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Acampora calling all bears
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August 4, 1998: 7:00 p.m. ET
Sometime Dow-10,000 booster says market could hit 'major bottom' this fall
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NEW YORK (CNNfn) - One factor behind Tuesday's market decline was comments by Prudential Securities' Ralph Acampora that the current decline could take the Dow down as much as 20 percent from its highs of last month -- bringing the blue chip index to around 7,500.
A partial transcript of his "Street Sweep" comments follows.
JOHN METAXAS, CNNfn ANCHOR: You made your comments in the middle of the day. The Dow had already been down, but the losses accelerated. To what extent do you think you're responsible for a little bit of a self-fulfilling prophecy here?
RALPH ACAMPORA, CHIEF TECHNICAL ANALYST, PRUDENTIAL SECURITIES: You'd hate to think that one person could do this, but I think the popularity of business shows and all the media attention that it gets, I guess it becomes a little bit of a catalyst. But remember one thing: no one individual causes a decline -- it could be the catalyst for a decline, but the makeup of the market, the weakness that I was talking about, is really what's behind this. It's not one individual.
METAXAS: All right. Now we gave the headline for your comments. Tell us in your words what you foresee for the market.
ACAMPORA: Well, you have to go back a little bit. For the last 3-1/2 years I have been very, very positive. We've had 14 corrections in the last 3-1/2 years, and most of them were stealthy, in other words, stocks were weak, but the Dow wasn't.
And we're in the 15th decline, but this time I was starting to see Dow stocks, big ones like 3M (MMM) and Procter & Gamble (PG) -- which shouldn't really go down in my work -- were starting to get hit and that's what precipitated me. One of the reasons why I felt this time around it was not only going to be small stocks, but it would be some of the big stocks
METAXAS: So we've got some of the indices -- Nasdaq the is down 11 percent from the highs, the Dow approaching 10 percent.
ACAMPORA: Yes.
METAXAS: You see 20 percent declines in all the major indices?
ACAMPORA: Yes, I think so. In terms of a Dow that's around 7,400-7,500, yes, I think so. And for the other averages it might even be worse.
METAXAS: You made a very prominent prediction of Dow 10,000 a few months back.
ACAMPORA: Actually I made that prediction in June of last year, and I backed away from it at end of the year and I brought it back again because we had the Asian problem and we recovered from the Asian problem. And, you know, we got within 10 percent of that target. The Dow eventually on an intra-day basis got to 9,400, but if I have to walk away from it, I will do that.
METAXAS: I have no doubt that your technical indicators change, but if they changed so much, are they really reliable predictors?
ACAMPORA: That's not true. They don't change that much. I had a forecast that was 3-1/2 years old. I was very early calling the bull market, and hopefully I'm very early calling the bear market. My stuff doesn't change that rapidly.
METAXAS: You would call that a bear market -- 20 percent is it?
ACAMPORA: Absolutely.
METAXAS: Is that the low? Do you think that's where the Dow ends up?
ACAMPORA: We'll see when we get there. It could be worse.
METAXAS: Now what's going to determine and what are you going to be looking at to see how bad this thing progresses?
ACAMPORA: I think you already started. You have major breakdowns in the utility index and the transportation index. I was sad to see that the technology stocks -- which by the way, I happen to like -- they were coming under pressure at the last hour of trading. I had nothing to do with those going down and I think it's fairly much across the board. Be careful with those bank stocks, those leading bank stocks look weak. So I'm going have to see it wash out before I say it's over.
METAXAS: How do you tell when in big sell-off comes?
ACAMPORA: Well, I think you're going see record volume before this is over, and I think it's not going to be a one- or two-day affair. It will be a multiple factor. We have to create a lot of fear and I have to tell you, if it wasn't for the press calling me, my phones wouldn't ring today. You are the guys that were the only ones that were calling me.
When my phones are overheated with phone calls then I know everybody's really nervous and I think they're frozen at the switch. When they really get nervous, then I say you have a bottom. We're not even close.
METAXAS: How likely is it that a major direction in the market can be set in August when so many traders and so many people are on vacation?
ACAMPORA: All the (more) reason why it can be. Because there's no one there to be on the other side of a sell. Maybe there are less buyers out there. Everybody talks about seasonality, it's a lot of fun to talk it, it's good cocktail party talk -- but the market is going to do what it's ever going to do whether you're there or not, whether it's summer or winter. It doesn't make any difference.
METAXAS: Now how do you see some of the fundamental factors that may move the market interplaying with the technical considerations that you look at?
ACAMPORA: That's a very important question. This is isn't just a technical observation I'm making. I happen to be very, very optimistic on interest rates, and I always thought all along that the thing that would break the back of this bull market would be a dramatic rise in rates and that's not the case.
So if I kind of read between the lines what's wrong here, I think the big companies are finally saying this stuff in Asia will impact their earnings. This will not be a one- or two-quarter phenomenon. It might be longer and I don't think they like what they see.
METAXAS: So, in a sense when Greenspan went up to Capitol Hill and said the biggest problem in the economy is not perhaps an Asian-induced slowdown but perhaps an uptick in inflation, the markets seem to be voting in the opposition direction right now.
ACAMPORA: Yes, I think so and I would go with the market.
METAXAS: Tell us now, what should investors be doing?
ACAMPORA: Well, first of all, forget the market, forget the averages. Look at your portfolio. That's what's most important. And I think everyone should be sitting down and really seriously going through their holdings, and if there are any stocks in there that look vulnerable -- and obviously it's a matter of interpretation -- I would sell them.
If there are stocks that don't have that much risk, I'd tough it out -- because I think we're going make a major bottom, by the way, sometime in the maybe September or October -- and that's going to be a major buying opportunity. But between now and then, it will be a little painful.
METAXAS: All right: major bottom. What does that mean and where would that be?
ACAMPORA: Well, hopefully it's only down 20 percent, and if I have the indication that we've created enough fear, valuation comes back to the market. If I can see that, boy, I'll tell you, I'll become a screaming bull again.
METAXAS: Now you have said you think this is the start of a bear market. What about the long term secular bull trend and the one that we're talking about is one that's been going on this whole decade and the last decade.
ACAMPORA: I don't want to make this sound like a play on words, but there is a difference. When you say "secular" -- in this case secular bull market -- you're talking about something that can last many years.
When you say "cyclical" you mean something that's going to last a few months. I think we have a bear market right now that's already started in secondaries, a cyclical bear, which means it can last a few months within the context of a long-term secular bull market. So if you're not in the market, keep your powder dry, I'll get them to you wholesale.
METAXAS: Some time in the fall. Ralph, any words of wisdom for anybody who's tuning in at this hour, hasn't been watching today, and tunes in and sees nearly a 300-point decline in the Dow?
ACAMPORA: I think what you should be doing tonight is going through that portfolio, calling people that you respect, who know what they're doing, call your financial adviser and sit down and plan a strategy. And if indeed you're long-term oriented, this is where you're really going to test people's mettle. If they're long term and investing for their retirement, this could be a bonus for you. This could be a great buying opportunity -- but what I'm saying is you don't have to be a big buyer tomorrow, that's all I'm saying.
METAXAS: And when, just to reiterate, when might you be ready to bring back that Dow 10,000 prediction?
ACAMPORA: Let me see where the bottom is and how far down we go, and see how much damage is done. I'd gladly bring it back. 
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