Investors who hold stocks quoted on the US Nasdaq index will be relieved to hear analysts are increasingly positive about its short-term prospects.
One of Wall Street's most influential technical analysts, Mr Ralph Acampora of Prudential Securities, has this week suggested the Nasdaq will shake off its September blues and rally by more than 20 per cent in the short term. Mr Acampora has been telling his clients that he has set a near-term target for the Nasdaq composite index of 4,563. The last time the Nasdaq composite rose above the 4,500-mark was last April, when it hit a session high of 4,572, but closed sharply lower at 4,223.
"My conclusion is that we've made a low. We've never changed our optimism long term," referring to Friday's dramatic decline to as low as 3,614. "I think we are starting a pre-election rally right here, which should be followed by a honeymoon rally. So I think we've seen the worst of it for a while." Mr Acampora did not give a specific time frame for his "near-term" forecast.
Last month he reiterated that he sees the Nasdaq composite near 6,000 by June 2001, adding he was not revising his forecast that the blue-chip Dow Jones industrial average may hit 12,500 to 13,000 by year end.
In his latest note, he said last Friday's technology stocks battering was basically a "panic day" - when prices go down dramatically and sometime during the day reverse, and subsequently the market closes at or near the high of the day.
On Friday, the Nasdaq finished at 3,803, the session high, after a wide and deep sell-off sparked by a profit warning from the world's leading chip-maker Intel.
Analysts blame higher interest rates, soaring energy costs and a weaker euro currency for corporate America's earnings worries. An important factor in his forecast, Mr Acampora said, was the fact that none of the averages made new lows, but rather held above their previous support levels. "I expect a very dramatic upturn. The crisis, whether it be interest rates, currencies, or energy, has been abated at least for the short term," he added.
