Art Shaw, who ran the TA depart at SB -- Hires Ralph Acampora In Late 1960's---- good history.
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Technical Guru Acampora Picks Winners
By Haitham Haddadin
NEW YORK (Reuters) - Ralph Acampora became a Wall Street celebrity with bold and accurate forecasts like his famous "Dow 10,000" call.
But the spotlight can be a bit harsh, at times for stock market gurus.
"All of a sudden you are in a box; 'What's your next big number'?" Prudential Securities' top technical analyst said. "I hate the word, 'guru'. It has a life expectancy of about a month. Once you are up there at the top people start shooting at you."
For the year ahead, Acampora is bullish again on the blue-chip Dow Jones industrial average (^DJI - news) and thinks its recent rally could hoist the index back to its all time high, or a little higher, at 12,000.
Acampora bases his calls on technical factors, and after more than 30 years in the business, the 60-year-old pundit is one of the best-known "technicians." Unlike "fundamental" analysts, who look at how interest rates and corporate earnings impact stock prices, he studies a stock's price action or an index's chart against a host of indicators such as "resistance" or "support," levels where sellers and buyers emerge, to divine his moves.
For now, he is less sanguine on the broad market's S&P 500 (^SPX - news) and the tech-packed Nasdaq Composite (^IXIC - news), saying they still need more time to build solid bases before they; can rebound with the Dow stocks.
But Acampora is basically bullish, based on a key indicator of market breadth called the advance-decline line, the ratio of rising to falling stocks on the New York Stock Exchange. It has edged higher since March 2000, when the bear market started, as the majority of stocks gained ground.
"The real story is market breadth," Acampora writes in his long-term market outlook. "It suggests that the old economy names will continue to lead as the list broadens to incorporate more new sectors."
Right on cue, a chart of the Standard & Poor's 600 small cap index (^SML - news) shows the gauge of small stocks shooting off the charts. Ditto for the Midcap 400 (^MID - news) or the Russell 2000 (^RUT - news) indexes.
A MARKET OF STOCKS
The star analyst stunned Wall Street in the mid 1990s when he forecast the Dow was entering a huge bull market.
He said the gauge would climb to 7,000, from 4,500 at the time, drawing much scorn from investment pros who were expecting a bear market. Acampora did not stop there; after Dow 7,000, he went to forecast the gauge would go to the 10,000 mark. The rest, as they say, is history.
"Everyone said what is this guy smoking?" Acampora reminisces, behind him a huge television screen at his spacious office in a lower Manhattan high-rise. Once that target was hit, "I said wait a minute this thing can go a lot higher, and everybody said 'You're really nuts' .. and it worked."
Acampora's winning streak earned him the moniker "King Ralph" from CNBC. Those were the good times. But the bubbly stopped flowing in early 2000, and the bear market made a mockery of many bullish prognostications, including his prediction that Nasdaq would hit 6,000 by June 2001 -- more than three times higher than its current level.
In his best selling September 2000 book, the "Fourth Mega Market, Now Through 2011" (Hyperion) Acampora argued the case for a superbull market. To his credit, he did warn investors to expect severe downturns along the way.
The big market calls got him his reputation -- but Acampora these days is focused more on bread-and-butter stock selection. He includes with his daily reports the mantra: "It's not a stock market, it's a market of stocks."
Two winning picks from January 2001 stand out: Tricon Global Restaurants (NYSE:YUM - news), the operator of Pizza Hut and Taco Bell. The stock pulled in a yummy return of 85 percent, soaring to $63 from about $34. And while the once red-hot New Economy stocks fizzled, shares of department store chain Dillard's Inc. (NYSE:DDS - news), another Acampora pick, sizzled, going to $25 from about $14.
For investors, the individual stock picks are just as important as the big market moves -- and indeed both require skill and hard work, experts say.
"These were not easy calls," said Mike Epstein, Vice President of NDB Capital Markets Corp., in Jersey City, New Jersey. "They took tremendous imagination and prescience to do it. Many people became bulls along the way, but Ralph was among the early ones and one of the most right."
Acampora hit home runs with names such as drugs giant Johnson & Johnson (NYSE:JNJ - news), and utility Southern Company (NYSE:SO - news). He likes Staples Inc. (NasdaqNM:SPLS - news), the offices supplies retailer, toy maker Mattel Inc. (NYSE:MAT - news), and American Standard Cos. (NYSE:ASD - news), maker of air conditioners and bathroom fixtures. From a technical perspective all have one thing in common: prices steadily grinding higher.
NO VOODOO PLEASE
Acampora got a thorough grounding in technical analysis under the market wizard Alan Shaw, who was teaching at the New York Institute of Finance (NYIF), in the late 1960s. Acampora impressed Shaw with his mastery of point-and-figure charting, and in thew 1969 got hired by Shaw's firm, Harris Upham & Co., which later merged into Smith Barney. He became the first technician ever at Kidder Peabody in 1980 and joined Prudential in 1990.
Acampora helped spread the gospel of technical analysis on the lecture circuit. He has taught technical analysis every Monday night at the NYIF for more than 30 years. Acampora is pleased the discipline, once dismissed as witchcraft, steadily gains acceptance on Wall Street. He writes in plain English, unlike others whose jargon can border on esoterica.
"It gets too complicated, there are too many things. It's system overload," said Acampora, who heads the Market Technicians Association.
Acampora graduated from Iona College in New York, with a bachelor in history and politics, and attended St. Joseph's Catholic seminary in Yonkers to study theology. He likes to peek back in history to find parallels, and sees a repeat of the aftermath of the vicious 1973-74 bear market, when small and mid capitalization stocks outperformed big caps.
"People want to talk about Intel and my answer is: 'Get a new life'," he said, scribbling on a board in his office. "Cisco (Systems) makes switches, but did you ever see one? No! But I know what Staples does, I know what Mattel does .. That's the new leadership; back to basics." |
