Viewing Month: October 1982

Tabell’s Market Letter – October 01, 1982

Tabell’s Market Letter – October 01, 1982

Tabell's Market Letter - October 01, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON NEW JERSEY 08540 DIVISION OF' MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE hniriilg; ',', or'ali 4. ii over 7 ;'i day it may;- th, dig once more into history to try to assess the downside possIbIlities. to.- be' useful We begm with the assumption. extensively adumbrated in previous issues of this letter, that August 12. 1982 saw the start of a new bull market. One of the almost universal characteristics that we Can altach to bull markets is the presence of a lengthy and extensive take-off rally. The percentage advance of this rally and its length in weeks for each of the eight previous bull marKets'is shown in the talble at right. In all cases except 1978-1981, the initial advance lasted a great deal longer and carried considerably further than the current one has to date. Thus, if we assume that such a rally began in midAugust, it would have a good deal further to go before correction 1949-1953 1953-1956 1957-1961 1962-1966 1966-1968 1970-1973 1974-1976 1978-1981 INITIAL RALLY Advance 41. 3 60.0 59.3 30.3 22.2 42.1 36.2 16.8 Length in Weeks 57 66 83 31 30 42 14 14 (a correction is, throughout this discussion,defined as 5 or greater) takes place. Here. however, it becomes necessary to introduce a complexity. Not all take-off rallies shown in the above table have started from the absolute low point of the previous bear market. In five of the eight cases. there has existed a volatile basing period during which a significant portion of the initial BASING PERIOD advance from the low was retraced. The rele- Advance vant statistics appear in the table at left. T.p.ngth in Days Retraced While three past' bull markets took off immedia- 1949-1953 1953-1956 tiftri !e before taeoff, -d 1957-1961 38 80 two retraced the entire move. Based on current 1962-1966 83 72 technical patterns, we think a full retracement. 1966-1968 28 148 i.e., a testing of the low of 776.92, is a highly 1970-1973 29 57 unlikely eventuality at this stage. A correction 1974-1976 44 108 on the order of those which took place in 1957, 1978-1981 – 1962, or 1970. however, has to be regarded as, at least. a possibility. What argues against this is the timing factor. 34 trading days have elapsed since August 12. Two of the previous basing periods were shorter than this, and two others not much longer. Only the 1962 double-bottom formation. which lasted from June 26 through August 23 of that year at.d involved a swing from 535 to 616 and back to 558 on the Dow was considerably longer. Another statistic regarding corrections in bull markets is perhaps relevant. The length of the typical initial rally elaborated above shows that substantial corrections do not tend to take place until an upswing is fairly well advanced. Furthermore. as we have suggested in the past, they do not tend to be very large until the bull market has ultimately run its course. The table below shows the total number of 5 or greater CORRECTIONS AFTER BASE FORMATION corrections in each pre- Number Largest Decline Average Decline l\v,I'f'—iLi'jB,n,ID,h, vious bull market, to- 194!f-1953 6 13.5 7.9 – 44 gether with average 1953-1956 4 10.0 6.8 11 length in days and 1957-1961 4 12.6 10.5 38 the average percent- 1962-1966 3 10.5 7.5 28 age decline. Again, -with the–..exception….of 1966-1968 4 19701973—-4 9.9 -13.4 8.0 …- …… 9;2 – 29 50 1- 1978-1981.such 1974-1976 6 10.2 6.3 23 corrections have 1978-1981 11 16.0 8 4 21 historically been relatively mild and relatively rare. All of this argues against excessive stubbornness in waiting for further downside activity in the present instance. There does indeed exist a top on the Dow-Jones Industrial Average, broadened since we first mentioned it last week, which suggests a downside objective of 870. This would be a retracement of 40 of the initial advance and argues that a basing period would, in fact. be a feature of this parti- cular market bottom. Conversely. however, from a bullish point of view, it would also suggest that the characteristically long take-off rally has not yet started, and such a rally, beginning from just under current levels would, based on the historical record, be dynamic indeed. Dow-Jones Industrials (12 00 p. m.) 897.53 S & P Composite (12.00 p.m.) 120.57 Cumulative Index 9/30/82 1232.14 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL No statement or exprealOI1 of opinion or ony other motter herein contained IS, or .s 10 be deemed to be, directly or indirectly, on offer or the ol,c,tatlon of on offer to buy or lell ony security referred to or mentioned The matter IS prelented merely for the convernenco of the subSCriber While e believe the sources of our Informa- lion to be reliable, we In no way represent or guarantee the accuracy thereof nOt of the llatements mude herein Any Ocllon 10 be taken by the subscnber should be based on hIS awn investigation and Iniormahon Janney Montgomery SCali, Inc, as a corporation, ond .Is off.cers or employees, may now have, or may later take, POSitions or trades In respect to any SeWfilles mentioned lI'I thiS or ony future Issue, and such pOSII'On may be different from any views now or hereafter expressed In lh,s or any other Issue Janney Montgomery SCalI, Inc, which IS registered wllh the SEC as an Investment adVisor, may gIve adVice to Its lI'Ivestment adVISOry and other customers Independently of any stalements made In Ih,s or In any other Issue furl her information on any security meniloned herein IS available on request

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Tabell’s Market Letter – October 08, 1982

Tabell’s Market Letter – October 08, 1982

Tabell's Market Letter - October 08, 1982
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–c— – – – —,-., TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON .N. EW JERSEY 081540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE INC MEMBER AMERICAN STOCK EXCHAI\fQE I—-i r t …… -p'.,…… t.'r—- —————0–c– -october.8';7I9-g2,o,-c.'.'.—.-.–;,.c.-. . .—.,..—-I One of the oldest Wall Street adages is Don't fight the tape. Since last August, disbelievers in this maxim have been compiling a record comparable to the opponents of Joe Louis in his prime. Those who were awaiting further extension of the correction which ended on September 30, having taken the market down a shade over 4 over a two-week period, were greeted this week by a 37-point rise on Wednesday, which took the Dow to a new bull-market high, followed by another session of record upside volume on Thursday, further extending the gain. We admit that we succumbed to the temptation ourselves, albeit mildly; in our last two letters, and wound up getting knocked clear out of the ring. We had been noting the existence of a top formation on the Dow, suggesting a downside objective as low as 870. This, of course, was never even approached. The point is that the formation in question, interpreted in vacuo, did indeed exist. What the week's events prove is that a powerful major trend can and often does override a short-term contratrend pro- Jection. It is possibly useful at this stage to expand just a bit on some of the statistics documented in this space last week. It now becomes obvious that what can be considered the take-off rally of this particular bull market began coincidentally with the low on August 12. We elaborated a week ago on the historical length of such take-off rallies. If such a rally is defined as ending with the first 5or-great er correction, the last two instances, in 1974 and 1978, continued for 14 weeks. This record would imply that a 5 correction might take place as early as this November. We pointed out, however, that the six previous bull markets had featured take-off rallies of 30-83 weeks in duration. If we are willing to ignore the more recent experience, therefore, it is perfectly logical to project that the market will continue to rise, without a correction of as much as 5, until sometime between February of next year and early 1984. Investors are therefore advised to reread the first sentence of this letter. – \Vhyt-may-wellbe..askecL.-should.n nf th;. betakinll .place Thursday's lead Wall Street Journal story assayed an explanation with the headline Stocks Surge Anew on Favorable Reports ,01 !tates and Earnings. Well now. Interest rates are indeed declining, and bond markets were almost as ebullient as the stock market. We are old enough to remember, however that the dean, of Wall Street security analysts, once wrote a book devoted to the theory that stock earnings should be capitalized at twice the current yield on high-grade bonds. According to this particular piece of wisdom, if the level of the Dow is to be tied to interest rates, it is currently worth about 330. As far as earnings are concerned, the Journal did cite the case of two large companies reporting higher third 1juarter results. It did not note that earnings for the Dow for the first six months are down almost exactly 50 from a year earlier, and, overall, not much third-quarter, or indeed even fourth-quarter, improvement is expected. It is nice to believe that the stock market behaves in response to such things as earnings rund rates/ In truth, it moves in response to the availability of funds, coupled with investor perception of these fundamental factors. A recent incident probably tells a great deal more about the reason for the stock narket's be- havior than all of the financial community's conventional analysis. A friend of ours ventured, this week, to the local bank to withdraw his All Savers Certificate. He waited in line for half an hour. The point is that, with some 8 billion of these instruments maturing this month, potential stock-market funds were indeed available. Investor perception regarding the market's future, fueled in large part, no doubt, by the publicity attending the August rally, caused some portion of these funds to find its way into equities rather than other instruments. Now this reasoning, we will be the first to admit, is pure theory and we canll')t document it. It is nonetheless perfectly logical, given the end result which showed up on the ticker tape this week. Yet another Wall Street cliche is the impertinent answer to the question Why did the market go up. It is, More buyers than sellers. This is yet another way of citing the two factors mentioned above, availability of .funds and investors' willingness… to-v-commit those funds, 1 plus a third .factor, un- willingness by sellers to supply stock except at higher prices. The historical record cited above suggests that such factors, once having emerged, tend to persist for protracted periods of time. We know of no reason why this should not be true in the present instance. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Dow-Jones Industrials (1200 p.m.) 971.85 S & P Composite (1200 p.m.) 129.63 Cumulative Index (10/7/82 1289.81 or 'fNo stofement Or expreUlon of opinion Or any other 10 buy Of sell any secunty referred 10 or mentioned matter herem The molt Cp ontol ned td IS, bd d b d to he eeme to e, Ireetty or mdHeclly, on offer or the SolICllotlon of on offer lion to be bosed on re hiS l loble own ' , we nve s I l n lg no w allan o J re nd nrfeasreaIt;nguJae CheJr,sr issene;emllrneoYr or of Ie the convenience of the subSCriber WhIle we believe statements mdde herein Any adlon to be taken the sources of OUf Informa by the ubscrlber should be lihpoSitions or trades In respect to any seCUrities mentioned In HilS or an futur thiS or any other Issue Janney Montgomery Scott Inc which s reglsie d tlhSSch' 0S50 corporation, an Its officers or such positron moy be different employees, may from any views now now have, or may (ater toke, or hereafter expressed In customers Independently of any sotements made 'In tl1;5 or rn ny othe ressu'l F ,as an. rnvestment adVisor may give adVice to lIs Investment advl!'oty and Othel r I u er rn ormO,lon on any securrty mentioned herern IS ovorlable on request

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Tabell’s Market Letter – October 15, 1982

Tabell’s Market Letter – October 15, 1982

Tabell's Market Letter - October 15, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – )ctober 15, 1982 — .. ..———-..-.-r..'.—————.—7-..-..-..——–;.——————,I Is the stock market rise of the last two months the biggest in history The—answer is no, ' but it is probably tied for third. In order to ju;tify the above statement, we have to engage in some fatrly complex definition. The Dow, through Wednesday, was up 30.65 in just over two months. It will be noted that, in the previous sentence, we dealt with two variables, the percentage rise and the length of time re- quired to accomplish that rise. In order to compare markets it is necessary to combine these two variables into a single statistic which can be done by using annualized rate of change. It is thus possible to say that over the past 61 days the Dow has risen at an annual rate of 384.53. (This is, it should go without saying, a description, not a prediction.) Annualized rates of change of this magnitude are fairly common animals over short periods. For periods as long as two months they are a distinct rarity. We allowed our computer to spend the evening one day this week calculating the annualized rate of change for every period between 30 and 120 days starting on every date since 1926. This involved the comparison of some 1. 38 million such time periods. The essential conclusion is the one stated above. The present rise is exceeded in magnitude by only two rallies, the first being the granddaddy of them all, the one which began on July 8, 1932 and produced a 94 advance in less than two months to September 7. The annual rate of rise from July 7 to September 7, 1932 was 4782. A rate of rise as great as the present one was maintained over almost a four-month period. A sharp reaction fOllowed that rally, and, in February, 1933, another advance began, taking the Dow up 117 over just under five months. Various two-month periods in that rally saw annual- ized rates of change in excess of 1500. 1—-li–JNo-other -stock -market adv.ance since..1.926..has..producedadyances…significanlly. greater -than, the recent one. The bull market of 1938 produced a 60 rise over seven and a half months. The initial stages of that rise were at rates roughly comparable to the present over a number of two- month periods. In subsequent history, from 1938 until this Aue-ust, no comparable rate of rise emerged. The take-off rallies of bull markets during the 1950's and 1960's were occasionally characterized by annual rates of rise in excess of 200 for one-month periods. Over periods of as long as two months, no single rally in the postwar experience prior to the present one was able to produce an advance much greater than 100-125 at an annual rate. It seems that, on a sober statistical basis, the present market is worthy of the headlines it has produced. The other facet of the recent market which has produced headlines is volume. Here, also, it is necessary to go back many years in order to locate precedents. One way of making volume comparable over long periods of years is to relate it to the number of shares listed, i. e., to measure turnover. As of the end of August, 1982, just over 39 billion shares were listed on the New York Stock Exchange. The high daily NYSE volume for that month was 137.3 million shares. Dividing this by the number of shares listed gives a daily turnover ratio of .351. The last time that this figure was exceeded was in September, 1939. Now if one goes back far enough, such a turnover ratio is fairly common. It was exceeded, often by considerable margins, during every single month between 1926 and 1930. Indeed, in 1901 annual turnover was 319, suggesting that a volume of trading comparable to the ,'ecent one was apparently almost a daily occurrence. However, subsequent to 1933, turnover began to de- cline secularly. Eight scattered months between 1933 and 1939 saw high daily turnovers greater than August, 1982. As noted above, there has been no comparable instance since. Until last month the peak turnoverof'ihe postwar perlodhildoeen .275anOctober 10;r979. The 1950's peak was .219 on September 26, 1955. The present market rise, therefore, has produced some critical tasks for the technican We are accustomed, in most cases, to deal with the present-day stock market in terms of post-Wurld- War-II experience. This is clearly inadequate in the present instance, and, in order to find parallels, it is now necessary to return to the markets of the 1920's and 1930's. Obviously, we will be exploring the implications of this task in future issues. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Dow-Jones Industrial Averages (1200 p.m.) 996.50 S & P Composite (1200 p.m.) 134.32 Cumulative Index (10/14/82) 1365.68 No statement or expression of opinion or any other moiler herein contained IS, or I to be deemed to be, directly or Indirectly, on offer or the soliCitation of on offer to buy or sell ony security referred 10 or menhoned The moiler 15 presented merely for the convenience of the subcrrber Whde -He believe Ihe sources of our InformoIton to be relloble, we In no way represent or guarantee Ihe accuracy thereof nor of Inc slalements mode herem Any oerrcn to be token by Ihe 5ub5Cf/br should be based on hiS own Invesllgotlon and Information Janney Montgomery Scott, Inc, 0 a corporation, and Its officers or employees, may now have, or may later toke, pos!llon5 or trades In respect to ony securities mentioned In thiS or any Future Issue, ond such POSition may be different from any Views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scolt, Inc, which IS registered With Ihc SEC as on Investment adVisor, may give odvlce to 11 Investment adVisory ond othel customers Independently of ony slatements made In thiS or In any other Issue Further Information on any security mentioned herein IS available on request

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Tabell’s Market Letter – October 29, 1982

Tabell’s Market Letter – October 29, 1982

Tabell's Market Letter - October 29, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF' MEMBER NEW YOAK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE October 29, 1982 In our discussion last week of the prospects for a super-cycle bull market, we mentioned that the stock 1-'emscafrikpettiomnignhit1,syinoryfa,cst,'b8etpoviasreidanfcoer such With an event, having been in a major bear market since 1966. cU.rrertt neaalilies,-wrucn teI1ustlie Dow is'fliiiingwith an This alF,–lr- time high. The bear market, of course, is in terms of the Dow after adjustment for inflatiOn' and a chart of the averaQ'eS. so adiusted. appears below. The GNP deflator is used to adjust the index to first-quar- ter-1966 dollars making the high in that quarter equivalent to the actual Dow. PREPARED Bf DELAFIELD. HARVEY. TqBELL After the adjustment, last August's low becomes not 776.92 but 281. 54. The recent rise has taken this not to 1000 but to 362. The history of the average since 1966 becomes one of a long and relimtless de- cline composed of three approximate-50 drops, the first two of which were followed by only partial reco\ eries. The total decline from the 1966 high is 71. 7 ,roughly in a league with the bear market of 1929- 1932, which produced an 85.8 decline. It is interesting to note where the Dow, after inflation adjustment, is today in comparison with prior levels. Its current 362 figure compares with a 1929 high of 858. It sold above its current level for almost. the. entire period .1935 1940, . not. generally. considered. a. banner, era rfor. the, stock market. Following World War II, it moved above its current level in 1951, so that last August's level represents a 31-year low. It can be argued, moreover, that this.desultory performance has produced uncommon value. It is pos- sible to adjust Dow-Jones earnings as well as prices for the ravages of inflation, and, when. this adjust- ment is made, the record low price/earnings ratio was reached two years ago,in 1979, when the Dow sold at 6.4 times inflation-adjusted results. This was Ii lower level than had been the case in mid-1949. By the third quarter of 1981, the Dow had returned to 6.9 times inflation-adjusted-earnings,close to that record low level. Since then ,of course, the p /e ratio has expanded, as the market has moved ahead and earnings, especially after inflation adjustment, have dropped. It has risen to around 12.3 for the third quarter of this year. However, it must be remembereo that this figure is based on recession earnings and will probably be reduced sharply in an economic recovery. It goes without saying that the market is anticipating such a recovery and could be in for a shock were it to fail to materialize. Nonetheless, recent history strongly suggests that, especially given a de- cline in inflation, the next decade could turn out to be one of considerably better stock prices. AWTrs Dow-Jones Industrials (12 00 p.m.) 984.36 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL C NP.flPl!Q\I!.(l Um..l4.M't 1'11 iWt,…e.rrflJStllf'l1dipf lWe9c156I'P680-Jm'eonntyloontheedr mThot,/QLo),.t3..reVK,lt1f,onretcselnnteedd IS, or IS 10 be merely for the deemed to be, canvenlenctS of directly or Indlfectly, thc subscriber WhIle on 'Ie offer or belIeve the solicltahon of the sources of our an offer mforma- tlon to be rel,able, we m no way represent or guarantee thc accuracy thereof nor of the statements mode herem Any act,on to be token by the subscrober should be based on hiS own mvest,gahon and Information Janney Montgomery Scott, Inc, as a corporat,on, and ,15 officers or employees, may now have, or moy later toke, positions or trade In respect to any securities mentioned m thiS or any future Issue, and such pOSitIOn may be difFerent from any views now or hereafter expressed m thiS or any other Issue Janney Montgomery Scali, Inc, whIch ,s registered With the SEC as on mvestment adv,sor, may gIve adVice to ,ts mvestment adVisory and other rustomers mdependently of any statements made m thiS or In any othcr Issue Further Information on any security mentioned herein IS available on request

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