Tags: Ralph Acampora | Trump | Reagan | Stock Rally

Ralph Acampora: Trump Stock Honeymoon to Linger for a 'Couple More Months'


By    |   Wednesday, 22 February 2017 05:27 PM

Veteran stock technician Ralph Acampora said the stock market rally which began upon Donald Trump’s presidential victory is far from over.

The director of tactical investments at Altaira Capital Partners told CNBC that he sees similarities between the Dow's climb during the Reagan administration and its current rally under Trump. The so-called godfather of the charts says that the current Dow advance is essentially going through a similar "honeymoon period" that followed Reagan's election.

"From the Election Day of November of 1980 to April of 1981, in just a six-month period, the Dow gained about 15 percent," Acampora told CNBC.

"That was his honeymoon period. Trump is in office now, since Election Day [it has been about] four months. So theoretically, if time has any impact, Trump might have a couple more months left to his honeymoon," he said.

The Dow is up more than 13 percent since the election.

After Reagan's "honeymoon period," the Dow dropped by as much as 25 percent through the rest of 1981, which Acampora says happened thanks to the amount of time it took Reagan to implement his policies, CNBC reported. Trump could face the same problem, Acampora said.

Acampora, however, says that this doesn't diminish the fact that "that bottom in August of 1982 was the beginning of the next secular bull market that lasted 18 years." In other words, if history were to repeat itself then "what Trump wants to get done could long term be super positive for the market."

"I think you could have a similar run in time," he added. "Trump has another couple of months because he's four months after the November election. I think the momentum you're seeing now and the leadership you're seeing now begs that [the market] goes higher."

Acampora believes that Dow 22,000 is only a few short months away, meaning that the index could have another 6 percent left to run by summer 2017.

Trump's promises to cut taxes and roll back regulation have fueled hopes of a pick-up in the U.S. economy, sending stock markets to record highs, with the Dow Jones up 13 percent since his election victory, Reuters reported.

But hedge fund managers like Seth Klarman, who has been running $30 billion Boston-based hedge fund Baupost Group since 1982, worry Trump's polices may cause a sharp rise in inflation, while his protectionist tone on trade could hit other major economies.

"We could find ourselves at the beginning of a lengthy decline in dollar hegemony, a rapid rise in interest rates and inflation, and global angst about the stability and wisdom of American leadership," Klarman said in a letter to investors on Feb. 8 that was shared with Reuters.

"The Trump rally – in my opinion – saw global markets price in a huge amount of hope around his campaign promises, while ignoring the knock-on risks to fragile economies like Japan that export to the U.S.," said Shannon McConaghy, a portfolio manager at London-based Horseman Capital.

(Newsmax wires services contributed to this report).

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Veteran stock technician Ralph Acampora said the stock market rally which began upon Donald Trump's presidential victory is far from over.
Ralph Acampora, Trump, Reagan, Stock Rally
Wednesday, 22 February 2017 05:27 PM
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