the August (2002) highs and then have a run," Acampora said. These levels are Dow 9,077, S&P 965 and Nasdaq 1,426.

[sylvester80]

Theorist Optimistic 'Buy' Signal Coming
Sunday April 13, 11:19 am ET

http://biz.yahoo.com/rb/030413/markets_stocks_theory_1.html

NEW YORK (Reuters) - The Dow Jones industrial average (CBOT:^DJI - News) has gained 11 percent since its most recent low, and at least one follower of a stock market gauge known as the Dow Theory is optimistic there may be a major "buy" signal in view.

Dow theorists argue that gyrations in the 30-stock industrial average indicate a market trend when backed up by a similar move in the 20-stock Dow Jones transportation average (CBOT:^DJT - News).

"We have held above the lows, and now turned back up," said Jack Schannep, editor of the TheDowTheory.com, who has been following the theory since 1960. "If we go above (the most recent highs) on the Dow industrials and the Dow transports, it will declare a Dow Theory market 'buy'."

The Dow Theory, named after Wall Street Journal co-founder Charles Dow, has been around for a century and is based on Dow's writings and observations where he split the industrial and railroad stocks into two separate averages.

The rationale is that railroad or transport companies move raw materials to manufacturing companies, or the industrials, and then transport the finished products to places of sale.

For the economy to be healthy, both sectors have to be utilized and that will be seen by moves in related stocks.

A cornerstone of technical research, the theory has advanced from Dow's time and now focuses on the eponymous transportation average -- which includes railroads, airlines, sea container shipping companies, and truckers.

A NEW BUY

In getting more bullish, Schannep takes the most recent lows from March 11 -- where the Dow industrials closed at 7,524.06 and the Dow transports were at 1,942.19 -- as a retest of what some see as the October 2002 market bottom.

Since then, although both averages have pulled back, they held above those lows and have turned higher.

"The higher highs situation with higher lows, is a classic uptrend," Schannep said.

Confirmation of a new "buy" signal, according to Schannep, will come when the Dow average rises above 8,521.97, its March 21 closing high, and the transportation average closes above 2,263.49, its most recent closing high, again on March 21.

The Dow industrials traded up 0.6 percent to 8,354.95 on Wednesday, while the transportation average rose 0.9 percent to 2,220.62 in late morning trading.

One problem, though, is that not all Dow theorists necessarily see the same thing, at the same time.

Rich Moroney, editor of Dow Theory Forecasts, which has been publishing since 1946, argues that the market's primary trend is still bearish.

While the industrial average held its October 2002 closing low during the most recent downtrend, Moroney notes, the transportation average broke through it's Oct. 9, 2002, low -- signaling the bear market may still have room to run.

"If the industrial average trends below 7,286.27 (the Oct. 9 closing low) it will confirm the bear market," Moroney warned.

Schannep acknowledged that he is more aggressive on "buy" signals than other theory followers arguing that with the speed of technological innovation and communication today, things just "happen more rapidly than they did previously."

RELEVANCE

To be sure, some say Dow Theory may not be as reliable or even relevant as it was a century ago. The U.S. economy has become more focused on services, as manufactured goods became cheaper to assemble overseas where labor is less expensive.

That means sectors like banking, securities services and computer software have a greater impact on the U.S. economy than makers of refrigerators and washing machines.

Others argue that while the Dow Theory has an underlying economic argument, technical analysis itself is fundamentally flawed.

"There is a compelling theory underlying it, but it's still a pattern-based technical analysis," said Charles Kaplan, chief executive of Equity Analytics, a Web-based economics and statistical consulting firm. "It's not a good way to make money in the long term unless you know when it's going to be right or wrong."

Schannep dismisses the criticism. He emphasizes the theory will not indicate the duration or extent of any move in stocks, but rather whether they are a "buy" or a "sell."

There may be two or three signals a year or none at all, he said. The "buy" signal in December 1990 was not reversed until August 1998, and almost exactly coincided with the longest economic expansion in U.S. history.

[sylvester80]

Fed's Santomero Sees Moderate Recovery
Sunday April 13, 1:15 pm ET

http://biz.yahoo.com/rb/030413/economy_fed_santomero_2.html

PHILADELPHIA (Reuters) - Philadelphia Federal Reserve President Anthony Santomero said on Sunday the U.S. economy will gradually recover this year and economic growth will pick up steam in 2004.
But he warned that a "barrage" of uncertainties still pose a challenge to longer-term business strategies, including plans to hire new workers, and that it was too soon to declare a full-fledged end to the economy's troubles.

"I see economic growth accelerating over the course of this year toward a healthy and sustainable pace of around 3 to 4 percent by year's end and into 2004," Santomero said in prepared remarks at a conference sponsored by The American Truck Dealers.

Santomero said it was difficult to discern war-related obstacles to growth from fundamental sources of economic weakness. But as the focus shifts away from Iraq, he added, consumer and business spending will resume and allow a more robust economic expansion to take hold.

"It is far too soon to declare that the global situation has now been stabilized and the U.S. economy is back on track," he cautioned.