TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEM8ER New YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCI( EXCHANGE December 19, 1980 past;,It first a review of the year just to ,9Ltwosubjecls ,t.he . fOllowe-d-'byan 'attempt to forecast 'the 'shape of the market for' the year ahead. That tradition dictates, therefore, that this letter be devoted to a retrospective view of the year 1980. It was a very good year, or perhaps, to put it more accurately, it was a very good spring and summer — six months of a good stock market apparently being about the best we can expect these days. Insofar as the stock market is concerned, the parties see!'l to Qe geHing shorter. Those of us who have been around for a while can recall that there was, indeed, once a time when the mar- ket spent periods of as long as two or three years doing very little except going up. It may well be that such happy times will return. Meanwhile, we shall have to content ourselves with episodes such as the middle six months of 1980. The start of this particular party can be precisely dated. It began on March 27, 1980, a day which has come to be called Silver Thursday. In an almost textbook example of an intraday sell- ing climax, the Dow on that day posted an intraday low more than 30 points below its previous day's close, tacking on more than half of this loss between 2 and 3 PM. Almost all of the decline was then retraced in the last hour of trading, with total volume reaching over 63 million shares. From that day, on which the Dow closed at 759.98, the market's course was almost a straight upward one. The average moved through 800 in late April, through 900 in mid-July, and attained a high of 966 on August 15. Other indices followed parallel courses. From that point, however, the rise slowed down. Basically, we witnessed lateral movement through September and October, followed by a downside thrust just prior to the election, the post-election rise to 1000.17 on Nov- ember 20, and most recently, the 100-point drop which took the Dow to an intraday level of under r . ….-, ' . ' ,,' ' , ' , . -. , In the light of this sort of action, any attempt at a forecast must address itself to a rather ob- vious question. That question centers on whether the irregular market since mid-August consti- tutes part of a distributional top formation presaging market weakness for 1981. The question, in other words, is whether 1000.17 on November 20 (140.52 a week later for the S & P 500) constitutes an intermediate-term high for the market. As a preface to discussion of this question, it is perhaps appropriate to back off a bit farther into history and see just how we arrived at Silver Thursday last March. To attain a full perspec- tive, we must go back to 1974, a watershed low of stock market pessimism with the Dow under 600, and a P IE Ratio approaching 6. This benchmark was followed by a two-year rally to over 1000 in 1976 and a two-year-Iong, albeit mild, decline to March 1, 1978. 1978 and 1979 saw repeated rallies to just over 900, all of which were turned back, followed by a full-scale test of the 1978 low this spring. It is also worthy of note that, as of this spring, the Dow P lE had returned to just about the same depressed level which it had attained in 1974. The ensuing market rally, coupled with recession-induced, mildly declining earnings, has increased this P IE somewhat, but not by a sig- nificant amount. The essential point, and one that has been made many times in this letter, is that this perform- ance by the Dow (and by the S & P 500, which is about the same with a slightly-more-pronounced upward bias) significantly understates what has really been happening in the stock market. Our Cumulative Index of all NYSE stocks, rose from its 1974 nadir of 345 to a September, 1978 peak of 832, never participating in the Dow's 1976-78 bear market. For this indicator, 1978-80 constituted a lateral trading range between the mid-800's and mid-600's, that latter low having been finally tested this March. The 1980 performance of. the Cumulative Index has been an adv8p.c;,e from 661 ' on March 27 to over 1040 at the end of November. '' Putting all this in another perspective, the Dow, at its high of last month, stood 73 above its watershed 1974 low and 31 above its double-tested bottom of March, 1978 – March, 1980. The Cumulative Index', by contrast, had advanced some 200 from 1974 and almost 60 from the 1978- 1980 bottom. It was following these advances, fairly modest ones in the senior averages and rather sharp ones in the broad-based indicators, that the market began to move laterally last August. It is within this framework that we shall, next week, try to formulate a 1981 forecast. Dow-Jones Industrials (1200 PM) S & P Composite (1200 PM) Cumulative Index (12/18/80) 933.79 133.33 985.59 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL AWTsla No statement or expression of opInion or ony other motler herein contolned IS, or 1510 be deemed to be, directly or indirectly, on offer or the 5011(llollon of on offer 10 buy or sell onr. security referred to or mentioned The moiler IS prcsenled merely for Ihe corlVerlcnc!; of the subSCriber Whde we believe the sources of our Information to be reI lab e, we In na way represent ar guarantee the accuracy thereaf nor of the statements mode herem Any action to be token by the subSCriber should be based on hiS own investigation and mformohon Janney Montgomery Scott, Inc, as a corporallon, and lIs officers or employees, may now have, or may loler toke, positions or tradeS In respect to any securities mentioned In thiS or any future Issue, and such posItion may be different from any views now or herelfler e;pressed In thiS or any other Issue Janney Montgomery Scott, Inc, whICh IS regtered With the SEC as an Investment adVISor, may give adVice to 11 Investment adVISOry and othel C\lstomers Independently af any statements mode In thiS or In any other Issue Further information on any security mentioned herein 1 aVailable on request

,, I' TABELL'S I' MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08!540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGe, INC MEMBER AMERICAN STOCK EXCHANGE December 24, 1980 There are a number of factors which, it seems to us, need to be considered in trying to put to- of areof speciaLinterest tech- nician were discussed' at length in this space last week, That discussion concern'ed'itself-with'the fact that two major stock price bottoms could be identified over the past two-and-a-half years, those of March, 1978 and March, 1980, The letter went on to note the fact that, since the major stock-market low of 1974, most broad-based indices had advanced sharply, whereas the Dow, and, to a degree, the S & P 500, had made comparatively little progress. The forecast problem from a purely technical point of view centers around determining the nature of those 1978 and 1980 bottoms in relation to the over- all cyclical process. However, even in a technical market letter such as this one, it is necessary to observe other con- siderations in arriving at a forecast. Here again, there are a number which seem to have obvious rele- vance. The first, of course, is interest rates. Twice during 1980, we have witnessed record or near- record short-term interest rate levels, the first time this spring, followed by a recovery and a return to those record levels in recent weeks as the nation's major banks fell allover themselves in an effort to raise the prime. The second downswing was especially demoraliring for the bond market, causing what could be described, at best, as chaos. A natural corollary to all this is the effect current interest-rate levels may have on business activity in 1981. Certainly, conventional wisdom tells us, any recovery should be slowed down by the current monetary stringency. It is, indeed, not impossible to visualize the reemergence of recessionary forces, the so-called double dip that economists were talking about late this fall. All of this is taking place just prior to the inauguration of a new Presidential adminstration, one with an apparent electoral mandate to moderate the hyperinflation of recent years. While the precise direction that this new administration may take is not yet certain, it is hard to believe that some of the necessary steps are going to be without pain. To this must be coupled the oft-observed and natural tendency of any new regime to administer painful economic Intheface ofafiof fills, wOe' are-looking, as we noted-iIi the firsq;aragraph',-aCa markeCwhich- — ,- -, posted a major low nine months ago and is now within striking distance of a high posted as recently as late last month. We have watched, through all of 1980, a stock market which has, by and large, been willing to ignore the negative factors alluded to above. With this in mind then, back once more to the technical position. If a cyclical bottom, in the Dow at least, occurred in March, 1978, a peak for that cycle at 1000 in November, 1980 would not be entire- ly out of the question. However, as we have noted at various times during the year, a further ex- tension of the advance into 1981, before any major peak was reached, would be an equally likely possi- bility. The pattern on the Dow, moreover, continues to suggest somewhat higher levels. It can, however, not be gainsaid that, as we progress farther into 1981, a stock-market cycle which is taken to have begun in early 1978 will be moving into what must, on an historical basis, be considered a mature stage. It will be the technician'S major task during the year to try to identify the signs of formation of a stock-market peak. It is, indeed, conceivably possible that such signs may already be accumulating, and they would be reinforced by a weak year-end rally, something we will discuss in our next issue. Nonetheless, in view of a stock market which has been ignoring unfavorable fundamentals all year, we are not yet ready to state that such a peak has already occurred and would instead build a 1981 forecast on the anticipation of further strength, at least during the first half of the year. Such strength, we think, if it occurs, may well be centered on the basic industrial stocks, notably represented in the Dow-Jones Industrial Average, since it is these stocks which remain relatively un- exploited and possess major accumulation bases suggesting the possibility of longer-term higher levels. Strength in these issues could possibly produce a Dow-Jones Industrial Average in the 1200-1300 range. If the year-end rally does, indeed, follow through and the envisioned' strength takes place, the market could then be subject to a correction of some magnitude, the exact extent of which remains, at this stage, unclear. The only interpretation of recent market history that would obviate the need for such a correction would be the assumption of a cycle bottom in March of this year. Such an interpre- tation would call for continued market strength throughout 1981. For the purpose of a working forecast, we prefer to remain within the framework outlined above. That framework would anticipate continued market strength during the first part of 1981, followed by some correction or consolidation in the second half. Such a forecast calls, for the time being at least, for a continuation of the positive attitude expressed toward equities by this letter over the past few years. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Dow-Jones Industrials (200 PM) 959.56 S & P Composite (2 00 PM) 135.36 Cumulative Index 12/23/80 1013.13 WE WISH YOU ALL A HAPPY AND PROSPEROUS NEW YEAR AWTld No statement or cxprenlan of op'nton or any other matter herem contolned 1, or IS 10 be deemed 10 be, directly or indirectly, on offer or the soliCitation of an offer to buy or sell onr. security referred to or mentioned The moIler ,s presenled merely for the of lhe subscriber While e believe lhe sources of our Informa- tion to be rei ,ob e, we In no way represenl or guarantee the accuracy lhereof nor of the statements mude herein Any ochon to be token by lhe subSCriber should be based on IllS own investigation and ,nformation Janney Montgomery 5011, Inc, as a corporation, and Its officers or employees, may now hove, or may later POSitiOnS or trades In respect to ony secuntles mentioned In th,s or any future Issue, and such position may be different from any v,ews now or hereafter expressed In thiS or any other Issue Janney Montgomery Scali, Inc, which '5 registered wllh the SEC as on Investment adVisor, may 9,ve adv'ce to 11 Investment adVISOry and olhel customers Independently of ony statements mode If'l thiS or In any other ,ssue Further information on any security mentioned herem IS ovollable on request

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE December 31, 1980 – — For some years now; -we haVestiidiectthefamiliar seasonaf. a-stage —'1- year-end rally, and it has been the custom of this letter to point out some of the conclusions that can be derived from a study of this phenomenon. We have suggested that an exhaustive study, since the Dow- Jones Industrial Average first was computed in 1897, indicated that such a rally, however miniscule, in- variably had taken place. Until recently, the year-end rally as measured by the Dow-Jones Industrial Average had always carried into January. However, two recent periods, 1976-77 and 1977-78, have pro- vided exceptions, failing for the first time in the history of the DJIA to continue into January. The 1977 bear market began from a high of 1004.65 on the last day of December, 1976. In 1978 the bear market con- tinued, penetrating the December, 1977 low on the first day of the year, plunging almost 100 points before bottoming in February. 1978-79 and 1979-80, however, saw the resumption of the usual year-end rally pattern. The following facts about the year-end rally may be noted. 1. The year-end rally often has been of great magnitude with advances as great as 28 having been recorded. It also, on occasion, has continued with only minor interruptions for as long as six months into the new year. In 1961, 1964, 1967, 1971, 1975, . and 1976, the rally continued into February or March. However, on other occasions, it has been of only a few day's duration, reaching a top extremely early. Thus, in 1960, 1970, and 1973, the rally reached a peak by the first week in January, and, as noted above, the 1976 and 1977 year-end rallies failed entirely to carry into January. 2. There has been a persistent tendency for the rally to begin early in years when the market has been up, and late in years when the market has been down. In recent upward years, 1963, 1967, 1975, and 1979 are examples, the rally commenced from early tlownWara years, rmr271966-,. 1969, ana 197T;–Ule 'rally began late in the year. 1980 was an up-year, and the apparent start date was December 11, at 908.45. 3. The important thing to watch in connection with the market action in the early months of the new year is the low for the previous December. This low has been broken in 48 years out of the past 80. However, in 28 of these 48 cases, it was broken in January and February. For example, in 1970, 1973, 1977, and 1978, the December low was broken by early January. Since 1937, it has never been broken later than mid-March, with the exception of 1965 and 1974. Thus, if the market is able to hold above its December low for the first 2-1/2 months of the year, chances become good that this low will not be broken. In 1980, despite the break in early March, the year turned out to be a good one. 4. In years when the December low has been broken, the subsequent trend has been downward two-thirds of the time. 1962, 1966, 1969, 1973, 1974, and 1977 are typical cases. 1965 and 1978, along with 1980, as noted above, were exceptions. 5. The magnitude of the rally is an important clue as to the year's market trend. For example, an advance of 10 or more from the December low has been followed by an upward or neutral market in 35 of the 41 years that such an advance has occurred. An advance of less than 10 or more from the December low before an identifiable correction takes place has been followed by a downward market in 26 of the 39 years. In 1963, 1964, 1971, and 1980, the year-end rally approximated 10, and in 1972, it was 17. In 1962, 1970, 1973,and 1977, for example, it was less than this figure. 6. The length of time in which the rally continues into the new year also is important. For example, in 22 years, the rally continued -into-March or l!i.te-r. -In 19 6ftllese 22 years, the eventual trend was upward. In 1964, 1972, 1975, and 1976, the year-end rally continued into March and in 1961, 1967, 1971, and 1980, into February. This year, therefore, the December 11 closing low of 908.45 becomes an important reference point to watch. If the Dow is able to advance from this low by 10, not unlike last year, roughly to the 1000 level, or continue a rally into February or March, the historical implications would be bullish. Dow-Jones Industrials (2 00 PM) S & P Composite (2 00 PM) Cumulative Index (12/30/80) 964.85 135.77 1017.64 ANTHONY W. TABELL HARVEY, TABELL AWTld No stotement or expression of opinion or any other matler herein contained IS, or IS to be deemed to be dlreclly or mdlrecily, on offer or the oitl;llollon of on offer to buy or sell ony security referred to or mentIoned The matter IS presented merely for the converlence of the subscrIber While -Ne belIeve the sources of our information to be rel,able, we In no way represent or guarantee the accuracy thereof nor of the statements mode herein Any acllon to be token by ihe subscriber should be hosed on h,s own investIgatIon and Informallon Janney Montgomery Scott, Inc, os 0 corporatIon, end lIS offIcers or employees, may now have, or may later lake, posihons or trades In respect 10 any securItIes mentioned In thIS or any future Issue, and such pOSItIOn may be different from any vIews now or hereafter eypressed In thIS or any other Issue Janney Montgomery Scott, Inc, whICh IS regIstered wllh the SEC as on Investmen' adVIsor, may gIve adVIce 10 115 Investment adVISOry and othel customers Independently of any statements mode In thIS or In any other Issue Further Informchon on any sec\Jflly mentIoned herem IS available on request ( l