Way to Go, Ralphie Boy! Er, Maybe Not
With the
Dow Jones Industrial Average
having
crossed the once unfathomable 10,000 barrier, many people are getting (and taking) credit.
Federal Reserve
Chairman
Alan Greenspan
and
Goldman Sachs
market strategist
Abby Joseph Cohen
are two individuals most closely linked to the bull market.
Then there's Uncle Ralphie. Shortly after the Dow crossed 10,000 this morning,
Prudential Securities
chief technical analyst
Ralph Acampora
appeared on
CNNfn
and then
CNBC
, where he was largely fawned over. Then he hosted a conference call with reporters, most of whom seemed ignorant of the fact that Acampora is fighting to regain his stature, if not his relevance, with many market professionals.
"I think Wall Street is disappointed with the vicissitudes of his strategy calls over the last year or so," said the chief investment officer of one fund group, who requested anonymity. "He went bearish when he should have stayed bullish and now seems to be going bullish to jump back on the bandwagon."
Acampora's rise to guru status began back in June 1995 when he forecast the Dow would hit 7000 in short order.
The index was trading around 4250 at the time, but it crossed 7000 in April 1997. In July 1997, Ralph released a report dubbed
Dow 10,000
. In an interview shortly thereafter with this reporter (then working elsewhere and pining away for
TheStreet.com
), Acampora forecast Dow 18,500 by 2006, a prediction he repeated during today's conference call.
As Acampora kept upping the ante and the stock market kept rising, so, too, did his reputation. It got to the point where if Acampora burped, the market got gas.
'Ralph Acampora has been dead right in his long-term forecasting and he's been dead wrong in his near-term forecasting,' a rival
strategist said.
Then came the summer of 1998. In early August, with Russia's debt default roiling financial markets, Acampora was vilified for predicting a 15% to 20% drop in the Dow just a day after reiterating his Dow 10,000 call on
CNBC
. The heat got so bad the technician
apologized for contributing to the market's then-frightening angst.
Since that time, Acampora's star has faded in the minds of many professional investors. Wall Street participants believe Acampora has engaged in some
Clintonesque
waffling, a charge for which there seems to be some merit.
On Nov. 30 he predicted (correctly, it would turn out): "The market's recent spectacular advance from the Oct. 8 low is not over. In our opinion, any pause could be deemed a buying opportunity."
Then, Dec. 14, he wrote: "We would be expecting sudden, possibly nasty, corrections within the market, but we believe the long-term outlook remains strong and we would view these weaknesses as buying opportunities."
But when bond yields started rising and stocks began to stumble in January, Acampora didn't heed his own advice.
Warning of Ugliness That Never Arrived
On Feb. 8, after the Dow had fallen more than 3.5% from its then-record high of 9643.32, he wrote: "The near-term outlook is becoming worrisome. A 5% to 10% correction at this point would be normal, but this could turn ugly, depending on the Treasury yield." In the report, the technician placed near-term support for the Dow at 9087 and then 8676, and warned levels between 7800 and 8450 could be witnessed "if the correction were to get ugly."
The correction never reached maximum ugliness. After the report was issued, the index never traded below 9000 even on an intraday basis. On
Feb. 9, the Dow closed at 9133.03, at what would prove to be its nadir of the cycle.
So last week, when Acampora reiterated a previous call that the index could hit 11,500 by September, the chortling on trading floors began.
"Now, with the market at or near 10,000, he's pounding the table," the investment chief said. "I needed him to say that at 7400 last fall."
"The timing of those calls has caused Ralph to lose some luster both within Pru and outside on the Street," the source continued. "The Pru people that cover me call up embarrassed about Ralph's calls."
The fund manager contrasted Acampora to Goldman's Cohen, who "just stuck to her guns and has done a fabulous job. But that's not to say any of this is easy, because it's not. And Ralph has been right a lot more than he's been wrong. Everyone is entitled to a stumble. This is a humbling business."
Ralph Sticks Up for Himself
With little trace of humility, Acampora defended his market calls in this morning's conference call.
"I turned bearish in August, thank God," he said. "Then on Oct. 10 I said the correction was over, which was a good call. Recently I was looking for a minor correction." Regarding the most recent call, Acampora first predicted a short-term correction "about the third week of January," not the Feb. 8 date of the published report, he said, noting the call was accurate.
When Acampora turned bearish on Aug. 4, he used the term "cyclical bear market," suggesting a relatively short period of weakness. But "no one picked up the word cyclical," he recalled. "They just lumped me in with all the super-bears. It's not fair. It's a matter of semantics."
A chief strategist at a rival firm, who also requested anonymity, said this occurrence highlights the inherent conflict in Acampora's work.
"A lot of times when a strategist gets quoted, his comments are taken out of context through no fault of anyone," the strategist said. "When forecasting near-term, you must label it as such. That's why I would never want to be the No. 1 guy, because you're on a pedestal. When you're right, good, that's your job. If you're wrong, you're a goat."
But the strategist acknowledged some traders are frustrated with his market calls. "Ralph Acampora has been dead right in his long-term forecasting and he's been dead wrong in his near-term forecasting," he said. "He's been looking for lower lows at bottoms and turnaround corrections at tops."
Acampora: Victim of Perception or His Own Failings?
Ralph "Make Me Poorer"
Unfairly judged
Clinton can't carry Ralph's butter in the waffling department
Too soon to say