As the Nasdaq composite blasted through the 5,000-point milestone yesterday, Wall Street's most bullish strategists were already making their predictions for Nasdaq 6,000.
"Even when I made my fearless forecast of Nasdaq 5,000 in 2000, I never thought it would happen in 2 1/2 months," said Ralph Acampora, chief technical analyst at Prudential Securities. "But now that we've closed above 5,000, I think we can see Nasdaq 6,000 in the next 12 to 18 months."
He added that he would not be shocked if the Nasdaq hit 6,000 this year.
There's no doubt the Nasdaq's amazing growth spurt has caught the Street off-guard. In their year-end predictions, top strategists at the biggest brokerage houses came up with a consensus estimate that the Nasdaq would end 2000 at only 3,805. That's lower than where it ended 1999, but most strategists were predicting a correction for the popular technology-packed average.
Now they are changing their tune.
"We're still in an extremely strong bull market," said Dennis Peacock, a broker with A.G. Edwards. "I believe the Nasdaq is still undervalued and could go much higher."
A broad-based rally sent all the major market averages higher yesterday, as investors cast off interest rate fears and geared up for strong quarterly profits.
But as has been the usual pattern of late, the Nasdaq rallied even more than the other major averages. For the day, the Nasdaq was up 3.06 percent, compared to a 1.56 percent gain for the Dow.
And for the year, the Nasdaq is sitting on a gain of 24.02 percent, whereas the Dow has lost 12.93 percent of its value.
That's why Prudential's Acampora believes the Nasdaq will soon outpace the Dow although he declined to name a date.
Right now, the Dow is trading above 10,000 twice as high as the Nasdaq. But it took the Dow 104 years to reach that level. The Dow had 99 years to cross 5,000, whereas the Nasdaq did it in only 29 years.
"This is mind-boggling," said Elaine Yager, a vice president and technical analyst at Herzog Heine Geduld. "I feel like someone should be sending out signals, �Nasdaq to earth, Nasdaq to earth.'"
Yet even as she expressed shock at the rapidity of the Nasdaq's climb, she believed that it could still climb higher. Her charts show a short-term objective of 5,419 on the Nasdaq.
That's because the big leaders in the stock market are all Nasdaq stocks.
The biggest gainers yesterday were almost all Nasdaq stocks, including Dell, up $3.50 to $50.44; Microsoft, up $4.44 to $100; and Oracle, up 88 cents to $84.
Strategists attributed that to the technology sector's better chances for strong profit growth. Investors in other sectors remain concerned that an unexpected profit warning like the one that Procter & Gamble issued earlier in the week could take the steam out of their stocks.
Wall Street analysts are expecting first-quarter profits to be quite strong, across the board, though there may be isolated cases of profit shortcomings.
"There's no reason that profits shouldn't be good," said Lawrence Kudlow, chairman of the investment policy committee at Schroder & Co. "There's no recession in sight and no inflation in sight. I think the power of the Nasdaq is going to pull up the other indices. And everyone in America is going to love that."