Tabell’s Market Letter – April 03, 1981

Tabell’s Market Letter – April 03, 1981

Tabell's Market Letter - April 03, 1981
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEy 08540 DIVISION OF MEMSER NEW YORI( STOCI( EXCHANOe. INC MEMBER A.MERICAN STOCK EXCHANGe April 3, 1981 —- — …. – — – , – – – – – . . …. — — — — — —'!' -….. -….. e. – -0… – – FO' most 'imdrtat questions, there exist both simple and 'compi,'' a'ns';ers' in-many cases; the com- plicated answers do not contribute any additional useful knowledge by virtue of their complexity. Such is often the case with questions regarding the equity market, and it is particularly true, we think, today. It is possible, at the moment, to take an extremely simple-minded attitude toward the stock market. That attitude can be constructed approximately as follows The market has just made a new high; we are, therefore, in a bull market; one should, therefore, be fully invested in common stocks. This, it is true, is an excessively simple construct. It is also probably correct. It is when one begins to look at the market esoterica that we technicians are paid to observe that com- plexities begin to arise. The first one, which we have mentioned before in this space, centers around the proper interpretation of the base formed in January and February of this year. As we have pointed out, the optimistic interpretation of that base leads to a short-term target of 1050 in terms of the Dow, and, as the patterns have formed recently, similar targets in the broader-based indices. In light of market action over the past couple of weeks, such targets appear plausible. The past fortnight's inspec- tion of individual chart patterns has detected a broad host of upside breakouts in individual issues, a large number of those breakouts being of significant proportions. Certainly, a continuation of the move to no more than 4-5 above current levels appears well within the range of possibility. Such a move, as we pointed out last week, would lend strong credence to the theory that the sideways trading range of September-December was nothing more than an interruption in an ongoing upswing from the lows of silver Thursday back last March. Such an upswing would have plausible targets in the area of 1200. When one begins to look elsewhere for evidence confirming such targets, the picture becomes mixed. Let us consider, for , breadth statistics. Most breadth indicators, including those of the most hA;h hiA hAVP nnwthp.Dowinmoving ab9ye thejrevelsoLJJIJLUary 6. Breadthcan, there-,.,,-jI''1 fore, be said to be in gear with the market in an upside move dating back to the year-end rally low early December. That move, incidentally, having now extend,ed into early April, and having advanced well over 10 percent, suggests, on the basis of historical evidence, that the December low of 908.45 is unlikely to be broken during 1981. What is still lacking in breadth statistics, is a confirmation of the highs of last September. Such a confirmation by one indicator, unadjusted weekly breadth, will probably take place when the figures for this week are finally in. As far as other breadth indicators are concerned, however, it will require considerable time and further strength before the highs of last September are penetrated. When and if a confirmation of last September's high does take place, those unshakably determined to seek bearish arguments in breadth statistics will be able to point out a lack of confirmation going back to September, 1978. We are inclined to dismiss this argument for a number of reasons, but it is probable that it will be heard from those who remain inclined to continue to fight the tape as the market moves to and through the highs made last fall. The importance of the September, 1978 breadth peak is one facet of a fairly important unresolved cyclical question. Our own interpretation of the market's position, in terms of the major four-year-cycle, has been — since approximately one month after the cycle started — that such a cycle began March, 1978. There exists growing evidence that this cycle may have been attenuated and that a new major cycle began just over a year ago, in March, 1980. It would be useful, although it is unfortunately- im- possible, to be certain whether we are dealing with a three-year-old mature bull market or one that, at the age of 13 months, remains relatively youthful. . It is possible to raise yet other esoteric questions. New NYSE highs for the week ended March 27 were 354 versus a figure of 516 last Septem,ber. The best figure so far attained for new daily highs is 175 on March 23, versus levels consistently above 200 in the September-November period. This consti- tutes evidence of some degree of maturity for the current upswing. – ;' 1I of this, however, should do nothing more than remind us that we see only through a glass darkly, and that portfolio management consits of making decisions in the face of uncertainty. Uncertainty has always existed, and it exists currently. However, the most practical attitude toward equities at the moment undoubtedly remains the simple-minded one suggested above. That attitude calls for a fully invested position in common stocks. Dow-Jones Industrials (12 00 PM) S & P Composite (12 00 PM) Cumulative Index (4/2/81) 1011.17 136.16 1139.97 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL' AWT sla No statement or expreSSion of opinIOn or any other motter here'n contained IS, or IS to be deemed 10 be, directly or indirectly, an offer or the soliCItation of on offer to buy or sell ony security referred to or mentioned The matter IS presented merely for the converlen of the subscriber While 'Ne believe the sources of our InformaTion TO be reliable, we In no way represent or guarantee 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 II'Iformatlon Janney Montgomery Scott, Inc, as a corporatlon, and Its officers or employees, may now have, or may laler take, poslilons or trades In respect to any secUrities mentioned In thiS or any future Issue, and such pOSitron rooy be different from ony views now or hereafter expressed In thl or any other Issue Janney Montgomery Scali, Inc, which IS registered With the SEC as on Investment adVisor, may gIVe adVIce to Its Investment odvl(Y and othel customers Independently of any statements mode In thiS or In any other ISsue Further Informal Ion on any secunty mentioned heretn IS available 01 request

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