Viewing Month: December 1982

Tabell’s Market Letter – December 03, 1982

Tabell’s Market Letter – December 03, 1982

Tabell's Market Letter - December 03, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08640 OIVISION OF MEMBER NEW YORK STOCK EXCHANGE. tNC MEMBER AMERICAN STOCK EXCHANGE December 3, 1982 A story in Tuesday's New York Times entitled Wall Street's Furious Swings is typical of recent commentary on market aotion. The general theme of the piece is that market volatility haa in- I —an;umberli!;!ac;tio'nthatar;eu!nusual..thTeoreiIfDoprlyei;iii;;,;with-dL1 out precedent, , is to exaggerate the caae. There are three problems, In our view, with the Times story. The first is that it covers only the period 1970 to date, a relatively restricted timeframe. The second touches a sensitive nerve as far aa this letter Is concerned. It persists in talking about daily point changes in the Dow, including a chart to prove that the average daily point change for November waa the highest in history, a fact which is true but meaningless. We state once again the ob- vious fact that daily changes, in order to be comparable over time, must be stated in turns of percent- ages or (see below) some comparable statistic. The article aIao talks at length about the market's volatility, and, we suppose, the applicable Webster's definition here is tending to erupt in violent action. It is indeed true that over the period August/October the market did erupt, going up by an unusually large amount in a short period of time. There seems, however, to be an implication that variability during this period was In fact unusual, and such is simply not the caae. To illstrate the distinction, a market which went up 10 points a day for a long period of time would be dynamic but not variable. One which alternated going up 20 points and down 10 for the same period of time would achieve the same result, but with variability considerably greater. How dOes the variability in today's market compare with paat periods We attempt to remedy the defects cited above in the following chart. First of all, the chart covers the period 1926 to date. Secondly, it meaaures daily log changes rather than point changes (percentage change would have been equally appropriate, but logs are a bit more precise). Finally, the actual figure charted is the standard deviation of daily log changes each month from their monthly mean. Readers unfamiliar with statistics need only be aware that the standard deviation is simply a measure of the amount by which a given group of numbers varies from its average. C;IANDARO Df. …. 1AfION m OAlli lOu UiRNUl.S DOW JONtS IhDU'irRIAL AVtRRM. MQNIHLY 192G . DArt The first item that Ule chart clearly suggests is that current volatility is miniscule compared with that demonstrated In the 1930's, particularly the periods 1929-1933 and 1937-1939. Secondly, current action Is by no means unprecedented in recent history. The standard deviation reached higher peaks in October as maio; m1a9r7k4t December turning 1973 Points May 1970, and May. an dccurrence which, 1962. Three of these. at least will be remembered it is our belief ,also occurred in August,- 1982. ,spection oJ 11)e chart will show other spikes around past bear market bottoms. Recent market volatility. therefore. is not at all without parallel. It is. rather. a. relatively un- frequent but nQt uncommon event consistently associated with major-cycle turning points. This associa- tlon, we think. is the most meaningful aspect of recent market action. AWTrs Dow-Jones Industrials (1200 p.m.) S A P'CompOl!lte (1200 p.m.) Cumulative Index (12/2/82) 1039.74 139.42 1507.77 ANTHONY W. TABELL DELAFIELD. HARVEY. TAB ELL No statement or expression of opinion or ony other mafter herem contolned IS, or IS to be deemed to be, directly or indirectly, on offer or Ihe soliCitation of on offer to buy sell anr. security referred to or mentIoned The motter IS presented merely for the convenience of Ihe ubscrlber. While we believe the sources of our Informa- tion to relloh e, we In no way represent or guarantee the occurocy thereof nor of Ihe statements mude herem Any action to be token by the subSCriber shol,lld be bosed I own inVestigatIOn and mformatlon Janney Montgomery Scali, Inc, 0 ( corporation, and lIS officers or employees, may now hove, or moy later loke, In respect to any securities mentioned In thiS or ony future Issue, and such position may be different from any views now or hereafter e)preed In Janney Montgomery Scott, Inc, which IS rcgl5tered With the SEC as on Investment adVisor, may give advice to lis Investment adVisor.., and othel J of any stalement5 made In thiS or m an.., other ISsue Further Information on any seoJflty mentioned herem IS available on request

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Tabell’s Market Letter – December 10, 1982

Tabell’s Market Letter – December 10, 1982

Tabell's Market Letter - December 10, 1982
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T TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMSER NEW YORK STOCK EXCHANOE, tNC MEMBER AMERICAN STOCK EXCHANGe December 10, 1982 We have discussed, from time to time over the past month, the subject of interest rates or, morespeifcr!l.!IY.i''the-mock-market 's preoccupation-with-interefl!7ates !' A–f.gflt-aS!'-weindica- ted that one of our conceptual problems with this particular fixation was the fact fhat there existed at least four reasonably-widely-accepted explanations of why interest rates behave as they do and that, with supposed experts in near-total disagreement, there were distinct pitfalls in installing money-rate movements as linchpin of a theory of short-term stock market behavior. The stock market, over the past year at least, has appeared wholeheartedly to accept one par- ticular view, a view which we identified two weeks ago as conventional wisdom. According to this theory, interest rates, for at least as far ahead as the market cares to look, are solely a product of Federal Reserve policy. Unfortunately, quasi-officially at least, the Fed is not supposed to be looking at interest rates at all but at monetary aggregates. Thus', until recently, the market tend- ed to treat every decline in those aggregates as bullish, presumably on the theory that a resultant Fed pattern of less restraint would produce lower interest rates and thus better stock prices. Insofar as the federal deficit is concerned, the market also appears to have accepted the conventional wisdom, finding itself thereby locked in uneasy embrace with the Democratic majority in the House of Representatives. Thus, equity marts greeted the Reagan tax cuts with a profound lack of enthusiasm and have tended to respond positively to recent measures to increase taxes, thereby presumably coming closer to bringing the federal budget into balance. Now it is possible to point out, without necessarily agreeing with them, that there exist other schools of thought with regard to interest rates and deficits. Supply-side eomomists would have us believe, for example, that the tax cuts, if followed through, will stimulate the economy sufficiently so as to produce added revenues. Ironically, the demand-side, or Keynesian. theories of the 1930's would also tend to suggest that a massive budget deficit was a proper stance during a period of – – –seven–econlJlli1uontraution- L-et'us-assume-for-just-amOrfientthat–there-may-exist4!ome-merit–to….- either or both of these points of view. The result would be a 1983 economic recovery of some proportions. Ironically, most analysts agree, this would have a tendency to produce upward pressure on interest rates, and, therefore, if stock-market behavior is truly correlated with bond yields, we are forced to the quixotic conclusion that economic recovery would be bearish for the market. We happen to have some personal difficulty in buying this, and, as time goes on, we have a suspicion that the'market will also. What we are su,,)esting, in other words, is that recent market behavior can be more sensibly rationalized in terms of Ilnticipated economic recovery than in terms of interest rates. This theory is harder to quantify, since interest rates are falling day-by-day, and the recovery is still out there somewhere in the future. Nonetheless, it seems to us clear that the market is indeed making some sort of statement on recovery prospects. Earnings for the Dow-Jones Industrial Average are down, on an annualized basis, some 35-40 over the past five quarters. The market's response to this has been to post one of the steepest rises in its history. Now it is not our intent to deplore this phenomena. We are technicians and, therefore, do not think the market is irrational. Indeed, the historic lead time of stock-market bottoms on economic recoveries suggest'! that the market's record as 8 forecaster in this regard is at least as good as that of most economists. What we are saying is that built into recent market action there are some definite assumptions about recovery prospects for next year. Thus, future short-term fluctmtions may well hinge on the emerging validity of those assumptions. We have seen some manifestation of this sort of thing in the past few days as airline stocks went into a tailspin on analyst estimates, and a single earnings forecast caused a cataclysm in video-game stocks. – We 'expect' there will-be 'more 'snch'occurrences inAhe-future.–Earnings devel- opments have a considerably longer historic' record as explanations of market behavior than do interest rates. We would expect the importance of such developments remaining in line with expecta tions to reemerge in a983. AWT rs ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL Dow-Jones Industrials (12 00 p.m.) 1027.59 S & P Composite (1200 p.m.) 140.57 Cumulative Index (12/9/82) 1525.51 No ,tatement or eXpreSSion of opinion or any other motler herem contolned 15, or 1 to be deemed 10 be, dlrettly or Indtrectly. on offer or the solICitation of an offer to buy o( sell any security referred to or mentioned The motter IS presented merely for the convenunce of the subSCriber While we believe the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the slalemenh mude herein Any action 10 be token by the subscriber should be based on hiS own IOvestlgotlon and 1Oformotlon Janney Montgomery Scali, Inc, as a corporation, and lIs officers or employees, may now have, or may later toke, poSitions or trades 10 respect to any securities mentioned 10 thiS or any fu1\Jre 1Sl1fl, and such palhon may bl,l dlfferenl from any views now or hereafter elpressed In thiS or any other ISsue Janney Montgomery Scali, Inc, which IS registered Wllh the SEC as on 1Ovel1ment adVISor, may gIVe adVice to 115 Invcstment adVisory and olhel CUSlomeu Independently of any stalements made In thIS or In any other Issue Further information on any security menhoned herein 1 available on request

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Tabell’s Market Letter – December 17, 1982

Tabell’s Market Letter – December 17, 1982

Tabell's Market Letter - December 17, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08!540 DIYISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCI( EXCHANGE – December 17, 1982 We intend, this year as always, to issue a two-part year-end forecast, the first part – , consisti'.! g-ofa -reviw of-past-histol'y-.-Our-normalpl'actice -in-suh-reviws-'-has-been-simply–.\- to cover 'the' previous year. In thinking about this overthe past few weeks, however, it be- came apparent to us that an historical review germane to the present stock market situation should cover a much longer period of time, in this case all the way back to the late 1940's. Moreover, in the past few days, it became equally apparent that such a review would also be required to focus on a much shorter timeframe, i.e., the past six weeks. With this in mind, let us begin. Space limitations allow an only cursory summary of stock-market history between June 13, 1949 and September 21, 1976. Suffice it to say that during this period there occurred seven bull markets. The first four of these (the fourth ended on February 9, 1966) had two essen- tially universal characteristics. (1) Each one produced SUbstantive new highs (293.79 in 1953, 521. 05 in 1956, 734.91 in 1961, and 995.15 in 1966). (2) Each one proceeded to where it was ultimately going without much in the way of correction. With a single exception, the largest bull-market correction during that period was 13.55. These corrections, furthermore, tended to take place in the late stages of advances rather than the earlier ones. The picture changed with the next three bull markets. Rather than producing signifi- cant new highs,each of these three advances topped out at roughly the same level at which the 1966 market peaked, 985.21 on December 3, 1968, 1051. 70 on January 11, 1973, and 1014.79 on September 21, 1976. Corrections, however, followed the same pattern. They tended to be in- significant and occurred late in the process, if at all. This brings us to bull market number eight, which began in February, 1978. As far as the level at which it peaked is concerned, it followed the pattern of the previous four. Its lligJl–was1024.05-On…,ApciJ-2'7,…..J..981..It,howv.er-.-addd–neww.tinkle,-'f-hel'e—wl'e,-inthe-.4-….. three years between low and high, three notable and significant corrections, September-October 1978, October-November, 1979, and February-April, 1980. They brought the Dow down 13, 11, and 16 respectively, and, instead of being clustered toward the end of the rise, were evenly spaced throughout the advance. Each one brought the Dow back to a level very close to its February 28, 1978 starting point. Furthermore, of interest from the technician's. point of view, each one featured noticable selling climax indications (remember Silver Thursday 1980), whereas the actual start of the bull market, in 1978, had featured few such indications. There then followed the bear market of April, 1980-August, 1982, and we continue firmly 1) believe that the ninth bull market in this series began on Agust 12 of this year. Interest- ingly enough, like 1978, it began with little activity and reduced volume on the downside, how- ever spectacular the subsequent upside action may have been. Its initial rise, as we have pointed out ad nauseam, was steeper than that of any of the advances discussed above. The question which remains unanswered centers around the nature of its corrections. We had been leaning toward the view that such corrections would be similar to those of the first seven bull markets discussed above, miniscule and late. As noted, however, the last upswing established the precedent of corrections occuring early and being relatively deep. This, inevitably, forces us into consideration of the past six weeks. On November 3, the Dow made a high, 1065.49, roughly equivalent to that of the past five bull markets. It has, since then, been moving sideways and has formed what can be considered as a potential distributional top suggesting a decline of intermediate-scale proportions. None of the major averages has yet broken out of this top, although a fair number of individual stocks have indeed done so. The question which an.historical.review engenders, therefore is whether the 1976-78 precedent of severe intermediate corrections will be followed or whether the current – upswing will tend to behave along the lines of most others since World War II. The even more basic follow-on question is whether, if the former is the case, the scenario of a major bull market's having begun in August, 1982 is altered. It is these questions that will be explored in our forecast next week. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Dow-Jones Industrials (1200 p.m.) 998.25 S & P Composite (1200 p.m.) 136.29 Cumulative Index (12/16/82) 1477.39 A VERY MERRY CHRISTMAS TO ALL No stalemen' Of expression of opinion or any other matter herein conlolned IS, or Is to be deemed 10 be, directly or Indirectly, on offer or the SohCllotron of an offer to buy or sell any secvnly referred 10 or mentioned The mOiler rs presented merely for the convenlenCtl of the subscrrber WhIle we believe the s.ources of our Information to be relIable, we In no way represent or guarantee the occurOI;'( thereof nor of the statements mude hereIn Any action to be token by the subscrrber should be based on h,s own InVestIgatIon and information Janney Montgomery Scoll. Inc, as a corporallon, and lis offIcers or employees, may now have, or may later toke, positions or trades In respect 10 any securItIes mentlonl!d In thiS or any future Issue, and such pOSition may be different from any views now or hereafter eypressed In thiS or any other Inue Janney Montgomery Scott, Inc, which IS regIstered With the SEC os on Investment adVisor, may give adVice to Its Investment odvls.ory and othel customers Independently of any statements mode In Itlls or rn any other Issue Further Information on ony security mentioned herem IS aVailable on request

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Tabell’s Market Letter – December 31, 1982

Tabell’s Market Letter – December 31, 1982

Tabell's Market Letter - December 31, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY OB540 DIYISION OF MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK eXCHANGE December 31, 1982 For some years now, we have studied the familiar seasonal tendency of the stock market to stage a year-end -'-'co'ncJusionsthat can raB be y, and it has derived,from been th a study eoCctu!st1oimspohef ntohnisfflie'tnteornt-op-oOinUtYoourtisgoimnaelofsttuhdeoing- back to when the Dow-Jones Industrial Average first was computed in 1897, indicated that such a raIly, however miniscule, invariable had taken place. However, two recent periods, 1976-77 and 1977-78, provided exceptions, with the DJIA, in each case reaching its year-end raBy high prior to the first day of January. The last four years have seen the resumption of the usual year-end rally pattern. The following facts about the year-end raBy may be noted. 1. The year-end raBy often has been of great magnitude, occasionally continuing through the entire subsequent year without a 5 correction being recorded. It frequently has continued with only minor interruptions for as long as six months into the new year. In 1961, 1963, 1964, 1967, 1971, 1975, and 1976, the raIIy continued into February, March, or beyond. However, on other occasions, it has been of only a few day's duration, reaching a top extremely early. Thus, in 1960, 1970, 1973, 1974, 1981, and 1982, the raIIy reached a peak by the first week in January, and, as noted above, the 1976 and 1977 year-end ralIies failed entirely to carry into January. 2. There has been a persistent tendency for the rally to begin early in years when the market has been up, and late in years when the market has been down. In recent upward years, 1967, 1975, 1979, and 1980 are examples, the rally commenced from early December. In recent downward years, 1962, 1966, 1969, 1977, and 1981, the rally began late in the year. This year, an up year, the December low occurred on December 16 at 990.25. 3. The important thing to watch in connection with the market action in the early …..,. monthsofthe.newyearistheaforementioned3igurj)..thaJ!reviousDecembeJ'.,….,,……, low. This low has been broken in 50 years out of the past 82. However in 29 of these 50 cases, it was broken in January and February. For example, in 1970, 1973, 1977, 1978, 1981, and 1982, the December low was broken by early January. Since 1937, it has never been broken later than mid-March with three exceptions, 1965, 1974 and 1981, when it was finally penetrated in August. Thus, if the market is able to hold above its December low for the first 2t months of the year, chances become good that this low will not be broken. 4. In years when the December low has been broken, the subsequent trend has been downwards two-thirds of the time. 1962, 1966, 1969, 1973, 1974, and 1977 are typical cases. 1965, 1978, 1980, and most recently, 1982 were exceptions. 5. The magnitude of the rally is an important clue as to the year's market trend. For example, an advance of 10 or more from the December low has been foIIowed by an upward or neutral market in 35 of the 41 years that such an advance has occurred. An advance of less than 10 or more from the December low before an identifiable correction takes place has been followed by a downward market in 29 of the 41 years. In 1963, 1964, 1971, and 1980, the year-end rally approximated 10, and in 1972, it was 17. In 1962, 1970, 1973, and 1977, for example, it was less than this figure. This year, the rule failed to hold, with a year-end rally under 10 being followed by an up year. 6. The length of time in which the rally continues into the new year is important. For example, in 23 years, the ral1y continued into March or later. In 19 of these 23 years, the eventual trend was-upward.-, In1964,-1972,1975,and 1976 — the year-end rally continued into March and in 1961, 1967, 1971, and 1980. into February. This year. therefore, the December low. reached December 16 at 990.25, will become an important reference point to watch. If the Dow is able to advance from this low by 10. roughly to the 1100 level. or continue a rally into February or March, the long-term historical implications would be bulIish. RJS rs Dow-Jones Industrial Average (1100 a.m.) 1047.09 S & P Composite (1100 a.m.) 140.28 Cumulative Index (12/30182) 1516.70 ROBERT J. SIMPKINS. JR. DELAFIELD. HARVEY, TABELL No statement or expression of opinion or any other matter herein contOlned Is, or IS 10 be deemed to be, directly or indirectly, an offer or Ihe ollcLto!lon of 0 offer to buy or sell onr. security referred to or mentioned The mOiler IS presented merely for Ihe convenience ollhe subSCriber. While we belIeve the sources of our ,formo 1101'1 10 be reHob e. we ' no way represent or guorentee the euracy thereof nor of the slotements mude herem Any actIon 10 be token by the subSCriber should be based on hIS own Inve51lgotlon and ,formohon Janney Montgomery SCali, Inc, as a corporatIon, and Its offICers or employees, may now have, or may later toke, poSItions or trades m respect to any securitIes menTIoned m This or any future Issue, and such pOSItIon may be different from any vIews now or hereafter e.opressed In Ihn or any other ISsue Janney Montgomery Scott, Inc, whIch IS regIstered With lhe SEC as on ,vestmenT odvisor, may gIve adVICe 10 lIs ,vesTment advISOry and olher customers Independently of ony ,tolements mode Il'I Ihls or Il'I any olher Issue Further InformatIon on any serunty mentIoned hereIn 1 ovmlable on ruest

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