Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Techplayer who wrote (10060)	10/16/1999 9:19:00 AM
From: William Hunt	Read Replies (1) \| Respond to of 21876

briand ---contradiction at it's best ---October 15, 1999 Bearish Rumblings From the Seers By Stacey L. Bradford YOU THINK THE Dow's flirting with 10000 on Friday was bad? Here's something even more ominous: It also broke through Ralph Acampora's primary support level. OK, OK, so it's not exactly as widely watched an indicator as those thousand-point milestones on the Dow Jones Industrial Average. But Acampora, Prudential Securities' technical analyst, has won wide attention for his calls on the market. And on Friday morning, he warned clients that if the Dow Jones Industrial Average closed below 10085, the market would likely fall to 9600. At the very least, he says it would be an indicator of further downside momentum. Friday, the Dow skidded 266.90 points to end the day at 10019.71. And while Acampora now believes the Dow may fall further to 9600, he also says there is a 60% chance that we may get another selloff to the 9000 level. Deutsche Bank's Ed Yardeni agrees. Yardeni, now a well-known Y2K bear, says he expects the Dow to trade at 9000 by year's end and fall down even further to 8000 by March. This is the start of the market correction that he has been calling for, he says. "[This is] fairly classic compared to previous downturns," Yardeni says. "Stocks peak in August and then deteriorate in September and October." He says the stock market has been overpriced for much of the year, especially the technology sector. Yardeni may not be buying stocks anytime soon, but he does like the bond market. He says bond yields on the 30-year Treasury could drop to 5%, or even 4.5%, by the middle of next year. One reason he's so bullish on bonds is that he doesn't expect the Federal Reserve to raise interest rates again this year. "My view is that the Fed doesn't want to be accused of bursting the bubble," he says. Also, he can't see Federal Reserve Chairman Alan Greenspan tightening rates in November or December when he has said he wants to increase liquidity at year's end to brace for Y2K jitters. Our bond expert, Elliott Platt of Donaldson, Lufkin & Jenrette, is far from being so bullish. He anticipates the 30-year Treasury bond yield may rise as high as 6.85% over the next 12 months. Friday, it yielded 6.26%. Why so bearish? No surprise here: inflation. He predicts wage inflation will outpace productivity growth next year, producing an increase in unit labor costs that will place upward pressure on consumer prices. Platt also believes interest rates are now too low relative to the 5.25% fed-funds target. The current target warrants a 5.75% two-year-note yield and a 6% 10-year-note yield, he says. Given the choice, Platt says he would advise investors to put their money into stocks over bonds. While the stock market may be weak over the near term, he believes that for the long term, equities still look very favorable. Weighing in with the bulls is SmartMoney.com's top-ranked pundit, Goldman Sachs' Abby Joseph Cohen. Just a couple of days ago, Cohen told clients that she believes the S&P 500 is somewhat undervalued -- and that was before Friday's selloff knocked the S&P 500 down another 2.8%. "The outlook remains favorable for U.S. equities, based on solid corporate performance and mild-mannered inflation," Cohen wrote in a note on Oct. 12. "Stock-price declines during the third quarter left the S&P 500 modestly undervalued." By the end of 1999, Cohen expects the Dow to trade at 11500. That would be an increase of almost 13% from Friday's close. She anticipates the S&P 500 will rise to 1385, an increase of 11% from current levels. If that's not enough of a gain for investors, consider Acampora's long-term estimate. He predicts the Dow will trade at 12000 by the end of 2000. Now that's a far cry from his near-term call for a Dow at 9600. BEST WISHES BILL