Tabell’s Market Letter – October 24, 1980

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, tNC. MEMBER AMERICAN STOCI( EXCHANGE October 24, 1980 It is now apparent that the stock market has entered into a new phase, which phase can be dated, – approximately ,-from .A when the Dow-Jones.lndustria!, Average reacllecl, a, high oLlI6li. 72.This high was followed, three weeks later,- by a closing low of 928.58 on September 8 and a-'sharp rally to a 1980 high of 974.57 on September 22. A week later the Dow had plummeted to 921.93 on September 29, and three weeks afterward had rallied to 972.44 on October 15. It has since retreated, most notably in a 15-point slide in Thursday's trading. The action of the S & P 500 over the same period has been similar, but with more of an upward bias, that index's 1980 high having been reached at 133.70 just about a week ago. We have, quite obviously, a trading range circumscribed by the 5.71 range, between 921 and 972, over which the market moved in late September, and market action for the past two months has essen- tially been contained within this range. Trading ranges may be defined as the range of a given index over some fixed number of days, 50 trading days having been proven to be an appropriate figure for analytical purposes. Ever since October 6 the high and low for the Dow over the preceeding 50 days has been confined by the 5.71 figure mentioned above. This statement has continued to be true for the last 15 days. This is, by no means, an unduly long period. The following table lists all periods of 30 days or longer since 1949 when the difference between the 50-day high and low for the Dow has been less than 6. Also tabulated are the one-month, two-month, and six-month changes in the DJIA following the periods in question. Daie JUN 3 1949 MAR 24 1950 IEC 30 1950 A 51 JUN 26 1952 NOV 18 1952 APR 2 1953 SU' 10 1953 MAR 2 1956 AUG 13 1957 MAY 5 1958 JUN 3 1960 AUG 3 1961 NOV 14 1961 JAN 25 1962 1962 AUG 29 1963 JUL 16 1964 JUN 8 1965 FEB 28 1966 HAY 1 1969 JUL 14 1972 OCT 8 1976 HAY 23 1977 JUL 26 1977 AUG 10 1979 In DJIA IlLEod 59 167.24 55 209.78 37 235.41 35' '1c;21-L3 71 271.24 65 278.04 44 280.03 38 262.88 33 488.84 38 492.14 39 461. 12 36 628,98 48 715.71 30 732.56 35 696,52 32 683.69 55 7'6.40 75 847.47 145 889.05 73 951. 89 36 949.22 49 9.22.26 115 958.38 48 917.06 38 908.18 34 867.06 I J I A ll!oot,b l Cbs 170.68 2.06 1.88 244.51 3.87 c.!l.9j .;lO 278.57 -3.05 2.70 286.52 3.05 278.22 -0.65 266.09 518.65 '–1 'i . 6.10 481.0' 468.55 1. 61 640.37 1 .81 718.72 0.42 729.40 -0.43 1.82 611.88 -10.50 738.33 1.64 840.21 -0.86 879.49 -1 .08 919.76 -3.38 930.78 -1.94 969.97 5. 17 924.04 -3.58 925.37 0.91 854.12 -5.95 870.90 0.44 Af t e r 3Ciooibs LCbs 179.07 7.07 219.70 4.73 252.18 7 t 12 250.43 -2.61 74.41 1.17 287.84 3.52 267.63 -4.43 275.93 4.96 516.44 5.65 447.90 -8,99 480.00 4.09 614.29 -2.34 708.49 -1.01 696.03 -4.99 711.28 .2 1! 536.98 -21.46 755.23 3.97 868.67 2.50 878.89 -\ .14 931. 95 -2.09 886.12 -6.65 947.32 '.72 974.24 1.65 888.4, -3.12 835.85 -7.96 838.89 -3.25 6!iooibs 193.23 218.33 24Q.65 275.74 'B'-;-O-' 78.04 264.79 298.88 500.90 543.31 594.56 702.54 655.36 574.67 568.60 802.75 887.18 939.53 792.37 848.34 1025.59 918.88 770.70 885.49 LCbg 15.54 4.08 6.05 7.24 '6 T9 0.00 -5.44 13.69 2.47 -10.12 17.82 -5.47 -1.84 -10.54 -17.49 -16.83 10.51 4.69 5.68 -16.76 -10.63 11 .20 -4.12 -8.87 -15.14 .2.13 Results are diverse. The major bear markets of 1957, 1961-62-, and 1966 were preceeded by such trading ranges, as was the decline of 1977-78. In many other cases, however, as the table quite clearly shows, the trading range proved only a stopping point on the way to what ultimately proved to be significantly higher prices. What is perhaps interesting is that with the single exception of April, 1962, there was no case where the market moved significantly lower after only a one-month period. The trading ranges, in other words, tended to occur early in the distributional stage, affording time to react if downside breakouts made it obvious that they constituted distribution. This, we think, will be the case in 1980 if, indeed, the present phase turns out to be a distributional top. Dow-Jones Industrials (1200 PM) 938.57 S & P Composite (12 00 PM) 129.28 Cumulative Index (10/23/80) 1006.88 AWTsla ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expression of OPinion or any other molter herein contained IS, or 15 to be deemed to be, dHedly or Indirectly, on offer or the SollCitotlon of on offer to buy or sell any security referred to or mentIOned The matter IS presented merely for the COnvePlcnce of the subscriber While oNe believe the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the stotements mude heretn Any action to be token by the subcnber should be based on hiS own Investlgollon ond tnformottol Janney Montgomery Scott, Inc, as a corporation, and 11 officers or employees, may now hove, or may loter take, POSltlOrtS or tlodes In resped to ony securttles merttloned in th.s or ony future lSue, ond such position moy be dlfferenl from any views now or hereofter e;rpreSed In or any othttr luue Janney Montgomery Scott, Inc, whICh 15 reglllered WIth Ihe SEC as an II'1ve/ment advl50r, may give adVICe 1o liS Investment adVIsory and other customers Irtdependerttly of arty stotements mode Irt thiS or In any other ISSUe Further IOformatlon on any secullty mentIOned herein IS available on request