Dow May Fall to 6,000 Should Low Break, Acampora Says....

Discussion in 'Wall St. News' started by S2007S, Jan 16, 2009.

  1. S2007S


    Its a given that the markets are headed to new lows. I give it a 99% chance of this happening sometime over the next few weeks, if we do break to the upside I would look at this as the greatest shorting opportunity. As we all know the markets have 0 chances of any bull returning soon, so next lift in the market is just a gift to short.

    And the title below should read "WILL FALL to 6000" not "MAY"

    Dow May Fall to 6,000 Should Low Break, Acampora Says

    By Elizabeth Stanton

    Jan. 16 (Bloomberg) -- A decline in U.S. stock indexes below the 2008 lows from November may trigger a rout that pushes benchmark averages to levels not seen since the mid-1990s, according to two leading technical analysts.

    “Hopefully we don’t make new lows, because if we do, all bets are off,” said Ralph Acampora, who retired from Knight Capital Group Inc. in October 2007 after four decades on Wall Street. Should the Dow Jones Industrial Average fall below the 7,552.29 it touched on Nov. 20, it might tumble to 6,000, Acampora said. That’s 27 percent below yesterday’s close of 8,212.49 and a level last reached in October 1996.

    The lows reached by the Dow average and the Standard & Poor’s 500 Index in November are “a very, very significant area” because they are roughly where the last bear market ended in 2003, said John Murphy, chief technical analyst at and the author of three books on market analysis. “If that’s broken, it becomes very negative.”

    Both analysts spoke as part of a panel discussion about technical analysis, which involves making predictions based on historical trading patterns, at Bloomberg LP’s New York office.

    The S&P 500 is down 5.4 percent this month, including a 4.1 percent slide this week after profits from Alcoa Inc. trailed estimates and investors speculated banks need capital. After rallying 20 percent from its Nov. 20 low on speculation government spending would revive the economy, the Dow fell as much as 9.2 percent. It rose 1.1 percent to 8,305.75 as of 10:09 a.m. in New York today.

    Biggest Drops

    Both indexes posted their biggest annual declines since the Great Depression in 2008, with the S&P 500 reaching an 11-year low of 752.44 and the Dow sliding to its worst level since 2003 on Nov. 20. Stocks tumbled as more than $1 trillion in bank losses froze lending and spurred a global recession.

    The S&P 500 slipped below 776.76, the worst level of the 2001-2002 bear market, in November.

    Acampora, whose career also included decade-long stints at Prudential Equity Group LLC, Smith Barney and Kidder Peabody & Co., said that while the past two weeks are “very disturbing,” he’s still “willing to give it the benefit of the doubt.” He cited the time that has passed since the lows were hit and positive breadth, in which rising stocks outnumber falling ones.

    Even if the 2008 lows are not revisited, the market is probably in a trading range comparable to the ones that followed the 1929 crash and the bull market of the 1960s, Acampora said. The Dow average is unlikely to exceed its October 2007 peak of 14,164.53 for at least four years, he said.

    Trading Range

    After the 1929 crash, the Dow fluctuated between about 100 and 200 until 1950 when it began a sustained move higher. From 1966 to 1982, the average traded between about 600 and 1,000.

    U.S. stocks rose yesterday, erasing a drop of more than 3 percent for the S&P 500, led by retailers, technology and energy companies. The S&P 500 sank 38 percent last year and the Dow fell 34 percent amid the worst financial crisis since the Great Depression and the first simultaneous recessions in the U.S., Japan and Europe since World War II.

    Among Acampora’s past calls was a 1997 prediction that the Dow would reach 10,000. It rose to that level in March 1999.

    Murphy said the November lows are likely to be broken, in part because the dollar’s recent strength against the euro signals lower share prices globally, as foreign equity markets are correlated to local currencies.

    “There’s another down leg coming,” Murphy said. “Normally the market comes down in five legs. We’ve come down in two. I think we’re going to test those lows at the very least, and eventually probably take them out.”
  2. is ralph still alive. his nickname used to be wrong way ralph back in the 90s. this looks like base building to me. any good news and we could have a nice bear market rally.
  3. Yet another "paste and cut" article from ET's resident paper-trader, S2007S.
    How much does Baron pay you per post, anyway?

  4. Lighten up Francis.
    Quit whining about people posting/linking articles. It's a positive and they're worth discussing. A lot of articles worth reading get posted on this website that most would not come across.

    Keep up the good work S2007S

  5. If, as you state "we all know the markets have 0 chances of any bull returning soon", then in fact the market has nowhere to go but up. Please learn a bit more about how markets operate before you make more inane posts (the first step would be to avoid sleeping through your Econ 101 classes this semester).

    The more you and your permabear copycats (Port1385, Libertad and BuyLoSellHi) frantically try to scare people that the U.S. is sliding into oblivion with every bearish article you copy and past here, the more I'm convinced that the bear move is over and we're about to get a strong bull move.

    Just like I didn't buy into all the euphoria a couple years ago, I don't buy into all this chicken-little-the-sky-is-falling fanaticism now. It's like you guys love being the victims of fear that sells magazines and newspapers.
  6. Mvic


    The news today was terrible with all the layoffs and yet the character of sentiment has changed. Unlike in the fall as we approached the Nov low every bit of bad news would send the market in to a free fall, that has not been the case even in the last week or two as the market headed back down. Despite the downward movement there has been a constant bid under the market. Could this be why?

    Once the credit knot is removed (and in the high grade stuff it already is to a large extent, look at LQD or the broader CFT) and investors can have some confidence in prices again there will likely be significant deployment of funds back in to certain sectors.

    Going long here with a stop below Thursday's low makes sense to me and I bought in substantial positions in QQQQ, DBA, KOL (again), GLD, and DXO today. I haven't been this long anything since 2006. I am looking for a rally that lasts at least a few months, after that it will depend on how successful efforts like the stimulus are. If they work we won't see prices anywhere near these levels again. Of they don't I would look for the rally to fade and a retest and possible break of the lows in the Fall.
  7. Baron pays for posts?
    Man, I gotta get busy.
    Where's my check?!?!?:D
  8. I've been as bearish as bearish can be for a while
    but if Ralph Acampora is coming out of retirement to make a DOW 6000 call ..I may be for the first time in 3 years starting to get BULLISH

    He is always a TOP / Bottom Tick indicator

    Hopefully this time also...too many people hurting to keep this downward spiral of pain
  9. Market not turning into a raging bull market = automatically means we'll see new lows after new lows like clockwork?
  10. talknet


    Because of $60 Trillion loss DOW is heading towards 2000-levels. According to Dr. Marc Faber S&P 500 is heading towards 100-levels.

    By some estimates, combined losses in commodities, stocks, bonds, real estate are greater than $60 trillion. This is beyond rescue. The chart below, borrowed from Dr. Marc Faber's Market Commentary December 1, 2008, is devastating. The chart shows a stunning loss of $30 trillion stock market wealth around the world.

    The erroneous interpretation that FDR's government programs combined with accommodative monetary policy led us out of the Great Depression will result in policies that destroy the currency. It is of little value to debate what should be done, because this is what will be done. Dr. Marc Faber in his latest Market Commentary correctly surmises, “I have repeatedly characterized the current economic conditions as comparable to a war being fought between central banks around the world and the private sector and that this war is likely to be very protracted and will lead to high volatility in all asset classes. We have seen that governments are desperate to support asset markets with “extraordinary” and unprecedented monetary and fiscal measures…”

    The ill-fated measures will fail and do more harm than good. My interpretation of the charts leads me to conclude that the DJIA will correct all of the way back down to the level of the start of the last secular bull market which began in 1982 of 1000. A similar drop to the 100-level in the S&P 500 is to be also be expected. Gold will resort to its status as a currency and all currencies will deflate against gold. The price of gold will likely top out at a price higher than $1000/oz as the ratio of Dow-to-gold dips below 1:1 as indicated in the chart below:
    #10     Jan 16, 2009