Tabell’s Market Letter – February 25, 1983

Tabell’s Market Letter – February 25, 1983

Tabell's Market Letter - February 25, 1983
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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 …, February 25, 1983 Thursday's surge, in which the Dow spurted 25 points to a new record high, should, in our …yiewy\!!prised absoly noone. We have been tD'ing..!Q…!!o'Z.tl! in this space for ttlPJl.st… ……, six mantl'fs- tHe very simple lessori- Of history tilat bull m-arkets; once underway, – tend to-spend most – of their life moving ahead, with very little in the way of significant correction in the process. There are, of course, plenty of exceptions to this rule. but it is the exceptions that should be regarded as unusual, not the conventional behavior. Thursday's rally, therefore, seems to us to be nothing more than part of a typical pattern that has tended to -r.epeat itself in all mazKet1!dbrwhich we have an historical record. The internal health of the market, meanwhile, remains good. We completed this week a survey of the action of 1536 major issues, ascertaining for each issue (1) the day on which it made its bull- market high, (2) the extent of the correction subsequent to that high, and (3) the amount of recov- ery since. The table at left, show- Date of High Issues ing the month in '!Pich the bull- Sept. 1982 25 2 market high was posted for each Oct. 1982 122 8 issue indicates that almost half of Nov. 1982 195 12 all stocks made their highs within Dec. 1982 202 13 the last month and two-thirds Jan. 1983 338 22 achieved their highs within the Feb. 1-23, 1983 654 43 past two months. It strongly sug- gests that upside presSUYe remains strong, carrying the bulk of issues along with it. The right-hand table tabulates the Total extent of the correction which each of -..co;rrect;iOI'-,- ,…I;;;ssuiBes,……… –t.fle-1-6aG-issues-has-undergone..f-rem-,fts 0 5 31-1 21—1– high to its subsequent low todate. 5 – 10 301 20 These corrections have, by and large, 10 – 15 252 16 been small. 311 issues have posted a 15 – 20 252 16 total correction of less than 5 from 20 – 25 168 11 their highs, and half of all issues have 25 or more 252 16 corrected less than 15. The average correction on all 1536 stocks is 14.8. Having identified the correction for each of the 1536 stocks under study, it is then possible to look at the subsequent recovery. The table at left, based on Wednesday's closing prices, shows the amount by which each issue is Down from High 2/23 Issues currently down from its bull- 1) 51; 535 35 market high. Roughly a third of 5 – 10 427 28 all issues are now within 5 of 10 – 15 264 17 their bull-market high, and two- 15 – 20 140 9 thirds are within 10 of that peak. 20 – 25 62 4 A relatively small proportion of the 25 or more 108 7 issues under study presently find themselves down by significant amounts from their peak bull-market levels. If there exists any suggestion of weakness at all, it is that issues which have moved down have tended to remain down. The table at right shows the amount of each correction retraced as of Wednesday. Retracement Issues As can be seen, the majority of 80 or more 184 f2 stocks have retraced less than 60 – 80 178 11 40 of the amount by which 40 – 60 331 22 they moved down. The reason, 20 – 40 382 25 in other words, that most stocks Less than O 461 30 find themselves so close to their recent highs is not the vigor of the post-high rallies but the fact that the corrections were small in the first place. This factor, if it persists, could suggest loss of upside momentum, but it is obviously highly volatile and will change radically with any continu- ing rally. AWT rs Dow-Jones Industrials (1200 p.m.) 1125.10 S & P Composite (12 00 p. m.) 150.30 Cumulative Index (2/24/83) 1678.83 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No slatemenl or el'prenron of opinion or any other motter herein contolned IS, or IS to be deemed to be, directly or mdneclly, on offer or Ihe soliCitation of on offer to buy or sell any eClJnty referred to or mentioned The moiler IS presented merely for the convenienCE of the subSCriber While we believe the sources of our Information to be relloble, we In no woy represent or guorantee the accurocy thereof nor of the statements mude herein Any actIOn to be token by the subSCriber should be based on his own Invesllgatlon and Information Jonney Montgomery Scott, tnc, as a corporation, and Its officers or employees, may now have, or may later toke, pOlllons or trades In respect to ony securllles mentioned In thiS or any future .ssue, and such pos.t,on moy be d.fferent from any v.ews now or hereafter expressed In th.s or ony other Issue Janney Montgomery 5eott, tnc , whICh .s reg.stered woth the SEC os on Investment odvisor, may g.ve odvlCe to Its .nvestment odvisory and othe! customers independently of any stotements mode In th.s or In any other ISsue Further information on ony secuflty mentioned herein ' ovollable on request

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