Friday’s market selloff does little to change the fact that more record highs are still ahead for the Dow, said top market technician Ralph Acampora, who sees the Dow rallying close to 25,000 by the end of the year.
Late last week, stocks came under pressure, with all three major indices plunging after former national security advisor Michael Flynn plead guilty to lying in the FBI’s Russia investigation. The Dow fell as much as 350 points at the lows of the session, but pared most of those losses into the close.
The bounce back from the lows is a key indicator in the resilience of the market, Acampora told CNBC last week. It’s why even Friday’s brief selloff still has him sticking to his bullish position on stocks, and the Dow in particular: Year-to-date, all three major market indices remain up by double digits.
According to Acampora, the blue chip stock index could come close to hitting 25,000 by the end of 2017. The director of Altaira Research Partners’ technical analysis has his official sights set on 24,986 on the Dow by year-end — thanks to a few key indicators.
“The momentum is there, and if you look at the chart of the Dow and the Dow Jones Transportation Average, you’ll see both of them are at all-time highs, and since October that has not been the case,” he told CNBC’s “Futures Now” last week.
Acampora referred to a confirmation of the Dow Theory, which posits that a divergence between the Dow index and the Dow Transportation index points to a pullback waiting to happen. However, the Transports index rallied 5 percent last week, essentially lessening the divergence between itself and the Dow, which had been hitting all-time highs while the transports lagged.
“If the oldest theory in technical analysis is to be believed, then you have a reconfirmation of the primary bull market, and that’s very impressive,” added Acampora.
The rally in transports also comes on a rotation that Acampora sees happening in the market. While tech stocks sold off last week, transports and financials were among the sectors that rallied, which Acampora sees as a positive for the market.
