Prominent market technician Ralph Acampora thinks the stock market, and specifically the Dow Jones Industrial Average, has more than 7% left to climb by the end of the year, if the technology sector doesn’t buckle under the weight of persistent worries about valuations.
The market technician said the one proviso is that highflying technology names, which enjoyed a respite in the green on Tuesday after a two-session beatdown, stay above their recently minted lows.
The tech sector enjoyed a reprieve from that slump on Tuesday, helping the Dow, the S&P 500 and the small-capitalization focused Russell 2000 index RUT, -0.59% all finish at all-time highs.
This is quite different to the situation before the dot-com bubble burst, when the valuations of technology companies often appeared to have little to do with their ability to generate income,” John Higgins, chief market economist at Capital Economics, wrote.
To be sure, the Capital Economics report doesn’t maintain a bullish outlook on the overall stock market because the firm contends that companies’ abilities to squeeze out profit in the future is limited.