, TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORl( STOCK EXCHANGE, INC MEMBER AME RICAN STOCK EXCHANGE – June 6, 1980 — O W ' . F'- ' – -;- One of the more faniiliar s'tock'–market aphorisms is that 'a given- market does not seem'to want to- go down. Imprecise as this phrase may be, it nonetheless constitutes an accurate -description, and it can certainly be applied to market action over the past couple of weeks. After having advanced some 100 points from the double closing bottom around 760 recorded on March 27-April 21, the Dow embarked upon what could have been a correction with a 14-point declme on May 29. A normal rebound from that decline last Friday was followed by two declining days to a modest new low of 843.77 on Tuesday of this week, followed by a 14.25-point advance on Wednesday. Thursday's trading had moved the aver- age back to new high territory before profit-taking set in late in the day. The apparent lack of desire to go down remains, for the time being, apparent. There is some irony in all this since the apparent trigger for the latest rally was the official an- nouncement by the National Bureau of Economic Research that January, 1980 constituted the beginning of the seventh recession m the United States economy in the post-World War II period. This recession has, for the past two years, been the most widely advertised non-event since the Second Coming. We have been told from many quarters over those two years that the stock market, in view of the obviously impending recession, was not the place to be. Over that period, the market, with its usual perversity, tended to act rather well. Finally this week, with the actual emergence of the long-awaited Armageddon, the market's response was a move to new highs for the current rally. It is not our intention with these comments to minimize the significance of the official onset of the recession, although we do think the action of the past two years demonstrates once again the utter futility of trying to mix economic prediction and stock market prediction. The recession does, we think, have some importance in an attempt to determine just where we are in the present stock market cycle. It must, first of all, be noted that the dating of the present economic contraction is, at least, interest- ing, and we must confess to lack of total agreement of those august gentlemen who picked January, 1980 as a precise start'date. As- we hoted in.tms space three weeks ago;' the NBER's own mdex otCOinaaent- -,- economic indicators peaked in March, 1979, and various other indices commonly associated with recession peaked somewhat earlier than that. An honest reading of figures on economic activity during 1979 sug- gests that the trend for the year was absolutely flat rather than either up or down, an occurrence which, we noted, was more or less without precedent in the post-war period. Under these circumstances, it seems to us, any date over a ten-month period could have been chosen as the start date for the reces- sion. For whatever reason, the NBER chose to fix on the latest date possible. This is not without significance as far as the stock market is concerned since there does, in fact, exist a relationship between recession peaks and stock market lows, the former generally leading the latter, although in many cases, by not very much. Thus the recession peak in July, 1953 preceded a stock market bottom in September, 1953, and a peak in August, 1957 led an initial stock-market low in October, 1957. Since, as discussed above, an obvious stock market bottom of some significance occurred on March 27, the two instances cited would constitute precedent for linking that bottom with a recession beginning in January. It is true that the last two recessions, 1970 and 1974, demonstrated longer lead times, but it is also true that neither of those two recessions was as well advertised in advance, nor were they preceded by long, flat periods such as 1979 where some of the correctionary forces associated with the contraction could exert themselves. We do not regard it as improbable, therefore, that, when the history of these events is finally writ, the market low of two months ago will turn out to be the one associated with the 1980 recession. Coincidentally with all this, the market, from a technical point of view, finds itself at a crucial stage. The two-month rally which we have just enjoyed has, to date, done just about all that could be expected of it in light of the base formed in April. We have been citing, for some time, objectives in the mid- 800's in the Dow, and those objectives have, of course, been attained. We now find ourselves, once more in the overhead supply between 850 and 900 which has repeatedly turned back all attempts at a meaningful advance for the past two years. , We think, in other words, the market has done all that could be expected of it in the way of a normal technical rebound, and from here on it will have to demonstrate its own intentions. Prior to the decline which characterized February-March, 1980, the entire trading range of the 1978-1980 period was looking more and more like a base formation presaging much higher levels. That prospect was temporarily quash- ed by the debacle of last winter. If the recovery from that debacle continues as impressively as it has so far, however, the hypothesis of a 1978-1980 base formation would come to have renewed validity. Dow-Jones Industrials (12 00 PM) S & P Composite (12 00 PM) Cumulative Index (6/5/80) 860.67 113.09 829.92 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWT sla No statement or expreS510n of opinIOn or Clny other moIler ht'r/!In contolned 15, or 15 to be deemed to be, direcTly or Ind,retlly, on offer or the sollcltotlon of on offer to buy or sell ony SCCUrity referred to or mentioned The mottcr 15 prcsented mercly for the conVel'lCnce of the subscriber While -HC believe the sources of our Informo tlon to be reliable, we In no woy represent or guarontee the accurocy thereof nor of the statements mude herein Any action to be token by Ihe subSCriber should be based on hl own Investlgotlon and Information Jonney Montgomery Scott, Inc, as a corporation, and I'S officers or employees, moy now have, or may later loke, positions or trades In respect to any securilies mentioned III thiS or any future Issue, ond such position may be different from any views now or hereafter expressed In Ihl Of any olhcr Issue Janney Montgomery Scott, Inc, which IS registered With the SEC os on Inesl-nenl adVisor, may give adVICe 10 ItS Investment adVISOry and othel customers Independenlly of ony statements made III th.s or In any other Issue Further Informotton on any security mentioned herein LS aVOlloble on request

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YOAI( STOCK EXCHANGE INC MEMBER AMERICAN STOCK eXCHANGE – -. We live, apparently, in an era of perversity. We have been officially pronounced to be in the mIdst of a receSSlOn; each day's newspaper brings us news of rISIng unemployment. inventory glut, and other manifestatIOns thereof; in the midst of all this, the stock market continues to rise. Nor is the stock market the only institution that seems to be defying conventional WIsdom. Ever since the accession of Mr. Volcker, we have been warned of monetary restraInt being exercised by those in authority. One by-product of monetary restraint, we were all taught in school, is rising interest rates. Yet the past two months have been characterlzed by a drop in interest rates possibly unparalleled in the entire financial history of the UnIted States. YIELDS ON SELECTED SECURITIES Pf.RCf.'l1 VERAGES OF DAILY RATES ENDED FRIDAY MONEY STOCK (MIA) 2\ 0 200 -Ll ';',,,1,, I AVERAGES OF DAILY FIGURES i SEASON ADJUSTED I ' U-J.-18 0 HE '- I I 1–t- -t–t———-rlII ,., -\-4l,L–1rI- ' tI- ' WAY l ,' In. !—-t-1-4–I—–t—–II AI \ u, r\l, ' I I ! /0J . 0'i i , i /1.., \ Y \I .t i ro I, / \ ' I\ I ' C ' 'Jt,. V i -1–1—–t- i \. 11 0 , – 1-.10 – — , ,1—r\- J' ! f— , ' I i i i — f— —11—' . – t' —,, ,I! , , c' ' I! I! '1'1, W. I' J .I, ,i , ' I 'n 1 II 'ItO I) l' IS I l S 10 ., n II no P lS . , ' ' ' WOV,n r i 'LLI UL Xl w..R .I,Pft 1980 6 e.D 0 ' I IS lQ .1L' 11 10 10 ,. 1 Ie )(I ,. 18 15 U r 11 I i 1 18!J- DATA CUIIJ'!NT OATA IlElI! ,N WOV lIS 1980 150,.,.0 OF QQVRS 11 15 RElEAS API! …..y JUN JUL AUG SEP 0C1 NOV DEC JoI.N fEB IAAA .rA l'01HI 1C/80 The lefthand chart tells the interest-rate story. Prime rates plunge almost daily. CD and Commer- cial Paper yields have been cut in half since early April. The yield reduction for long-term bonds, while less pronounced, has been in the area f 200 basis points. Ths is, of course, a theoretical sign of monetary ease, not monetary restraint. Restraint is, however. quite real if one looks at the right- hand chart which is the history of MlA, the simplest monetary aggregate. We have actually seen an irregular plunge in the money supply since about mid-February. Continuance of current trends would suggest that it might develop into the sharpest money-supply contraction of the entire post-war period. Somewhere there must exist an explanation for this paradox. There s one, we think, and it arises from what seems to be a gradual shift in attitude on the part of the monetary authorities. In years past, the Fed's preoccupation was with interest rates as a gauge of the tightness of money. Today, that preoccupation is being shifted to monetary aggregates. We are coming to realize the extent to which these two phenomena are over the short term, mutually exclusive. Keeping interest-rate changes gradual, one of the FedIS major concerns in the past. led to sluggiSh changes in the behavior of money stock. Attention to money stock leads, as we are learn- Ing, to wild gyrations in interest rates. — As the recession persists, we think this dichotomy will continue. Bank loans and borrowed reserves have been plummeting. The Fed, we think, will have to take measures to moderate the money-stock decline which has been going on since February. A reduced demand for funds will mitigate against this. It may well be that despite the wild gyratlOns on the lefthand chart, that we ain't seen nothing yetI! as far as dechning short-term interest rates are concerned. Meanwhile. as yesterday's New York Times pointed out, there exists something approaching 500 billion in bank certificate accounts and money market funds whose yields are plunging and may continue to do so. The attractiveness of these investments, at least from a return point of view. is, we think. hardly likely to improve. Herein may lie a partial explanation of the stock market's behavior in the face of woeful economic news. Dow-Jones Industrials (12 00 PM) S & P Composite (12.00 PM) Cumulative Index (6112/80) AWT .sla 873.21 115.65 845.54 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or of opinIon or any other matter herein contained IS, or IS 10 be deemed to be. directly or ondorectly, an oHer or the 501lcltoloon 01 on oHer to buy or sell any lecuflty referred to or menhoned The moiler IS merely for Ihe COnVef'lllnCt! of the Whlle.Je believe the Ources of our Informo tlon to be rehable, we In no woy represent or guarantee the accuracy Ihereof nor of Ihe statemenls mude herem Any act,on to be taken by the subKnber should be based on hiS own ,nvestrga/ron and rnformcrhon Janney Montgomery S'ott, Inc, as cr corporatron, and rts offrcers or employees, may now have, or may laler lake. or Irade' In respect to any seCUrities mentioned In thiS or any future ISSue, and such poslt,on may be d,fferent Irom ony views now or h8reolter In thiS or any other IHue Janney Montgomery Scot. Inc, wh,ch IS reg,stered wllh the SEC on Investment adVisor, may g,ve adVICe to Its ,nvestment adVISOry and other customers Independently of any statements made In thiS or In any other Further Information on any seo.lflty mentioned here'n IS ovarlable on request

.; .!' ' .. TABELL'S MARKET LETTER 909 STATE ROAD, PRINCi!TON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YOAK STOCK EXCHANGE, INC MEMDEA AMERICAN STOCK EXCHANGE June 20, 1980 – – With thesfoCkmarket, -arleasttlirougnWednesday,having acted reasonalily -ins perhaps- – worthwhile stepping back and trying to reassess the longer-term picture. The chart below attempts to do this. It shows our interpretation of what constitute the major swings in the S & P 500 from June, 1949 to date. It is drawn to scale both horizontally and vertically with the vertical scale being loga- rithmic so that equal percentage changes show up as equal vertical distances. The horizontal scale is based on trading days and covers some 8,350 days ending approximately in April, 1982. lJL!' 100 \ /gO 197'-) 00 70 GO 50 40 SEP 14 1953 20 JUNE 1949 – ORTE I1033 DAYS 1177 OArS 1101 ORrs I1043 oRlS The length of each completed cycle in days is shown at the bottom of the chart, the cycles being measured from low to low. The consistent length of the swings to date is quite interesting and explains the popular, if not quite exact, concept of the four-year cycle, there being approximately 1,020 trading days in a four-year period. Most analysts would agree, we think, with the interpretations shown on the chart through 1974. For the most recent period, not surprisingly, there are conflict- ing interpretations. We have chosen to date March 6, 1978 as the end of a completed cycle, 863 trading days in length. This is somewhat shorter than the others but not out of line when contrasted with the experience of the entire century. If our interpretation is correct, the new major cycle which began on March 6, 1978 is now 579 trading days old. As the chart shows, this is barely half of its expected length of 1,043 days based on the average of all the cycles shown. An alternative view, of course, is that we remain in the cycle which began in 1974. If that is the case, that cycle is now 1,442 trading days old and would not be complete until another major low is reached. For this reason, we reject that interpretation. To our mind, the crucial issue is interpreting the cycle which we date as beginning two years ago. As the chart quite clearly shows, the four cycles through 1966 spent the bulk of their time in advancing phases. The three completed cycles since have tended to peak around the middle of their term. If the current cycle follows the pattern of those three recent ones, an imminent or even past peak is a logical expectation. If, on the other hand, it conforms to the earlier cycles and spends the bulk of its life in an advancing phase, a great deal more room exists on the upside. We, therefore, intend to try to dis- sect this cycle further next week. ANTHONY W. TABELL Dow-Jones Industrials (12 00 PM) 869.62 DELAFIELD, HARVEY, TABELL S & P Composite (12 00 PM) 114.17 Cumulative Index (6/19/80) 852.79 AWTsla No statement or of OpinIOn Of any other molter herein conlolned IS, or IS 0 be deemed to be, directly or ,ndlfectly, an offer or Ihe soliCitation of an offel to buy or sell any seturity referred to or mentioned The matter IS presented merely for the converlenCij of the subs!;nber While we believe the sources of our Informa- tion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude hen!!n Any actIOn to be by Ihe subSCriber should be based on hi' own Invesllgotlon and Information Janney Montgomery Scott, Inc, os 0 corparollon, and liS officers or emploees, may now have, or may later toke, po,llonl or trades H'I respect to any seCUrities mentioned In thiS or any future Issue, and such pOSition may be different from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to IS Investment adVisory and olher cuSlomerS Independently of any statements mode In Ih,s or In any other Issue Furlher ,nformation on any seturlly mentioned herein (s cVOllable on request

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 081540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE June 27, 1980 In this space last week, we examined the record of seven major stock market cycles from June, 1949 to in-thissPl'l!e thaCa newsuch-cyCle- u began on March 6, 1978. The purpose of this week's letter will be to examine that cycle in greater detail. The chart below shows the action of the S & P 500 on the current cycle, with its major high and low points drawn to scale. As can be seen, it has consisted so far of four major upward moves, the last of which has recovered almost all, but not all, of the previous ground lost. The crucial issue, of course, is whether the current rally will carry on to new peaks and thus represent a continuation of the cycle. – NO 19GB SEP 1976 JRN 1973 jJ, J! 9S, DFr JtJL 19S) DEC 190 1 FEB 1906 ' FB P Jg, HIN 19L1qSFP 1953 F 15 , OCT 1957- !lIN 1962 II IN 10620C1 1966 r y \ r r 10 19BO 100 .JllL MAR NOV 7 1979 MAR 27 1980 NOV 14 1978 In terms of length, it seems convincingly arguable that the current cycle has a good deal longer to go. The horizontal bars drawn through the middle of the chart show the length, in trading days, of each of the previous seven major cycles. It is visually obvious that each one lasted considerably longer than the present one. Even were the present cycle to duplicate the short lengths of 1966-70 or 1976-78, it would still have well over a year remaining. However, cycles are measured from low point to low point, and the key question is whether the high of Feburary 13 constituted the peak for the current cycle. The relative times of the previous cycle peaks, again drawn to scale on the chart, are shown by the vertical tic marks on the top of the chart. It may be noted that both the 1974-78 cycles and the 1966-70 cycles peaked at about the same relative point that the present market had reached last February. Duplication of the 1970-74 cycle, with its peak in January, 1973, would result in a high to be reached fairly shortly. If, however, the earlier cycles were duplicated, the ultimate peak of this one could still be a year and a half away. As the chart shows, the peaks of 1953, 1957, 1961, and 1966 lie well to the right of the present market on the time scale. Most interesting, however, is the level of the various highs in each previous cycle based on percentage advance from their individual lows. These levels are shown with the tic marks on the righthand side of the chart. It can clearly be seen that all five of the cycles shown attained percentage advances much greater than the advance from March,1978 to date. The reason the other two cycles, with peaks in 1953 and 1957, are not shown is that they both involved advances in the area of 100, off the top of the chart. In terms of cycle analysis, therefore, it seems to us that the market is currently at a crucial stage. Ex- tension of the present advance to new highs would suggest that the now-two-year-old market cycle continues in its upward phase. If this is the case, the historical record would suppport the likelihood of a protracted period of advancing prices with further substantial percentage increase. A reversal, however, would raise the likelihood that the peak of last February was comparable to those of 1968 and 1976, and the outlook would then have to be rated as considerably less than sanguine, with a retracement of at least the entire advancing phase of the cycle a distinct possibility. Dow-Jones Industrials (12 00 PM) 879.86 S & P Composite (1200 PM) 115.83 Cumulative Index (6/26/80) 865.80 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AW'f!No. ssitoatement or expresSIon of opInion or any olher moiler herein contOlned 15, or 15 to be deemed to be. directly or indirectly, on offer or Ihc soI ICltatlOn 0f on a ff er to buy or sell any security referred to or mentioned The moiler IS presented merely for the of the subscriber While -Ne believe Ihe sources of our informa- tion to be reliable, we In no way represent or guorl'nlee the accuracy thereof nor of the statements mude herein Any action to be token by the subscriber should be based on hiS own Investigation and Information Janney Montgomery Scoll, Inc, as a corporotlon, and Its officers or employees, may now have, or may later take, positions or trades In respect to any securities menhoned In Ihls or any future Issue, and such posItion moy be different from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Iflvestmenl adVISor, may give adVice to lis Investment advl10ry and other customers rndependently of any statements made rn thiS r In any other Issue Furlher Information on any securrty mentroned herein rs avollable on request