Thanks Scott,
don't mean to inject to much optimism but you know it's one of my faults:
Von the brighter side.......Top Market Timer Says, NASDAQ 5000
>>> This Year
>>> An InvestorLinks Exclusive Report
>>> From the InvestorLinks.com News Desk
>>> By: Peter Santini, January 11, 2001
>>>
>>> Like a hot knife through butter, the NASDAQ should go through 5000
>>> this year. That's what Don Wolanchuk says and he's one of Market
>>> Timer Digest's Top Market Timers, having won 17 annual timing
>>> awards since 1989. Some of his greatest timing calls were widely
>>> ignored by the investment community. Wolanchuk forecast the bull
>>> market rally following the 1987 crash and called for a DJIA above
>>> 10,000. When NASDAQ traded at 1800, he forecast a NASDAQ 5000. In
>>> 1999, at the bottom of the oil market, Wolanchuk called for $30/barrel
>>> oil. He was Market Timer of the Year in 1995, 1996, 1997 and 1999.
>>>
>>> In the interview
>>> below, Wolanchuk
>>> calls for a "fast and
>>> furious" return to
>>> NASDAQ 5000. But,
>>> that's only the first
>>> level. He's calling for
>>> a NASDAQ 10,000 on
>>> its way "towards
>>> 20,000." He forecasts
>>> Intel (INTC, Chart,
>>> Boards) reaching as
>>> high as $75/share,
>>> Microsoft (MSFT,
>>> Chart, Boards)
>>> returning to
>>> $112/share, AT&T (T,
>>> Chart, Boards)
>>> reaching $60/share, and Procter and Gamble (PG, Chart, Boards) at $118/share.
>>>
>>> Wolanchuk uses numerous historical comparisons in describing the current market
>>> conditions and helping explain why sentiment is as it is. In explaining why we should anticipate
>>> a major rally in the financial markets, he offers various technical measures, such as the VIX
>>> Index, the ARMS Index and the Advance/Decline lines. This may be the most important
>>> interview you will read this year.
>>>
>>> Investors and curiosity seekers may wish to visit Don Wolanchuk's website for additional
>>> information about his market timing techniques at www.wolanchuk.com
>>>
>>> INVESTORLINKS: How do you currently feel about the condition of the markets?
>>>
>>> WOLANCHUK: When it becomes hopeless to everybody, which it appears to be now… In fact a
>>> few weeks ago, with the American Association of Individual Investors, you saw 51 percent
>>> bears and about 30 percent bulls. That's a flight. And rather amazing because the DOW is
>>> basically where it was a year, year and a half ago. NASDAQ the same way. The market's taken
>>> a time out with the DOW about 10,000. The same thing happened in 1991 - went side ways,
>>> drove everybody crazy. It's taken a great breather. Interestingly, we get all the bluebirds out and
>>> you've heard the words "crash" and "bubble" and every other thing from these bears.
>>>
>>> INVESTORLINKS: The word "recession" has been mentioned more than a few times recently.
>>>
>>> WOLANCHUK: Yes. After the crash of 1987,
>>> we had a recession and the market went
>>> straight up. Recession, fear of the stock
>>> market, everybody moving into money market
>>> funds and talk of bear markets is what
>>> bottoms are made out of. Proof of that is in
>>> the technical picture. While this has been
>>> going on, the base 52-week new highs have
>>> been steadily climbing for a year now - the
>>> stocks making new 52-week highs. Last
>>> week, there were over six hundred. The
>>> weekly Advance/Decline line just keeps
>>> climbing and climbing and climbing.
>>> Technically, we've got a fabulous situation in
>>> the moving averages of put/call ratios. We've
>>> got numbers that we haven't seen in years.
>>> We've got an ARMS index in the moving
>>> average - the last time that I saw 130. I can't
>>> remember seeing a ten day ARMS at 130. Even while the DOW has been going up here,
>>> recently, the five-day trend has been staying above eight hundred. That's incredible! The DOW,
>>> where is it? It's over 1000 out of the October low. In the mean time, we've got everybody being
>>> chased out of the stock market. It's absolutely a fabulous situation.
>>>
>>> INVESTORLINKS: Is it fabulous enough that it's time for investors to rush back in?
>>>
>>> WOLANCHUK: They're not going to do it no matter what I say. If I tell them to jump in here with
>>> both feet, they're not going to listen to me - just like they didn't listen to me after the crash of
>>> 1987.
>>>
>>> INVESTORLINKS: For those that do listen to you, what should they expect?
>>>
>>> WOLANCHUK: Every time that we have this situation, the stocks are served up on silver platter.
>>> The interesting thing is the wipeout in a lot of NASDAQ stocks is typical of an industry that
>>> attracted a lot of people - the Internet business. A horde of people went in there for fast and
>>> easy money. A lot of these companies, of course, are not going to make it and you had the
>>> initial shake out. You had all these troubles with financings that turned into death spirals.
>>>
>>> INVESTORLINKS: Where do you see the NASDAQ heading?
>>>
>>> WOLANCHUK: When the NASDAQ was at 1800, I said it was going to 5000. It's a perfect
>>> correction. I haven't seen anything in the wave structure to negate my idea that it's going to
>>> head - the potential is that the NASDAQ is going to start flying up past 10,000 towards 20,000.
>>>
>>> INVESTORLINKS: The NASDAQ?
>>>
>>> WOLANCHUK: Yes, the NASDAQ.
>>>
>>> INVESTORLINKS: From where to where?
>>>
>>> WOLANCHUK: Past 5000 and a clean shot through 10,000 on
>>> it's way to 20,000.
>>>
>>> INVESTORLINKS: You're going on record that the NASDAQ is
>>> going to 20,000.
>>>
>>> WOLANCHUK: It's going to go beyond that eventually. There's going to be a lot of washouts in
>>> between. This is the best washout.
>>>
>>> INVESTORLINKS: Do you think we're ever going to see an opportunity like this again?
>>>
>>> WOLANCHUK: Just like we never saw an opportunity when it made it's low in 1998. Here we
>>> have a situation where everybody got notoriously bullish in the NASDAQ. The problem there
>>> was they were right being bullish, but they were wrong in the way that they executed it. That was
>>> by buying stock with borrowed funds on margin accounts. It wasn't anything else, but people
>>> were forced out of the market because of margin selling. Now look how clean this market is. Is
>>> anybody, who was on margin and who got wiped out, going to go near the margin department
>>> for probably months or years? Of course not. This market is very clean in that regard. So we
>>> don't have to worry about forced margin selling anymore. We don't have to worry too much
>>> about poor sentiment. After the crash of 1987 everybody thought, all through the next two years,
>>> that it was bear market rally. There's nobody going to be calling this a bull market for long time
>>> even though the weekly Advance/Decline line bottomed out a year ago.
>>>
>>> INVESTORLINKS: Do you think we're still in a bull market?
>>>
>>> WOLANCHUK: Absolutely. If there's nobody
>>> left to sell and everybody's bearish…I got the
>>> same thing in 1987. I feel a lot better about it
>>> now, because I'm in the minority. What's so
>>> funny is that the media said that the NASDAQ
>>> had its worst year in history. What they don't
>>> say is that, a year ago, the NASDAQ is where
>>> it is now. For the first six months it was the
>>> grandest six months in the history of the
>>> NASDAQ. Then, you had the worst six months
>>> and you ended up back where you started.
>>> That's exactly what the DOW did in 1987. All it
>>> did was go back to where it was in 1986 and
>>> the whole process started all over again. It is
>>> a hump in a chart that is continuing it's up
>>> climb. In the meantime, these stop clock
>>> bears who yet have to get religion… Can you
>>> imagine some of these stop clock bears who
>>> have been calling for the end of Western Civilization for the last fourteen years?
>>>
>>> INVESTORLINKS: What about the bears?
>>>
>>> WOLANCHUK: This market's not going to let them off the hook. Here we are above 10,000
>>> pressing 11,000. If I'd told you 15 years ago, after the crash of the DOW, when everybody hated
>>> it, that they would hate it just as much above 10,000 you would have thought I was a nut. Here
>>> we are above 10,000 and everybody hates it. We are at a high level consolidation that's been
>>> stretching out for a year and a half or so in the DOW and the NASDAQ - a flawless ABC. What
>>> we call an ABC irregular flat correction in terms of Elliot where the B-Wave made the high at five
>>> thousand. Until proven other wise, anybody who says we're in a bear market - and at the end
>>> and we'll never see these highs again for years, which we've heard a lot of… You've got to
>>> remember where all this talk came from. It came from the people who missed the entire
>>> advance to begin with. They have really no credentials to be making those kinds of statements.
>>> In the meantime I never thought that I would be in the minority bullish camp once again with the
>>> DOW pressing eleven thousand. It's a rather fabulous situation. All these companies that have
>>> taken whacks like Intel (INTC, Chart, Boards), General Motors (GM, Chart, Boards). There's
>>> some of these DOW stocks actually are screaming new highs like the banking stocks. What
>>> we've had is a rotational exercise, which is typical of a high level consolidation in the primary
>>> market. While the secondary and most speculative market, as you know the NASDAQ, has
>>> gotten it's comeuppance because of the margin buying.
>>>
>>> INVESTORLINKS: Where does that leave us?
>>>
>>> WOLANCHUK: Now we've got a cleaned up market where nobody is going to go near the
>>> margin desk. We're set up for a resumption of the bull market. In certain sectors the bull
>>> markets been intact for quite awhile.
>>>
>>> INVESTORLINKS: What about the market's short-term prospects?
>>>
>>> WOLANCHUK: Actually, the markets have been rallying while the NASDAQ is re-testing its prior
>>> lows. The Wilshire Small Cap on a weekly basis has a great-looking chart pattern as far as I'm
>>> concerned. It's declined and held its 150-week moving average. It's a mile out of its hole made
>>> in 1998. It's a classic little consolidation. But, if you look at the NASDAQ it's only declined in
>>> three waves off the top. If you're an Elliot Wave Analyst and you're bearish, you've got to say to
>>> yourself, "If that's only three waves, and that's the second wave pull back, a third wave blast of
>>> historic proportion can absolutely be born out of that." Because of that potential, I'm certainly
>>> not going to miss it, if that's going to happen. The wave structure of the NASDAQ certainly
>>> allows for that. Here we are with a VIX Index (CBOE Market Volatility Index) still above 30
>>> percent. It's been hovering above 30 percent since September. It's taken a stab to 37 percent
>>> during that time frame. This is a long period of high VIX readings without any solid detraction in
>>> a primary market. This is bullish. A market that looks ugly and doesn't go down is a market that
>>> you want to own.
>>>
>>> INVESTORLINKS: What are your thoughts on the recovering telecom sector?
>>>
>>> WOLANCHUK: There's no doubt about it, but
>>> the telecom sector has gotten awfully
>>> oversold, even more oversold than the
>>> NASDAQ. A lot of these wire houses couldn't
>>> stand it so I think they put out a big buy on
>>> AT&T (T, Chart, Boards). Here's a stock that
>>> technically appears like it's going to go all the
>>> way back to $60/share because of the gap
>>> situation. When a futures contract, or a stock,
>>> declines or advances leaving lots of gaps in
>>> the chart, all of those gaps eventually get
>>> filled. Intel (INTC, Chart, Boards) in my view is
>>> a prime candidate for that. INTC left all these
>>> huge gaps all the way down and Intel has got
>>> $75/share written all over it because of these
>>> gaps. The same thing with Microsoft (MSFT,
>>> Chart, Boards). I'm seeing Microsoft going
>>> back to$112, $115 or higher. It's the gap rule.
>>> The only reason that the NASDAQ declined in the first place was to fill all the gaps it left, when it
>>> initially thrust out of the hole over a year ago. There were three large gaps. They went down and
>>> filled them all. We had the S&P 500 futures bottom over a week ago at 1288. The next day it
>>> opened on a huge gap.
>>>
>>> INVESTORLINKS: How soon should we expect these strong moves?
>>>
>>> WOLANCHUK: We've been through some speedy moves here. We've had a bull market and a
>>> bear market - people going from extraordinarily bullish to extraordinarily bearish, all within a
>>> number of months. These things are moving really fast. Look at the volatility we've seen in the
>>> last number of weeks. We went through this 1991. While this is going on, sentiment is
>>> improving. It's just like 1991 all over again. It went up and down, drove everybody crazy for over
>>> a year. Not much has changed.
>>>
>>> INVESTORLINKS: Are you pretty much saying that we should expect more volatility.
>>>
>>> WOLANCHUK: I think we've had the bulk of it. My only concern is the cycles. We've got a
>>> four-year cycle due in 2002.
>>>
>>> INVESTORLINKS: What does that mean?
>>>
>>> WOLANCHUK: That means it's going to be marked by
>>> something. Let me give you an example. We had a four-year
>>> cycle low due in 1986. Everybody prepared themselves for it in
>>> early 1986 as measured by the daily Advance/Decline line. It
>>> topped out and started declining, declining, declining as
>>> everybody bailed out in anticipation of a four year cycle that was
>>> due in 1986. In September 1986, we got some sort of
>>> hammering job, but in December of 1986, the daily A/D line
>>> was making twelve-month lows while the DOW was virtually at
>>> historic highs. That got everybody really bearish. Then, the market exploded to the August 1987
>>> peak. There were all kinds of technical problems there. The 1986 four-year cycle low basically
>>> was met in 1987. The next four year cycle low if you count forward four years was 1990.
>>> Remember how ugly that was? Then, four years later was 1994. Remember how ugly that
>>> was? Four years later was 1998. So here we are, four years later from 1998, we have 2002.
>>> Somewhere between here and there, it appears that everybody is preparing for this four-year
>>> cycle, by bailing out of the stock market in anticipation of it. What everybody is anticipating, in
>>> my view, could prove to be something similar to what we saw in 1987: The market going crazy.
>>>
>>> INVESTORLINKS: Can you clarify how the NASDAQ fits into this?
>>>
>>> WOLANCHUK: Basically from the 1998 low, the NASDAQ has retraced exactly 75 percent of that
>>> entire advance in a clean three-wave fashion, which is exactly what the DOW did in 1987. It
>>> went back to the area of the prior consolidation. It was a consolidation in 1999. All through that
>>> year was choppy. It went up very slowly. I'm saying that the NASDAQ is set up, until the wave
>>> structure says other wise, to go through 5000 like a hot knife through butter - to go through
>>> 10,000 and a move towards 20,000.
>>>
>>> INVESTORLINKS: Over what period of time? Five years?
>>>
>>> WOLANCHUK: No, the percentage. Remember it is based on percentages. If I'm right, the third
>>> wave is going to be a lot faster than the move that NASDAQ made from the 1998 low to this
>>> past high (March 2000). It should probably take half the time that it took on that last big move. If
>>> I'm right, we'll go through 5000 inside this year sometime.
>>>
>>> INVESTORLINKS: Inside this year? Are you serious?
>>>
>>> WOLANCHUK: It did it before. It went from 1200 to 5000 in a space of a year (and some). We've
>>> had a three-wave decline. If indeed that's a second wave pull back. It still counts that way. A
>>> third wave is going to be kind of fast and furious. Because of that potential, I'm certainly not
>>> going to say it's not going to happen. I'm going to be prepared for it if it does.
>>>
>>> INVESTORLINKS: Could you explain how this works?
>>>
>>> WOLANCHUK: At the end of a second wave pull back, a second wave pull back is … they've got
>>> a lot of things going for them. People have got to be convinced that they will never see the
>>> highs again. People have to be convinced that they don't want any part of it. We're seeing a lot
>>> of this. After the markets crashed in 1987, one of the prominent bears said that the chance of
>>> the DOW getting above 2700 was 10 percent. Here we are above 10,000. By the way, that bear
>>> is still bearish. It is very tough being bullish because the market makes it easy to be bearish.
>>>
>>> INVESTORLINKS: So which sectors are going to be hot?
>>>
>>> WOLANCHUK: The sectors that everybody hates.
>>>
>>> INVESTORLINKS: Such as tech stocks?
>>>
>>> WOLANCHUK: Take the technology sector -
>>> completely sold out as far as I'm concerned.
>>> Retail? Everybody loves to hate retail. In the
>>> meantime, we see Home Depot (HD, Chart,
>>> Boards) has already gone from $35/share to
>>> $52/share over the last number of weeks.
>>> Intel has got the kind of formations that I'm
>>> just drooling over because of all the gaps left
>>> open above the market. I'm rather excited
>>> about what I see.
>>>
>>> INVESTORLINKS: Do you think the markets
>>> will struggle this year?
>>>
>>> WOLANCHUK: It's going to be a mental
>>> struggle. I don't know about the price
>>> struggle. I don't think there is going to be a
>>> price struggle. I think there is going to be a
>>> mental struggle. People are going to struggle with price.TORLINKS: Do you mean that investors are going to be looking at an up market and
>>> won't believe that it could go higher?
>>>
>>> WOLANCHUK: They did that in 1987 after the crash. If you got caught and got wiped out, you're
>>> not going to go near the stock market. Investors will listen to high profile bearish gurus who will
>>> be telling them it's a bear market rally. We had a prime example of that happening after 1987.
>>> Now I'm even more bullish because of the recent correction.
>>>
>>> INVESTORLINKS: Is there anything that would change your mind?
>>>
>>> WOLANCHUK: Yes, if the American Association of Individual Investors got up to 75 percent
>>> bulls and we got euphoric all over again. That's going to come.
>>>
>>> INVESTORLINKS: How soon?
>>>
>>> WOLANCHUK: At the top of the next third wave blast. There's
>>> going to be a lot of people that will start chasing - if I'm right and
>>> we've finished up a second wave correction in NASDAQ and it
>>> starts to melt up. There are no sellers left because everybody's
>>> bailed out of the stock market. People are going to be chasing
>>> stocks. Not everybody is just going to stand around and call it a
>>> bear market rally forever. When you chase stocks in a sold out
>>> market, you see the net results. It goes absolutely hairy. Look at
>>> what the NASDAQ did coming out of the 1998 hole. It was so
>>> doom and gloom in the 1998 low. It went from 1200 and it
>>> doubled in price vertically in a matter of weeks.
>>>
>>> INVESTORLINKS: Which stocks should investors consider at this point?
>>>
>>> WOLANCHUK: You just spread it around. Qualcomm (QCOM, Chart, Boards), in my view, is a
>>> great situation, Some of the blue chips, like SBC Communications (SBC, Chart, Boards). It
>>> wouldn't surprise me to see General Motors (GM, Chart, Boards) take off. Disney (DIS, Chart,
>>> Boards) is another. Procter and Gamble (PG, Chart, Boards) is another great looking situation.
>>> It got whacked and it came back nicely. It's consolidating. There's huge gaps just above the
>>> market all the way up to $85/share. It should take out $118/share or $120/share. It's been there
>>> before.
>>>
>>> INVESTORLINKS: Should we expect optimism over the coming year?
>>>
>>> WOLANCHUK: No. I don't want optimism. I want rising prices against the background of
>>> pessimism. Something like we saw through 1988 and 1989.
>>>
>>> INVESTORLINKS: Is that the bull market climbing the wall of worry?
>>>
>>> WOLANCHUK: Of course that's what we want and that's what we're going to get. You know how
>>> we're going to get the wall of worry? It goes up slow. It could be fast. There's two ways of
>>> leaving the world behind. The market goes up super fast, catches everybody. Or the markets
>>> go up slow with lots of correction. Everybody hates it all the way up because of that. It takes
>>> nothing to move this DOW two hundred, three, four, five hundred points anymore. When we see
>>> the epicenter of Primary Wave Three, there is going to be a thousand-point up day in the DOW.
>>> It's coming.
>>>
>>> INVESTORLINKS: Could the NASDAQ make a thousand-point gain in one day?
>>>
>>> WOLANCHUK: Absolutely. You can't have the epicenter Primary Wave Three of Three to the
>>> upside unless it is broad-based. All sectors going up in unison. That is a broad move. The last
>>> time we saw a broad move like that was coming out of the 1982 low.
>>>
>>> INVESTORLINKS: Any advice to investors who sold short this market or selling it short?
>>>
>>> WOLANCHUK: I hope they stay short.
>>>
>>> INVESTORLINKS: Thank you very much! At 03:23 PM 3/2/01 EST, you wrote:
>>>>Pomp just survived the seattle quake...we are all glad he is ok.
>>>>
>>>>I tend to agree. My customers are still seeing pretty good demand. This is
>>>>not tech, but basic services and materials. They are adjusting their payrolls
>>>>carefully, utilizing already in place productivity tools (optimizing would
>>>>be a good term) and positioning themselves for market share pickup when
>>>>available. Most have good balance sheets and do not think inflation is a
>>>>major threat beyond energy challenges. They can't price increases now, but
>>>>hope to when pickup occurs. The hunker down mentality is seen by many as an
>>>>opportunity for the future, not a disaster now.
>>>> |
