Checked out Prudential web site.
Kinda dull and broad, but this is what I found on TA
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Daily Technical Outlook
Daily Technical Outlook (01/04)
01-04-2002 08:53 ET
Brought to you by Ralph Acampora.
This outlook is based on Ralph Acampora's technical analysis and constitutes opinions which are subject to change. Contact a Prudential Securities Financial Advisor with any questions you may have. Remember that past performance is no guarantee of future results and there is no assurance that his forecasts will be attained.
The Increased Number Of Positive Individual Stocks Should Lead The Market Averages Higher
Near-Term
Positive comments about Intel Corp. (INTC-35.52, rated ‘BUY’ by Prudential Securities Equity Research)* yesterday appeared to spur the stock market higher. For us, ‘tech’ leadership is critical because it represents an area that holds considerable investor interest; hence, any improvement here suggests potential economic recovery. For the past several weeks most indices treaded water as they worked off their respective overbought conditions and waited for some good news to help break stocks to the upside. And that appears to be exactly what happened. Many individual issues pushed above their recent highs, extending the rallies that started in late September.
The theme of our commentary over the past several weeks mainly centered on the conflict between our macro versus our micro technical inputs. Momentum and sentiment indicators (macro) leave a lot to be desired while stock picking (micro) continues to improve. We encouraged our readers to zero-in on the trends of stocks (breadth) because this steady improvement, in our view, is broadening out to include more names within the growth areas as well as the value areas. If allowed to continue (which we believe will be the case), then these better acting stocks could pull the leading market averages higher. Thus, we are very encouraged by the overall action of the market as the initial trading days of 2002 unfold.
Below is a summary of our “Fearless Forecast For 2002”:
We have nine major points in our twelve-month outlook:
1 – We are in a range-bound market as opposed to a trending market.
2 – We must still contend with a series of near-term technical barriers in the form of: resistance levels, moving averages and a “rising wedge” are in place for some of the market’s leading averages.
3 – Secondary stocks are likely to be a big part of the leadership in the new year (S&P Small and Mid-Cap Indices and the Russell 2000 are above their respective moving averages.) This is an important near-term technical development).
4 – The yield on the Ten-Year Treasury bond is expected to go higher: levels of 5.5% and 5.9% are visible. The CRB Index (commodities) is building a small base formation—this suggests that the US economy is expected to recover in 2002 but it will be a slow recovery.
5 – The NYSE Composite Advance/Decline Line made a new recovery high recently. This breadth indicator suggests that the stealth-bull market that began in March 2000 is still alive.
6 – The Year 2002 plays an important role in the ‘Four-Year Cycle Theory’. Hence, sometime this year a very important low will be registered. It could confirm the low made in September 2001.
7 – The Philadelphia Semiconductor Index has regained upward momentum, at least during the latter part of 2001. This SOX leadership should continue into the new year.
8 – The optimum word for the new year is ROTATION. There will times to overweight growth stocks and then to overweight value, or perhaps a combination of the two will be needed over the next 12 months.
9 – The Dow Jones Industrial average will most likely remain between a low in the 7600-8500 area and a high in the 11,500-12,000. This also translates into a floor and a ceiling for the S&P 500 Index, respectively of 950-1000 and 1350-1400, and for the NASDAQ Composite of 1600-1700 and 2800-2900.
Listed below are the levels that represent important uptrend lines on key market averages:
Index The Uptrend That Began in Mid
September Currently Crosses At
Dow Jones Industrial
S&P 500
Nasdaq Composite
SOX Index 9691
1125**
1899
486
**Broken on Thursday, December 13, 2001.
Intermediate-term levels to watch if selling gets out of hand:
-Dow Jones: 9,409
-The Nasdaq Composite: 1646
-SOX Index : 427
-S&P 500 levels: 1057
-Sentiment: Bulls at 49.0%, Bears at 27.5%.
See below for our investment/trading ideas:
Kulicke & Soffa (KLIC-20.04, rated ‘BUY’ by Prudential Securities Equity Research)*. Uptrend support at 19.00
Documentum Inc. (DCTM-22.60, not rated by Prudential Securities Equity Research). Uptrend support at 19.00
Lonestar Steakhouse (STAR-15.67, not rated by Prudential Securities Equity Research). Uptrend support at 13.10.
Microchip Technology (MCHP-42.41, rated ‘HOLD’ by Prudential Securities Equity Research)*+ Uptrend support at 38.08.
Hutchinson Technology (HTCH-24.69, not rated by Prudential Securities Equity Research). Uptrend support at 21.78.
Intuit Inc (INTU-41.01, rated ‘BUY’ by Prudential Securities Equity Research)*. Uptrend support now at 39.34.
Storage Technology (STK-21.35, not rated by Prudential Securities Equity Research). Uptrend support at 19.75.
Dial Corp (DL-17.40, rated ‘BUY’ by Prudential Securities Equity Research). Uptrend support at 15.95.
Current Deletions:
None
Intermediate-Term
We labeled the market’s low in September 2001 as “a” bottom and not “the” bottom because we need evidence of further strong upward follow-through after the initial fourth quarter 2001 rise. We believe that signs of momentum continuing to the upside will come when the indices close and stay above their respective moving averages and resistance levels. (Note our table below for the appropriate support and resistance levels on some of the market’s leading averages). So far the action of the S&P Small and Mid-Cap indices and the Russell 2000 Index, along with the NYSE Composite Advance/Decline Line (breadth) suggest that at least part of the stock market is continuing to move higher after the 2001 fourth-quarter rally. This, we believe, bodes well for these respective areas of the stock market going into the early part of the new year. The optimum word, for us, is rotation as some stocks break to the upside while others break to the downside. We feel that the year 2002 will necessitate careful stock selection; investors must be flexible when weighting portfolios between growth and value. We believe that both styles will come into and out of favor over the next twelve months. Watch for our list of attractive stocks on this web site.
Starting in mid January we will release a monthly chart book called “PruCharts”. Each publication will have a different theme. It will incorporate technical studies on stocks, bonds, commodities, currencies, foreign markets and a host of technical indicators and theories. This document will also be available online within the Prudential Financial website.
In order to rate any advance as a “quality rally” will require, in our view, that the following averages must break above their respective resistance levels (listed directly below):
- The DJIA must takeout the 10,182 level.
- The Nasdaq Composite needs to close above 2103.
- The SOX Index has to exceed the 657 area.
Major Averages-Primary and Secondary parameters
Dow Jones Industrial Average Primary Support = 9,691.39 intra-week low (11/29/01)
Secondary Support = 9,080.81 intra-week low (10/19/01)
Primary Resistance = 10,182.38 intra-day high (09/04/01)
Secondary Resistance = 10,441.37 intra-day high (08/27/01)
Standard and Poor's 500 Primary Support = 1114.50 intra-week low (12/14/01)
Secondary Support = 1057.24 intra-week low (10/19/01)
Primary Resistance = 1,186.85 intra-day peak (08/27/01)
Secondary Resistance = 1,226.27 intra-day peak (08/02/01)
Nasdaq Composite
Primary Support = 1,898.98 intra-day low (12/03/01)
Secondary Support = 1,646.30 intra-day low (10/30/01)
Primary Resistance = 2,102.53 intra-day high (08/02/01)
Secondary Resistance = 2,328.05 intra-day high (05/22/01)
Russell 2000 Primary Support = 467.11 intra-day low (12/14/01)
Secondary Support = 419.49 intra-day low (10/19/01)
Primary Resistance = 519.89 intra-day high (05/22/01)
Secondary Resistance = 545.71 intra-day high (07/17/01)
Long-Term
Due to the market’s strong overall recovery since the September 2001 low, we feel we are now able to trace out reasonable floors and ceilings for some key market indices going forward. We expect a wide trading range to dominate as growth and value issues battle it out for leadership. This ebbing and flowing behavior will be part of the ‘Four-Year Cycle Theory’. The market is expected to suffer some sharp selloffs over the next twelve months, but we anticipate that aggressive investors will take advantage of these declines as excellent buying opportunities. Hence, we look for a ‘range-bound’ year. We note that this is far from a negative assessment, in fact, we believe it will be an exciting year for those who are flexible and timing oriented. Investing may take considerable discipline going forward. Here are the ranges we believe will box in the market’s activity:
Index Low Range High Range
Dow Jones Industrial 7600-8500 11,500-12,000
Standard & Poor's 500 950-1000 1350-1400
Nasdaq Composite 1600-1700 2800-2900
Source: Bridge Data Service.
Of course there is no assurance these targets will be attained.
+: Prudential Securities Incorporated and/or its affiliates have managed or co-managed a public offering of securities
*: Prudential Securities Incorporated makes a primary over-the-counter market.
#: Prudential Securities Incorporated acts as a specialist that makes a market in the security. At any given time, the specialist may have a position, either long or short, in the security, and, as a result of the associated specialist’s function as a market maker, such specialist may be on the opposite side of orders executed on the floor of the national securities exchange.
Prudential Securities Incorporated (or one of its affiliates) or their officers, directors, analysts, or employees may have positions in securities or commodities referred to herein, and may, as principal or agent, buy and sell such securities or commodities.
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