Ralph
04.02.2001, 11:31
February 02, 2001 11:05 AM ET
U.S. Stock Market Outlook
Near-Term
Prices as of close on 2/01/2001
Despite strong gains seen in many major indices in January and the heightened prospects of a consolidation of those gains short-term, the equity markets continue to be very resilient. Additional new groups and names continue to 'bubble up' under the surface. Yesterday we highlighted a few of the retail names that appear attractive technically including Costco Wholesale (COST-46 ¼, rated "HOLD" by Prudential Securities Equity Research)*, Dillards Inc. (DDS-15.50, rated "HOLD" by Prudential Securities Equity Research)+, Long's Drug Stores (LDG-25.41, not rated by Prudential Securities Equity Research) and Nordstrom Inc. (JWN-20.35, rated "HOLD" by Prudential Securities Equity Research). With our outlook remaining very constructive for a further drop in interest rates, we continue to see strength in many areas of the financials. In our view, several broker/dealer names now appear poised for a resumption of their major uptrends including Merrill Lynch (MER-76, rated "ACCUMULATE" by Prudential Securities Equity Research)+ and Legg Mason Inc. (LM-56.15, not rated by Prudential Securities Equity Research). In the aerospace/defense area Lockheed Martin (LMT-36.21, rated "HOLD" by Prudential Securities Equity Research)# appears to be terminating a four-month consolidation by breaking to the upside from its 30-35 range. Further gains are anticipated into the mid-40's.
Over and above what we feel are very constructive technical underpinnings across a broad array of stocks and groups, we now see the Dow Industrials headed for a serious challenge of its January 24th intra-day peak of 11,024. A close above this level would terminate a three-month trading range and suggest potential for new all-time peaks. One of the leaders within the Dow that is anticipated to continue higher after its recent breakout above 36 is ALCOA Inc. (AA-38, not rated by Prudential Securities Equity Research). The list is growing. What may be lacking in some of the large-cap 'tech' names is, in our belief, being made up for in spades in a great number of equities listed on the NYSE.
For additional new ideas, please see our latest piece entitled "The Start of A New Bull Market" which has been mailed to all the branch offices. This "Special Report" will go into greater detail on the subject of breadth. It will provide a very interesting historic perspective that examines a previous period when major rotation led to another significant bull phase. In the meantime, any market pause is not expected to result in a major problem for breadth.
Levels to watch on further selling:
Dow Jones: A close below 9654 would be very negative (crimson flag) on the Dow.
The Nasdaq Composite level: 2224.21 (crimson).
SOX Index levels: 516.64 (yellow); 475.97 (crimson).
S&P 500 levels are: 1254 and then 1137.
Sentiment: We do not want to see the weekly Bull/Bear statistics climb above 55% (current reading/yellow) and 60% (crimson).
See below for our investment ideas:
Costco Wholesale (COST-46 ¼, rated "HOLD" by Prudential Securities Equity Research)*
Long's Drug Stores (LDG-25.41, not rated by Prudential Securities Equity Research)
Nordstrom Inc. (JWN-20.35, rated "HOLD" by Prudential Securities Equity Research)
Marriott International (MAR-45.99, not rated by Prudential Securities Equity Research)
Lexmark International (LXK-57.00, not rated by Prudential Securities Equity Research)
Applied Materials Inc. (AMAT-50 9/16, rated "ACCUMULATE" by Prudential Securities Equity Research)*
National Semiconductor (NSM-27.31, not rated by Prudential Securities Equity Research)#
Level 3 Communications (LVLT-39 3/8, rated "STRONG BUY" by Prudential Sec.'s Equity Research)*
WorldCom Inc. (WCOM-22 3/16), not rated by Prudential Securities Equity Research)*
Smurfit Stone Container (SSCC-14 1/2, not rated by Prudential Securities Equity Research)
Wells Fargo & Co. (WFC-50.40, rated "ACCUMULATE" by Prudential Securities Equity Research)
PNC Financial Services (PNC-73.90, rated "ACCUMULATE" by Prudential Securities Equity Research)+
Advanced Digital Information Corp. (ADIC-23 1/16, not rated by Prudential Securities Equity Research)
Unisys Corp. (UIS-17.11, not rated by Prudential Securities Equity Research)#
Minnesota Mining & Manufacturing (MMM-111.55, not rated by Prudential Securities Equity Research)
Tricon Global Restaurants (YUM-35.94, not rated by Prudential Securities Equity Research)
Charter Communications (CHTR-22 1/2, not rated by Prudential Securities Equity Research)*
Sigma Aldrich Corp. (SIAL-40 3/16, not rated by Prudential Securities Equity Research)
Reebok International (RBK-28.95, not rated by Prudential Securities Equity Research)
Georgia Pacific (GP-30.91, not rated by Prudential Securities Equity Research)#
Mercantile Bankshares (MRBK-39 15/16, not rated by Prudential Securities Equity Research)
Waste Mgt. Inc. (WMI- 24.41, not rated by Prudential Securities Equity Research)
Micron Technology (MU-42.18, rated "ACCUMULATE" by Prudential Securities Equity Research)#
Current Deletions:
None Today
Intermediate-Term
Ralph Acampora's Wall $treet Week picks for 2001:
Stocks (Prices as of Friday, 01/26/01 close)
Cablevision Systems (CVC-85.44, not rated by Prudential Securities Equity Research)
Graco Inc. (GGG-39.37, not rated by Prudential Securities Equity Research)
Mercury Computer Systems (MRCY-50 7/8, rated "ACCUMULATE" by Prudential Securities Equity Research)+*
Minnesota Mining & Manufacturing (MMM-107.31, not rated by Prudential Securities Equity Research)
QUALCOMM Inc. (QCOM-81, not rated by Prudential Securities Equity Research)
Unisys (UIS-16.06, not rated by Prudential Securities Equity Research)#
United Technologies (UTX-73.12, rated "HOLD" by Prudential Securities Equity Research))
Waste Management (WMI- 25.81, not rated by Prudential Securities Equity Research)
Wells Fargo (WFC-51.50, rated "ACCUMULATE" by Prudential Securities Equity Research)
A "quality rally" will require, in our view, that the following averages must break above their respective levels (listed directly below):
The DJIA must takeout the 11,400 level.
The Nasdaq Composite needs to close above 3535.
The SOX Index has to vault the 800 area.
Major Averages-Primary and Secondary parameters
Dow Jones Industrial Average Primary Support =10,369.70 intra-day low (11/13/00)
Secondary Support = 9,654.64 intra-day low (10/18/00)
Primary Resistance = 11,028.00 intra-day high (01/24/01)
Secondary Resistance = 11,401.20 intra-day high (09/06/00)
Standard and Poor's 500 Primary Support =1,254.07 intra-day low (12/21/00)
Secondary Support = 1,136.89 intra-day low (12/14/98)
Primary Resistance =1389.05 intra-day peak (12/11/00)
Secondary Resistance = 1,437.28 intra-day peak (11/08/00)
Nasdaq Composite Primary Support = 2576.95 intra-day low (1/16/01)
Secondary Support = 2224.21 intra-day low (2/18/99)
Primary Resistance = 3028.75 intra-day high (12/11/00)
Secondary Resistance = 3535.11 intra-day high (10/20/00)
Russell 2000 Primary Support = 457.56 intra-day low (01/08/01)
Secondary Support = 440.76 intra-day low (11/30/00)
Primary Resistance = 508.86 intra-day high (11/06/00)
Secondary Resistance = 545.71 intra-day high (07/17/00)
Long-Term
Our Fearless Forecast For 2001 is entitled: "In Search Of A Quality Rally"
Our forecast will not go out the normal twelve months. Due to factors outside the purview of technical analysis (the anticipated continued move by the Federal Reserve regarding a reduction in interest rates), we will only talk about a potential rally in the first few months of this year. We believe that the reasons for a potential rally might be:
A - The January Effect
B - Money flows from 401 K plans, etc..
C - The Fed should continue to lower rates.
The resistance levels on th
U.S. Stock Market Outlook
Near-Term
Prices as of close on 2/01/2001
Despite strong gains seen in many major indices in January and the heightened prospects of a consolidation of those gains short-term, the equity markets continue to be very resilient. Additional new groups and names continue to 'bubble up' under the surface. Yesterday we highlighted a few of the retail names that appear attractive technically including Costco Wholesale (COST-46 ¼, rated "HOLD" by Prudential Securities Equity Research)*, Dillards Inc. (DDS-15.50, rated "HOLD" by Prudential Securities Equity Research)+, Long's Drug Stores (LDG-25.41, not rated by Prudential Securities Equity Research) and Nordstrom Inc. (JWN-20.35, rated "HOLD" by Prudential Securities Equity Research). With our outlook remaining very constructive for a further drop in interest rates, we continue to see strength in many areas of the financials. In our view, several broker/dealer names now appear poised for a resumption of their major uptrends including Merrill Lynch (MER-76, rated "ACCUMULATE" by Prudential Securities Equity Research)+ and Legg Mason Inc. (LM-56.15, not rated by Prudential Securities Equity Research). In the aerospace/defense area Lockheed Martin (LMT-36.21, rated "HOLD" by Prudential Securities Equity Research)# appears to be terminating a four-month consolidation by breaking to the upside from its 30-35 range. Further gains are anticipated into the mid-40's.
Over and above what we feel are very constructive technical underpinnings across a broad array of stocks and groups, we now see the Dow Industrials headed for a serious challenge of its January 24th intra-day peak of 11,024. A close above this level would terminate a three-month trading range and suggest potential for new all-time peaks. One of the leaders within the Dow that is anticipated to continue higher after its recent breakout above 36 is ALCOA Inc. (AA-38, not rated by Prudential Securities Equity Research). The list is growing. What may be lacking in some of the large-cap 'tech' names is, in our belief, being made up for in spades in a great number of equities listed on the NYSE.
For additional new ideas, please see our latest piece entitled "The Start of A New Bull Market" which has been mailed to all the branch offices. This "Special Report" will go into greater detail on the subject of breadth. It will provide a very interesting historic perspective that examines a previous period when major rotation led to another significant bull phase. In the meantime, any market pause is not expected to result in a major problem for breadth.
Levels to watch on further selling:
Dow Jones: A close below 9654 would be very negative (crimson flag) on the Dow.
The Nasdaq Composite level: 2224.21 (crimson).
SOX Index levels: 516.64 (yellow); 475.97 (crimson).
S&P 500 levels are: 1254 and then 1137.
Sentiment: We do not want to see the weekly Bull/Bear statistics climb above 55% (current reading/yellow) and 60% (crimson).
See below for our investment ideas:
Costco Wholesale (COST-46 ¼, rated "HOLD" by Prudential Securities Equity Research)*
Long's Drug Stores (LDG-25.41, not rated by Prudential Securities Equity Research)
Nordstrom Inc. (JWN-20.35, rated "HOLD" by Prudential Securities Equity Research)
Marriott International (MAR-45.99, not rated by Prudential Securities Equity Research)
Lexmark International (LXK-57.00, not rated by Prudential Securities Equity Research)
Applied Materials Inc. (AMAT-50 9/16, rated "ACCUMULATE" by Prudential Securities Equity Research)*
National Semiconductor (NSM-27.31, not rated by Prudential Securities Equity Research)#
Level 3 Communications (LVLT-39 3/8, rated "STRONG BUY" by Prudential Sec.'s Equity Research)*
WorldCom Inc. (WCOM-22 3/16), not rated by Prudential Securities Equity Research)*
Smurfit Stone Container (SSCC-14 1/2, not rated by Prudential Securities Equity Research)
Wells Fargo & Co. (WFC-50.40, rated "ACCUMULATE" by Prudential Securities Equity Research)
PNC Financial Services (PNC-73.90, rated "ACCUMULATE" by Prudential Securities Equity Research)+
Advanced Digital Information Corp. (ADIC-23 1/16, not rated by Prudential Securities Equity Research)
Unisys Corp. (UIS-17.11, not rated by Prudential Securities Equity Research)#
Minnesota Mining & Manufacturing (MMM-111.55, not rated by Prudential Securities Equity Research)
Tricon Global Restaurants (YUM-35.94, not rated by Prudential Securities Equity Research)
Charter Communications (CHTR-22 1/2, not rated by Prudential Securities Equity Research)*
Sigma Aldrich Corp. (SIAL-40 3/16, not rated by Prudential Securities Equity Research)
Reebok International (RBK-28.95, not rated by Prudential Securities Equity Research)
Georgia Pacific (GP-30.91, not rated by Prudential Securities Equity Research)#
Mercantile Bankshares (MRBK-39 15/16, not rated by Prudential Securities Equity Research)
Waste Mgt. Inc. (WMI- 24.41, not rated by Prudential Securities Equity Research)
Micron Technology (MU-42.18, rated "ACCUMULATE" by Prudential Securities Equity Research)#
Current Deletions:
None Today
Intermediate-Term
Ralph Acampora's Wall $treet Week picks for 2001:
Stocks (Prices as of Friday, 01/26/01 close)
Cablevision Systems (CVC-85.44, not rated by Prudential Securities Equity Research)
Graco Inc. (GGG-39.37, not rated by Prudential Securities Equity Research)
Mercury Computer Systems (MRCY-50 7/8, rated "ACCUMULATE" by Prudential Securities Equity Research)+*
Minnesota Mining & Manufacturing (MMM-107.31, not rated by Prudential Securities Equity Research)
QUALCOMM Inc. (QCOM-81, not rated by Prudential Securities Equity Research)
Unisys (UIS-16.06, not rated by Prudential Securities Equity Research)#
United Technologies (UTX-73.12, rated "HOLD" by Prudential Securities Equity Research))
Waste Management (WMI- 25.81, not rated by Prudential Securities Equity Research)
Wells Fargo (WFC-51.50, rated "ACCUMULATE" by Prudential Securities Equity Research)
A "quality rally" will require, in our view, that the following averages must break above their respective levels (listed directly below):
The DJIA must takeout the 11,400 level.
The Nasdaq Composite needs to close above 3535.
The SOX Index has to vault the 800 area.
Major Averages-Primary and Secondary parameters
Dow Jones Industrial Average Primary Support =10,369.70 intra-day low (11/13/00)
Secondary Support = 9,654.64 intra-day low (10/18/00)
Primary Resistance = 11,028.00 intra-day high (01/24/01)
Secondary Resistance = 11,401.20 intra-day high (09/06/00)
Standard and Poor's 500 Primary Support =1,254.07 intra-day low (12/21/00)
Secondary Support = 1,136.89 intra-day low (12/14/98)
Primary Resistance =1389.05 intra-day peak (12/11/00)
Secondary Resistance = 1,437.28 intra-day peak (11/08/00)
Nasdaq Composite Primary Support = 2576.95 intra-day low (1/16/01)
Secondary Support = 2224.21 intra-day low (2/18/99)
Primary Resistance = 3028.75 intra-day high (12/11/00)
Secondary Resistance = 3535.11 intra-day high (10/20/00)
Russell 2000 Primary Support = 457.56 intra-day low (01/08/01)
Secondary Support = 440.76 intra-day low (11/30/00)
Primary Resistance = 508.86 intra-day high (11/06/00)
Secondary Resistance = 545.71 intra-day high (07/17/00)
Long-Term
Our Fearless Forecast For 2001 is entitled: "In Search Of A Quality Rally"
Our forecast will not go out the normal twelve months. Due to factors outside the purview of technical analysis (the anticipated continued move by the Federal Reserve regarding a reduction in interest rates), we will only talk about a potential rally in the first few months of this year. We believe that the reasons for a potential rally might be:
A - The January Effect
B - Money flows from 401 K plans, etc..
C - The Fed should continue to lower rates.
The resistance levels on th