Tabell’s Market Letter – April 16, 1982

Tabell’s Market Letter – April 16, 1982

Tabell's Market Letter - April 16, 1982
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TABELL'S MARKET LETTER 909 STA.TE ROA.D. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE i—- .– The Dow Jonesdndustrii'ilAverage-shoWed April 16, 1982 a.mooest -decline me tiFSt part oftJUs weelt;-……… I – – I through late Thursday afternoon rallying in the last hour to trim most of its losses posted early in the week. Within this framewo'rk continued rotation of leadership in groups – can be observed in a diverse market climate. On the one hand, constructive group relative strength is being seen in Drugs, Insurance, Retailing and Utilities, holding above their September, 1981 lows during the recent March decline. On the other hand, others, such as the Oil-related groups, for example, have penetrated last year's September lows during the March decline, together with the broader-based market averages. Considerable attention continues to be focused on the March 8, 1982 low of 795.47 on the DJIA. Is this 5.97 rise in the DJIA an intermediate rally in a bear market, or is it, in fact, the start of a major bul! market The fol!owing exhibit examines the major bull markets and bear markets that have occurred since the DJIA first attempted to penetrate the 1000 level in the Fall of 1966, some 16 years ago. For purposes of this exercise we are defining bull and bear markets as percentage swings of greater than 20 up and 20 down. EXHIBIT D-a-te 6/26/62 2/9/66 10/7/66 -' -1-2-13/.68 . — – 5/26/70 1/11/73 12/6/74 9/21/76 2/28/78 4/27/81 3/8/82 Average Advance Average Decline DJ Average 535.76 995.15 744.32 – – -985.21 631.16 1051. 70 577.60 1014.79 742.12 1024.05 795.47 59.68 31. 08 Chan 0.00 85. 75 -25.21 – .b32…36 -35.94 66. 63 -45.08 75. 69 -26.87 37.99 -22.32 Length 669 Days Length 319 Days Number Days This Swing – , . 0 913 167 51 R 367 665 481 452 362 798 218 – Three observations become immediately significant when inspecting the five advances and declines that have occurred since 1962. First, bull markets tend to last twice as long as bear markets, both in time and amplitude. Secondly, the average decline of the five bear markets is 31. 08. Thirdly, the average number of trading days for the five declines is 319 days. Therefore, historically, it would not be unprecedented for the recent bear market both in ex- tent (22.32 vs. 31. 08 average) and duration (218 trading days vs. 319 trading days average) to reestablish itself. This possibility continues to exist in an environment, as this letter has repeatedly emphasized, where a major technical constant has been present over the past 16 years – the flat secular trend of the equity market. Point-and-figure analysis of the DJIA gives another perspective of the dilemma which would seem to argue against a major advance developing immediately from these levels. The two-point and fivepoint- charts of the DJIAindicate' upSide(jbjectiveS-inthe-880 area.- Were- the DJIA to rise sharply toward these objectives it seems apparent overhead supply would pre- sent an effective barrier to a further advance until additional reaccumulation, base-building, and lor a test of the March low takes place. This type of pattern is also reflected in a great many individual chart patterns. The above is not able to give a definitive conclusion to the question asked earlier. How- ever, what this seems to indicate is that all the technical evidence is not in. Participation in the current advance for as long as it might last would seem logical. But we must wait for the accumulation of further technical proof to appear to demonstrate the case for the next bull market. RJS rs ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL Dow-Jones Industrials (1200 p.m.) 841. 23 S & P Composite (1200 p.m.) 116.46 Cumulative Index (4/15/82) 1108.81 No statement or expression of opinion or any other moIler herem contained is, or I.to be deemed to be, dlrt!ctly or Indirectly, on offer or the 50llcilolIOn of on offer 10 buy or sell any security referred to or menhoncd The molter 1 preenled merely for the convenience of the ubscrlber While we believe the sources of our Informa- tion to be reliable, we In no way represent or guarantee the accuracy Thereof nor of the statements mude herem Any oehon to be token by the subSCriber should be based on hIS own mveStlgot,on and informaTion Janney Montgomery coll, Inc, as 0 corporohon, and .15 offICers or employees, may now have, or may loter toke, poslhons or trades m respect 10 any securities mentioned .n thiS or any future Issue, and such pOSitIOn moy be different from any views now or hereofter expressed m thiS or any other l.Ssue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may gIVe adVice to Its Investment adVisory and othel customers mdependently of cny ,!olemena mode In thiS or m any other Issue Further Information on any security mentioned herein IS available on request

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