BUSINESSWEEK ONLINE : OCTOBER 2, 2000 ISSUE
FINANCE How Does a 22,000 Dow Sound to You? When Ralph J. Acampora predicted in 1995 that the Dow Jones industrial average, then in the low 4,000s, would hit 7,000 within three years, most folks thought he had lost it. But Acampora, director of technical analysis at Prudential Securities Inc., proved his critics wrong and then some. The Dow broke through that goal and even passed 8,000 in 1997. Now Acampora, in his new book, The Fourth Mega-Market, has another hypothesis: He says that the current bull market will last at least through 2011, claiming that we are in the middle of the ''fourth great mega-market'' that began in November, 1994. (The four mega-markets have all occurred in postwar periods--following the Civil War, World War I, World War II, and most recently, the cold war--due to redirection of funding to a peacetime market, explosion of new technologies, and underlying optimism, he says.) In Acampora's parlance, mega-market refers to a bull market that runs as long as a decade or more and has gains of 500% to 600%. Using this logic, he thinks the Dow will end up a little over 22,000 by 2011, or about double where it is now. Since that's a compounded annual growth rate of about 6%, his prediction isn't exactly bold. ''The easy money has already been made,'' explains Acampora. But it does tell us not to expect a prolonged bear market anytime soon and explains why this bull market could go on. Over the past couple of years Acampora has been somewhat of a waffler: one month bullish, the next month a bear. But in his book, he makes an interesting case for a prolonged bullish scenario largely using technical analysis. Technicians like Acampora believe that current and historical trends can predict future market movements, and they use a myriad of exotic charts to make their case. How does Acampora explain the recent market slide as well as the big March Nasdaq correction? ''Such periodic washouts are common and are necessary for a megamarket to be sustainable over the long term,'' he says. Indeed, Acampora's magic word may be ''rotation,'' the idea being that as long as money comes out of one sector and moves into another, the bull market is sustainable. And the fact that more stocks have been hitting new lows than new highs in recent years is actually a bullish sign to Acampora, as investors give up on Old Economy stocks. He also espouses ''Dow Theory,'' a technical indicator that shows bullish or bearish trends depending on where the Dow industrial and the Dow Jones stock transport index close in relation to one another. And he looks at cyclical data. In this Presidential election year, for instance, he says history points to a ''honeymoon rally'' post-election. Acampora explores more secular trends, too. He says new innovations in technology will continue to fuel markets, and he says the ''echo'' generation, behind the baby boomers, will increase their investments as they approach middle age. With The Fourth Mega-Market, Acampora's critics will no doubt again claim he's being too exuberant. Still, exuberance about the market in recent years hasn't exactly proven itself wrong. By Marcia Vickers in New York _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The Bull Is Only on a Break CHART: Reversal of Fortune How Does a 22,000 Dow Sound to You? INTERACT E-Mail to Business Week Online

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