Champion Market Timer Points to P&G and Cyclicals to Lead Next Market Rally; Names Two New Small Cap Stock Picks.
Over the past year, some of the most accurate market calls have flown off the lips of Don Wolanchuk, a contentious market timer, who reportedly has won a high number of "Market Timer of the Year" awards in various areas. He was 1999's Market Timer of the Year, Gold Timer of the Year, and Long Term Timer of the Year. Time and again, we return to Don Wolanchuk for his market insights and humbly request his guidance as to where the markets are headed next.
In simple terms, Wolanchuk was dead-on when he called a $30+ price in crude oil - long before any other market experts dared venture anything as ridiculous as $20 oil. Yes, he failed the gold bugs miserably, inaccurately forecasting rally after rally in the price of gold throughout 1999. He may have told his subscribers something else, but Wolanchuk was bullish in every StockHouse.com interview. In other futures picks, he was right about copper, lumber and bonds. Just before the final NASDAQ blastoff in Q4 1999, Wolanchuk was ecstatically bullish - more than common sense dictated. But, he was right and the NASDAQ soared while NDX futures roared higher.
Wolanchuk's 1999 track record in picking small caps rested with his two main picks: Valence [VLNC] and Waverider [WAVC]. Both were announced long before their spectacular rallies when both were trading at significant fractions to their current levels. However, another favorite, Mountain Province [MPVIF], steadily disintegrated down its stock chart.
After the markets roiled this past Monday and Tuesday, StockHouse editorial again turned to the "Legend" for his piece of mind on the markets. Wolanchuk specializes in Fibonacci-style analysis utilizing Elliot Wave theories in forecasting market directions and stock picks. Wolanchuk maintains a DJIA price target of 16,600. He has been featured in Business Week, Esquire, Individual Investor, Kiplingers, New York Magazine, and interviewed in numerous leading newspapers. He maintains a website for subscribers at www.wolanchuk.com/
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StockHouse: What's your take on the recent market volatility?
"The measure of the rally that's coming is always measured by the extent of the decline that precedes it."
Wolanchuk: Basically, there's nothing abnormal about it. It just gets bigger the higher we go. The moves, actually, in terms of percentage, they're not that much.
StockHouse: But on Tuesday, NASDAQ was down by 13% at one point.
Wolanchuk: In 1987, we had a volatility of 38% in a few days. Let's face it, the measure of the rally that's coming is always measured by the extent of the decline that precedes it. If the decline is sharp and deep, generally the advance that follows is going to be quite huge. We're going to have a huge rally out of this.
StockHouse: Was yesterday the bottom of the NASDAQ?
Wolanchuk: Yeah, sure. The NASDAQ - you'll never see that level again in your lifetime. Never. You're going to come down a bit in the next couple days, but you aren't going to see these lows again. The Dow will never see 10,000 again in your lifetime, in my estimation. The Dow, remember, it had a 1,500 point rally. This was just a little corrective thing here. Now we're ready to blast off. There are so many Dow stocks that are ready to support a blast-off, it's totally beyond belief. . A stock like Procter & Gamble [PG] is going to contribute mightily to the Dow's advance.
StockHouse: Will P& G be the leading stock in the Dow's advance?
Wolanchuk: Yeah. It had the deepest correction. I'd also say stocks like Coca-Cola [KO], International Paper [IP] - all the cyclicals. DuPont [DD], Merck [MRK], SBC Communications [SBC], Microsoft [MSFT]. Microsoft - all it did was go down and fill a gap it left a few months ago. About a month ago it got down to $88, then they ran it up to $114. This time the gap was at $85-1/4, as low as $84-15/16. That filled the gap. They left the gap above the market, and it's going to go "take it out." You're going to take out $120 on the next go-round with Microsoft.
StockHouse: How long will that take?
Wolanchuk: That might take about three weeks, if not less. All the financial stocks are ready to go crazy. Intel [INTC] is going to lead the charge. This is like shooting ducks in a barrel. Kodak [EK] is going to make a big run now.
StockHouse: What about your calls on oil? You've been bullish in the past.
"Intel is going to lead the charge."
Wolanchuk: Oil made its run to our target in the $30s. I would suspect that's going to be it for a while. We're in a corrective phase that might test the lower end of the $20-dollar range, $22-23. We made a fortune on that move from $10 to $34. The bulk of that's over. Once this correction's over, I still think there's a shot at $40 and beyond. That's gonna be a process that's gonna take a while. Right now we're focusing on the stock market and its move to the 16,000 area. That's where it's going to go. And gold, it's getting ready to blast off. This is just the mother of all bull markets. Fear levels relative to price are just extraordinary, rather extraordinary.
StockHouse: How do you feel about the oil service stocks?
Wolanchuk: Oil service stocks are going to go higher for the simple reason?to offset higher oil prices, we're going to have to be digging more holes. We bought Schlumberger [SLB] pretty cheap. I'll be looking for $100, $130 on that. We paid $41 for that stock. But those are not the kind of stocks where people should be betting right now because the biggest percentage gains are going to be the startup companies. You buy a $50 stock, that's nice. It goes to $100, you've only doubled your money.
StockHouse: What are your picks?
Wolanchuk: You buy a start-up company like the kinds we've been talking about-remember, we talked about Valence when it was in the $3s and $4s, and where did it go? You got tenfold on your money. Well, that's even going to go a hell of a lot higher. We're looking at $100 to $160 on Valence. It's the next generation battery technology. They're just getting started. A stock like Microvision [MVIS], even though it's $47 that's thin, that's a typical $500 stock because of its capitalization. You take a stock like Waverider, high-speed wireless. That had a great run. We bought it for pennies, ran up to $16 or so. It's had a beautiful, deep correction. Cleaned up the chart, filled the gaps, and what not. It appears ready to make the next launch to the sky. These guys know how to merchandise. You can have a great product, but if you can't sell it, it's worthless. They got a great product, they got a selling machine behind them, and don't forget, he's from Dell.
StockHouse: You've already told us about those. Got anything new?
Wolanchuk: You take some of these start-up companies, with these huge percentage gains, you take a stock like Synthetic Blood. For years, companies have been trying to find the holy grail for a blood replacement product. Synthetic Blood [SYBD] is the first company to do it. And they're in trials right now. They trade around $1.30. Of course, there's also Gene Lab [GNLB]. There's one stock in our portfolio that's been really acting well throughout all this, and that's Integrated Device [IDTI], and I think that's a bellwether (for chip stocks).
"This is just the mother of all bull markets."
StockHouse: What index should we be watching?
Wolanchuk: The key to all this is the cyclical index and the Dow Jones 65 Composite Index. They got an Elliot Wave structure that virtually guarantees a melt-up is coming dead ahead. The Morgan Stanley cyclical index is what you should watch.
StockHouse: How's all of this going to play out?
Wolanchuk: You've got a Dow that's set up. Everybody's gotten out of the value stocks. It's an empty index. Dow's at 11,000, and everybody hates it. You see the rotation? How did they get the Dow to stay up around 11,000, with all these Dow stocks ten miles off their highs? I mean Procter & Gamble hit $118. Now it's in the $60s. Coca-Cola hit nearly $70. Where is it now? It's now (under) $50. That's called rotation.
StockHouse: How long will this rally last?
Wolanchuk: You have your hiccups typically in the spring and in October. The cycles gyrate around, but the Dow is set up for a huge rally. You're not going to see the Nasdaq go to hell while that's going on.
StockHouse: Thank you very much.
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*courtesy ikegodsey |
