Acampora sees Dow at 12,500 to 13K
Morgan Stanley's Wien raises cash allocations
Last Update: 4:54 PM ET Jul 6, 1999
NEW YORK (CBS.MW) -- One of the Dow's biggest bulls is back.
Ralph Acampora, director of technical analysis at Prudential Securities, upped his target for
the Dow Industrials to 12,500 to 13,000 by year-end compared to his previous year-end
estimate of 11,500 made last December. But another high-profile strategist presented a
cautious stance on the outlook for U.S. equities. ( Watch a video of CBS.MarketWatch's interview
with Acampora.)
Byron Wien, chief U.S. equity strategist at Morgan Stanley
Dean Witter, raised cash allocations in a model portfolio to 20
percent from 15 percent, diminishing the equity position to 80
percent from 85 percent.
The Dow Industrials stood at record levels for most of the
session Tuesday but fell into negative waters in late afternoon
dealings, shedding 4.12 points to end at 11,135.12. The key
gauge closed at a record last Friday.
Break from range
Market averages broke above their trading ranges after three
months of consolidation, Acampora told CBS
MarketWatch.com.
"In the last three to three and a half months, the market did a
normal, healthy thing by correcting. It unwound a lot of the
excesses, especially in the Internets and large caps," Acampora
said.
The market's breakout is being fueled by diminished interest rate fears as well as good
earnings prospects, Acampora observed. He sees the 30-year's yield ($TYX) falling below 6
percent yield by year-end and migrating within a 5.70 percent to 5.80 percent range. The
30-year bond's yield rose 3.5 basis points to 6.035 percent Tuesday.
Acampora sees the Dow at 12,000 to 12,300 by the end of the summer.
The Prudential strategist sees broad-based participation within the marketplace during this
projected upward move in the Dow.
"The structure in the market is broader and more powerful," he said.
Acampora mentioned the telecom sector as one of many with great possibilities. He said Bell
Atlantic (BEL: news, msgs), GTE Corp. (GTE: news, msgs) and Ameritech (AIT: news,
msgs) have broken out to the upside after being stagnant for months.
And Yahoo (YHOO: news, msgs) and America Online (AOL: news, msgs) have also enjoyed
a very nice recovery, Acampora said. He suggests being aggressive in these stocks.
Positive earnings results Wednesday from Yahoo would bode
well for the entire group, he added. First Call projects the
portal's second-quarter earnings to come in at 8 cents compared
to 7 cents in the first quarter. Shares of Yahoo ended off 3 to
175 1/8, erasing earlier gains posted on Tuesday.
Cash increase
Wien increased the cash position in his model portfolio because he believes the market is
becoming too risky at current levels.
"Interest rates are high enough to make the market expensive," Wien said. He sees yields
treading higher and believes the Fed will be back to raise rates again.
"The value sector is more attractive compared to the growth sector right now," Wien
remarked. He sees vulnerability in the tech and healthcare sectors as well as in shares of the
large-cap multinationals. Consumer growth stocks are among the most susceptible to a
downturn in current market conditions, he said.
The last shift in allocations between stocks and cash was made in late February, when Wien
upped cash levels to 15 percent from 10 percent.
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