Prudential Analyst Sees Nasdaq Reaching 5,000 in 2000

One of Wall Street’s loudest bulls gave stocks a ringing endorsement for 2000 on Tuesday.

Ralph Acampora, Prudential Securities Inc.’s director of technical research, said the Nasdaq composite index could reach 5,000 next year, an increase of 28%.

Acampora gave his forecast in a conference call and a report to clients. The Dow Jones industrial average and the Standard & Poor’s 500 index could rise about 25% in 2000, he said.

The tech-heavy Nasdaq composite could soar to 4,800 or 5,000, the Dow could rise to 13,500 or 14,000, and the S&P; 500 could reach 1,700 or 1,800, Acampora said.

But the gains won’t be steady, Acampora said. Inflation concerns will persist, and yields on the benchmark U.S. 30-year Treasury bond could rise to 7% from 6.46% now.

“There’s not going to be a straight run-up to these levels; we’ll have fits and starts,” Acampora told Bloomberg Television. He added that “corrections” of 5% to 10% in the major stock indexes are likely.

As a technical analyst, Acampora relies on charts of past stock performance--rather than fundamentals such as sales or profits--to make his forecasts.

He said many technology stocks that have been sitting still as others have rocketed are poised to blast off. For instance, he said, Microsoft Corp. may be headed higher.

“I [expect] a rotation with the top stocks. Microsoft for most of this year was flat. Only last week it made a new high, and it’s beginning a new move up,” he said.

Acampora also likes Intel Corp., online auctioneer EBay Inc., Internet firm Inktomi Corp. and biotech company Immunex Corp.

His other top picks, which he said are forming strong bases, readying for an upward move after a flat period, are AT&T; Corp., Compaq Computer Corp., Dayton Hudson Corp. , PepsiCo Inc., Excite@Home Corp. and Lincare Holdings Inc.

Acampora noted that more stocks are declining than advancing on the New York Stock Exchange, a trend that illustrates how a small number of highflying stocks are leading the market higher.

Though some believe a slumping advance-decline line indicates a major sell-off is in the works, Acampora said he doesn’t expect that to happen.

“This is where I have my biggest disagreement with the bearish technicians. I say that if one believes, as I do, that this is ‘a super bull market’ similar to the 1949-66 affair, then negative breadth is not a huge concern.”

The blustery Acampora has been known to change his mind--and to leave himself plenty of room.

At the start of this year, he forecast a gaping year-end range of 7,800 to 11,500 for the Dow and 1,050 to 1,525 for the S&P; 500. In July, he raised his Dow forecast to 13,000, but in September he said he expected it to hit that mark next year, rather than by the end of 1999.

He’s also been known to be wrong. On Aug. 3, for example, he said, “Internet stocks look vulnerable. ‘Dot-com’ means ‘dot-down.’ ” The Interactive Week index of 40 Net stocks has since surged 113%.

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Ready for Takeoff?

In his forecast for 2000, Prudential Securities strategist Ralph Acampora said these stocks look promising. Some of the stocks are forming what technical analysts call “strong bases,” he said, readying for an upward move after an extended flat period.

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Ticker Tuesday YTD % Trailing Company symbol close change 12-mo. EPS* AT&T; T $54.19 +7.3% $2.40 Compaq Computer CPQ 27.88 --33.6 0.51 Dayton Hudson DH 70.75 +30.4 2.39 EBay EBAY 144.38 +79.5 0.14 Excite@Home ATHM 47.13 +26.9 --0.10 Immunex IMNX 89.75 +185.4 0.25 Inktomi INKT 181.00 +179.8 --0.40 Intel INTC 82.88 +39.8 2.23 Lincare Holdings LNCR 31.06 --23.4 1.67 Microsoft MSFT 115.88 +67.1 1.49 PepsiCo PEP 34.88 --14.7 1.13

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*Earnings per share

Sources: Times research, Bloomberg News