Tabell’s Market Letter – February 20, 1981

'. ' TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE February 20, 1981 The long-term implications of President Reagan's economic address to the Nation must be viewed as constructive. However.- tne–iriIfiiirreacUon -of the-stockrriarkeLyesterday. reflectea -an-atmospnere of – ..,. skepticism as the Dow-Jones Industrial Average closed at 933.36, down 13.74 points. The Dow-Jones Industrial Average has, since last July, been contained in a trading range deiIDed by a low of 908.45, posted on December 11, 1980, and a high of 1004.69, posted on January 6, 1981. As this letter has suggested in recent weeks, within the framework of this trading range, individual components of the Dow are, by no means, acting in concert and are, in fact, in many cases, reflecting quite dissimilar patterns. Obvious examples of this apparent dichotomy would include the constructive relative strength of such securities as Alcoa, Owens Illinois, Union Carbide, and U. S. Steel, compared with the poor price performance of stocks such as Exxon, Standard Oil of California, and Texaco. – COMPUTED TREND RNRLTSIS – DJIR F'6 10 'gal III'II! jlllllllllill I1II111111111 1 11111111 I II11I1I111 1l l l-lt1 1 1Illrll 1 l . —— – Iltlrllllll 32..20, —- —1 – — –. I I I II I II1I1 .Jm. .1lJL —- .ilL 't't llao Fn 1980 y J!IBD 1..lJN 1900 LJUl !98(1 IU; 1980 lSEP 1980 OCT !9SC llllv 1981' IOfC lqs(1 JIll! 'qa' 1Ell '011' To put the past 12 months in proper perspective, an inspection of the above graph of the daily high-low-close of the DJIA is useful. As can be seen, the DJIA, in the span of 226 trading days, has advanced from a low of 759.98 on March 27. 1980, 244.71 points to a high of 1004.69 on January 6, 1981. THs 32.20 advance in the market since March of last year to early January of this year was, by any historical measure, both in terms of magnitude and duration, a respectable, but by no means unprece- dented, move. Since the January 6, 1981 high of 1004.69, the Dow has corrected 72.12 points, or 7.28, in 35 trading days to a recent low of 931. 57 on February 13, 1981. This 29.88 correction of the recent ad- vance would appear, on the surface, to represent a normal one-third to one-half correction of the move. But, clearly, that does not tell the whole story. Serious technical damage has been done to the energy- related sector with corrections in individual stocks in this area in excess of 30 not uncommon. The fact that the general market has supported this amount of concentrated selling pressure to date has been constructive. The ability of the stock market to continue to absorb this pressure, must, however, be monitored closely. Dow-Jones Industrials (1100 AM) 934.13 S & P Composite (11 00 AM) 126.60 Cumulative Index (2/20/81) 1017.19 ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL RJSsla No statement or expression of opinion or ony other motter herem contained 15, or 15 to be deemed to be, directly or indirectly, on offer or the SOI,cllol.on of on offer to buy or sell onr. seamty referred to or mentioned The matter IS presenled merely for the convef'lence of the subscrIber WhIle we believe Ihe sources of our Informo han 10 be rellob e, we In no way represent or guarantee the accuracy thereof nor of Ihe stotemenls mude herein Any act.o… to be tal-en by the subscriber should be based on hh own Investigation and Information Janney Montgomery Scott, Inc, as 0 corporat.an, and .ts offICers or employees, moy now have, or may loter toe, positions or trades In respect to ony securll1es menhoned In th.s or any future ISUe, ond such POSition may be different from any views now or hereafter expressed In Ih,s or ony other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to lIs rnvestment adVISOry and othe, customers Independently of any statements mode In th,s or In any 01 her Issue Further information on any security mentioned herein IS ova liable on request