Tabell’s Market Letter – October 16, 1981

,, I TABELL'S QOD STATE ROAD, PRINCETON, NEW .JERSEY 081540 DIYle'ON 0 …eMBI! NIW VOJIIK STOCK EXCHANGE,INC. M'''BI'' AMlfltlCAN ITOCK EKCHANQI!! October 16, 1981 We ,used this spsceJast week to try to make a number .of pointll . The first was that .. by a number of measurements, the process which began on April 27th of this year qualified as the eighth cycle bear market in Post-World-War-ll history. We went on to suggest that that bear market, which, through September 25th when It posted a low of 824.01 on the DJIA, had lasted 106 trading days, was, to date, rather short by historical standards. In fsct, we noted, all of the seven bear markets had gone on for considerably longer periods. We further pointed out that the rally which began on September 26th, reaching its high to date in a 6.57 . rise to 878.14 on October 8th, was not inconsistent with rallies which had taken place within the context of previous bear markets. That same point can be made in a number of other ways. By way of proving that technical analysis is not all that complex, bear markets can be defined, quite simply, as strings of consecutive trading days, on which either (a) a new low is made, or (b) a new low ia not made. One way Ten-Days or Longer Periods Bear Market No New Lows 1/5/53 – 9/14/53 5 7/12/57 – 10/22/57 1 12/31/61 – 6126162 2 2/9166 – 1017/66 3 12/3/68 – 5126/70 5 1/11/73 – 12/6/74 7 9121/76 – 2/28/78 8 4/27/81 – 3 Largest No. of Consecutive Days No New Lows 53 17 51 46 87 146 96 36 of viewing market history since September 26th ia as a string of 16 consecutive days which fall into the second category. It 1s the third period of 10 days or longer without a new low since the downswing began, the longest being the 36 t\'ading days from May 12 to July 1. The table at left shows the number of such periods in past bear markets. As can be seen, recent downswings, especially 1973-4 and 1976-8 have had considerably more 1D-day-or-greater inter- ruptions than this market has had to date. Furthermore, the interruptions have tended to be longer. The table also shows the largest number of consecutive days without a new low . in each of the past seven bear markets. With the exception of 1957, each one has featured at least one considerably longer interruption during which time no new low for the downswing was posted. The table at right views past bear markets in another aspect. -It lists, for each downswing, the number of periods of consecutive new lows Posted within that downswing. In the present case, there have been 12 such periods since last . Total Largest Periods of Days-New Swing . Consec. Lows Low-to- Bear Market New Lows Posted Low April. As can be seen; the three most recent bear markets each had more than 20 periods consisting of one or more consecutive days where a new low was posted. The total number of days during the downswing on which a new low was posted 1s also of interest. We have had 26 such days to date ,somewhat less than 1/5/53 – 9/14/53 7/12/57 -10122/57 12113161 – 6126162 2/9166 – 1017/66 12/3/68 – 5126/70 1/11/73 – 12/6/74 9121/76 – 2/28/78 4/27/81 – 12 12 12 14 23 27 29 12 23 -2.19' 28 -4.84 31 -9.94 37 -5.10 59 -7.83 64 -6.80 66 -3.12 26 -3.44 the figure achieved in past market ) drops. Finally, having defined bear I markets as a series of swings to new lows, we can measure the size of each of these swings as t market decline progresses. This size tends to build up as the downswing contines, with the larg est swing almost invariably being posted toward the end of the decline. Through 1974, most be markets produced at least one downswing of 5\-or-greater magnitude during the course of their existence. The biggest downswing, low-to-low, in this bear market has been the 3.44 drop from the. August 31 low of 881. 47 to the September 8th low of 851.12. It would be normal to expect the present decline to terminate with a drop somewhat larger than this It remsins possible, of course. that a major low was made on September 25. and that possi- bility w!ll remsin until such time as a new low is posted. It must, however, be stated, that market action since that date is totally consiatent with an interruption in an ongoing downswing process. Dow-Jones Industrials (1200 p.m.) 854.83 S P Composite (1200 p.m.) 119.59 tumulstlve Index (10/15/81) 106.94 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL 'AWTrs No folement or exprelSion of opinion or (lny other maner herein contained I., or to be deemed to be. directly or indirectly. on offer or 1M! lollc,totlon of on offer '0 buy or ,II Clny security referred to or mentioned The motter is presented merely for the converlena of the subscriber. While oNe believe the touttes of our Informo tlon to be reliable, we In nO way represent or guarantee the accuracy thereof nor of the Slatements mllde herein Any action to be lake by Ihe subscriber .hould be based on his awn Investigation ond i'ormation Janney Mo'gomery Seoll, 'c., 01 a corporoloon, ad Its office or employeu, may now have, or may lofer toke, posilions Of trades In respect to ay secUrities menhoned ' thiS or any future issue, and IVch POSITion may be different from any views now Or hereafter expreued In this or any olher ISlve Janney Montgomery cott, Inc. which IS registered wllh the SEC as on Investment adVISor, may give adVice to lis Investment adVISOry Clnd otn anTomers Independently of any Itotement, mode In thll Of In any other Inve. FVMher Information on ony securiTy menhoned herein 15 ovclliable on reqvest