Acampora: A Technical Dozen

12/19/2003 12:00 am EST

Focus:

Ralph Acampora

Director of Technical Studies, New York Institute of Finance

"Growth stocks are losing leadership to value," says Ralph Acampora, director of technical research at Prudential Securities. Here, Acampora discusses the technical state of the current market, and highlights a dozen stocks that could become potential new market leaders. 

"When looking at the daily bar charts of the leading market indexes (e.g. DJIA, the S&P 500, the Nasdaq Composite, etc.), one is in awe because they are still all trading above their respective 50-day moving averages (MAs). These strong, near-term momentum lines have served as excellent support since March when the indexes successfully retested their MAs, seven times . So far these trends are still firm to the upside. That’s the good news. But for the not-so-good news, we are seeing an increase in negative individual stock performance. Many of this year’s huge winners are coming under increased selling pressure.

"But what makes this whole affair so interesting is that there are other stocks that are doing very well—they appear to be the beneficiaries of the profit taking in the former leaders—money is rotating into the laggards. In fact, the 1 ½ year uptrend in the comparative relative performance of growth versus value, was just broken. This is noteworthy because it is happening in the large- , small- , and mid-cap arenas; this suggests to us that investors are preparing for some sort of market pause or correction in the not-too-distant future. A flight into value is not uncommon. We don’t think that this is a long-term shift, but it could manifest itself well into the first quarter of 2004.

"Rotation is best seen in the price action of individual stocks; listed below are some issues that appear to be under accumulation:

Stocks That Appear To Be Under Accumulation—They Should Be Purchased:

Close As Of

Fundamental

Company

Symbol

12/5/03

Rating

3Com Corp.

COMS

7.82

Bank One

ONE

44.41

Underweight

Boise Cascade

BCC

30.20

Neutral Weight

Cisco

CSCO

23.75

Overweight

General Motors

GM

46.05

Overweight

Hewlett Packard

HPQ

22.11

Neutral Weight

Honeywell

HON

29.92

Overweight

Orbital Sciences

ORB

11.00

Renal Care Group

RCI

41.01

Service Corp International

SRV

5.55

Smurfitt-Stone Container

SSCC

17.02

Neutral Weight

Waste Management

WMI

28.80

 

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