Tabell’s Market Letter – March 26, 1982

Tabell’s Market Letter – March 26, 1982

Tabell's Market Letter - March 26, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08!S40 DIVISION OF MEMSEA NEW VORK STOCK EXCHANGE. INC MEM8ER AMERICAN STOCK EXCHANGE r– March 26, 1982 – I f -market-action-in-March -has-done-nothingelse, -i-t-has – at .Ieast createdA a-new-benchmarkdate That date, it can'now be recognized some three weeks 'after the fact, is 'II-larch' 8;-ori-which the Dow Jones Industrial Average closed at 795.47. At that level, the Dow, along with most other indicators, had decisively broken its prior low of last September and had reached a new nadir for the ll-month old downswing from the highs of April, 1981. All of this is not simply the technicians' oblique way of painting out that the market has rallied over the past three weeks, Indeed it has, and at Thursday's close, the Dow found itself up just over 4 from its March 8 low, Establishing that March 8 low as a benchmark, however, reqmres recognition of the fact that in many ways, market action since that date has been demorstrably better than the rather dreary sort of behavior which characterized most of last year. Using a 2 filter, the action of the past three weeks constitutes only the ninth identifiable rally since the beginning of the downswing, back on April 27, 1981. In terms of percentage advance. it has, so far, demonstrated nothing better than normal action. The swings for the eight completed rallies to date have averaged 4,2, and the strongest was the 6.5 rally from the September 25 low. In terms of staying power, however, the present advance is fairly impressive. Through Thursday's close, it has lasted for 13 trading days. The first bear-market rally back in May-June 1981 persisted for 24 days, but since that time tre market has been able to put on nothing better than an ll-day advance. It is, in sum, possible to detect substantive improvement in recent action. There are, indeed, other areas beyond simple measurement of rallies in which improving market action can be detected, Many individual issues have reached at least initial downside objectives and, in many cases, appear to be making attempts at base formations in recent trading. This sort of thing is reflected in the new-low statistics which, at least for the last downside phase, are a matter of record. Despite the fact that almost all major market mdices moved into new low territory early .this,month, .the.peak.number of individual stock lows achieved on March 9 was '263, considerably under the peak levels of aimost-60'Iich9.Kea-upbacKiTlsepteriiber. we'tio nol-UrtrrJrirn-misremiing– of the facts to call this a sign of technical improvement, at least in large sectors of the market. A number of signs of improving technical action are, of course, conspicuous by their failure to materialize. Breadth (the best advancing day so far featured 1210 advances on March 22) has been consistently less than impressive. Nor, despite the fact trading activity has picked up on the upside, is it possible to read too much comfort mto volume statistics. Volume reversal action, as we have pointed out, generalt'consists of a series of sharp one-day trading expansions to well above normal levels. What has instead been taking place is a steady expansion in the average level of volume which, on a 2S-day basis, has now reached over 57 million shares, by far its highest level on record. This high average level of volume will make it even harder for a conventional upside volume reversal to be recognized. Where does all this leave us In many ways the average investor can best obtain the answer by a process of self-examination — in other words by asking himself how the current improving market action makes him feel. The most bullish conventional wisdom at the moment would be the widespread certainty that the present rally constitutes a selling opportunity and it is only a matter of time before the market moves once again to new lows. On the other hand, to the extent that the current advance causes investors to feel that they have missed a major hottom, it becomes more and more likely that such a bottom has not yet occured. We are willing, for the time being, to remain neutral on the subject, which is why we went no further in our opening paragraph than identifying March 8, 1982 as a benchmark to watch. While recognIzing improvement — and indeed, as we have tried to point out, improvement of some signi- ficance in the past three weeks of trading — we think it grossly optimistic to suggest that improve- ment is dramatic enough to indicate the end of a confirmed ll-month downtrend. Moreover, while recognizing the possibility of further strength, we suspect. tl'!.at the least likely eventuality at the present time is for the market to run away on the upside. What we are saying, in other words, is that the technical picture has not been drastically altered by just three weeks of mildly amelior- ated action. Insofar as the pattern for the averages is concerned, the Dow has now moved up to the trading range, roughly between 820 and 840, which characterized most of February. The most constructive possible action, we think, would be a relatively protracted (2-3 week) period of backing and filling within that range. Were this to be followed hy a decisive move through 840, upside possibilitles would then have to be reassessed. For the time being, we are willing to await the formatIOn of this sort of pattern. ANTHONY W. TAB ELL AWTrs DELAFIELD, HARVEY, TABELL Dow-Jones Industrials (1200 p.m.) 822.01 S & P Composite (1200 p.m.) 112.40 Cumulative Index (March 25, 1982) 1078.12 oe,No sfatemen! Of expreSSion of opmlon or any other matler herein contOlned '5, or IS to be deemed fa direCTly or indirectly, on oUer or the sol,eltatlon of on offer 10 buy or sell any seC\Jr11y referred 10 or mentioned The mOiler IS presented merely for the convenience of the subscriber While Ne believe the sours of our Information to be reliable, we 'n no way represent or guarantee the cccurocy thereof nor of the stateMents mude herem Any oeilon to be tolen by Ihe subSCriber should be bosed on hiS own ,nvestlgotlon and ,nformation Janney Montgomery Secll. Inc, as ( corporation, olld Its officers I)r employees, may now have, or may later toke, positions or trade! 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