Tabell’s Market Letter – March 14, 1980

Tabell’s Market Letter – March 14, 1980

Tabell's Market Letter - March 14, 1980
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.', TABELL'S MARKE.r, LETTER' 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORI( STOCK EXCHANGE. INC MEMBER AMERICAN STOCK eXCHANGE . March 14, 1980 'thes-teepnessOf 'the94 28-poillf decline- .. – in the Dow-Jones Industrial Average which, since its recent high of 903.84 posted on February 13 of this year has, in the short period of 21 trading days, declined 10.45 to a low of 809.56 on Thursday of this week. This letter recently discussed the possibility of market weakness over the short term, citing the possibility of a move to the 800 level. The correction best measured by the Dow-Jones Industrial Average five-point unit chart indicates a downside objective of 805795. However, to date, all the available technical evidence does not 'suggest any sort of major long-term deterioration from these levels, particularly in the broader-based Stardard & Poors and New York Stock Exchange Composite averages. The market, quite obviously is oversold short term, by any measure that might be applied. The familiar 10-day advance /decline oscillator which on March 7 reached an oversold condition of -5806 is by no means a record. This was, however, recorded on October 27, 1978 when the 10day advance/decline oscillator reached -9382. To make these figures more compatable historically, they could be adjusted for the number of issues traded, as we have done in the past when discussing long-term breadth of the market studies. However, for this exercise, raw advance /decline data is used, which does not distort the results significantly, only limits the observations to recent periods. A study of the history of this oscillator over the years reflects a tendency of the Dow-Jones Industrial Average to rally after these oversold levels have been reached. 10-Day -Total DJIA Percent DJIA Percent DJIA Percent Date Adv-Dec DJIA 30 Dars Change 60 Days Change 120 Days Change . Aug 29 1966 -6,288 767.03 758.63 -1. 095 796.82 3.884 847.88 10.541 May 26 1970 -6,259 631.16 682.09 8..069 723.99 14.708 768.00 21. 681 Nov 26 1973 -5,898 824.95 834.79 1.193 846.84 2.654 818.84 -0.741 Oct 27 1978 -9,382 806.05 817.65 1. 439 846.41 5.007 856.98 6.318 Oct 22 1979 -6,682 809.13 824.91 1. 950 863.57 6.728 000.00 0.000 Mar 7 1980 -5,806 820.56 O.OU 0.000 000.00 0.000 000.00 0.000 . To justify this statement, with the help of our computer, the table above lists every oversold condition where a plurality of declines outnumber advances by 5800 or more to include the most current oversold condition. . It is interesting to note that there have been only six of these observations ever recorded, all occurring over the last 15-year period. The remainder of the table lists the DJIA close as of each oversold condition and then reviews the performance of the DJIA 30,60, and 120 days from the oversold condition. A casual inspection of the table shows the DJIA has advanced from the oversold condition in 12 of the 14 time periods observed. The two periods not advancing were down an average of less than one percent. The average advance of the 3O-day period was 2.31, 60-day period was 6.60, and 120-day period 9.45. Clearly what this data suggests is the tendency for markets to rally from their ultimate sharply- oversold condition. If we assume the March 7 figure of – 5806 was the ultimate oversold condition, and if we apply the above logic to our current market, we become not so concerned as to where the market is going on the downside from here — as mentioned earlier, 805-795 has seemed possible — but rather the behavior of the market after it rallies from its current oversold condition. It would seem, therefore, any clues for any further long-term deterioration would manifest itself from higher levels rather than the current 800 level. ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TAB ELL Dow-Jones Industrials (12 00 PM) 809.22 S & P Composite (12 00 PM) 105.10 Cumulative Index (3/13/80) 746.89 RJS sla No statement or expression of opinion or any other matter herein contolned IS, or IS to be deemed to be, directly or ,ndlrec1Ir,' an offer or the soJlcllohon of on offer to buy or scll ony secunTy referred 10 or mentioned The molter IS presented merely for the conver'lenC! of the subscriber Wh! e e believe the sources of our mforma lion 10 be reliable, we In no way represent or guarantee The accuracy Ihereof naf of Ihe statements mude heleln Any cctlon to be token by the ubcrlber should be based on hiS own mvest,gat,on and mformollon Janney MonTgomery Scott, Inc. os a corporotlon, and ItS officers or employees, moy now hove, or moy later toke, poSlhons or hades ,n respect to any SecUfltll.lS mentioned m thiS or any fulure lSue, ond such position moy be dlfferenl from onv views now or hereofler c)(pressed m Ih,s or ony other Issue Jonney Montgomery Stoll, Inc, which 15 regiStered With the SEC as on Inveslment adVisor, may give adVICe to la Investment adVisory and olhel customers Independently of any stalements mode In It-us or m ony olher Issue Further Information on ony.securlty menlulned herein !5 ovollable !;In request

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