Tabell’s Market Letter – March 11, 1983

'.. TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIYISION OF MEMBER NEW YORK STOCK EXCHANOE, INC MEMBER AMERICAN STOCK eXCHANGE March 11, 1983 The most valuable service that can be performed by a technician — if he is reading the signs and portents correctly in the early stages of a bull market — is to allay nervousness. There tends to be a '''eneral feeling among il).ves.tothat,if-metl;i,gins..ril-,..u..isssmeho.wexhibiting-aber-rant- ,… behavior 'and-is 'therefore, vulnerable to immediate reversal.' Most'bf'wliat we' have been' writing in this' space for the past six months has constituted an attempt to suggest, in one way or another, that what has been taking place since August, while it bears its own unique signature as all markets do, is, by and large, perfectly normal. Much of the focus of what we have been discussing has been on length of time — i.e., we have noted that a sharp initial rise, lasting for six months as the present one has, is hardly without prece- dent, and we have reminded our readers that bull-maret cycles tend to persist for a great deal longer than this. Our colleague, Robert Simpkins, in taking over this space last week, zeroed in on the ex- tent of the recent advance, some 47 from the August low, and documented the fact that an increase on this order of magnitude was also a not unusual occurrence. It 1S perhaps useful once again to put this fact into historical perspective. The table below cites some relevant statistics for 13 past major-cycle bull markets, starting in July, 1932. For each bull market the starting date and the percentage decline which preceded it is given, followed by the Dow- Jones Industrial Average at the low, the date of the high, the ultimate peak and the percentage advance. Set in this perspective, the 47 advance from August to date still appears as pretty much of a weak sister. All but three of the bull markets in question have involved rises considerably greater than the current one, and in numerous cases the ultimate advapce has been twice as great as the one so far. Previous Date of Date of Low Decline DJIA Low High DJIA High Advance July. 1932 -89.2 41.22 Mar. 1937 194.40 371.6 Mar. 1938 -49.1 98.95 Nov. 1938 158.41 60.1 Apr. 1942 -41.3 92.92 May 1946 212.50 128.7 Oct. 1946 -23.2 163.12 Jun(L1948 193.16 1&.,-,,–4-1 June 1949 -16.3 161.60' Jan. 1953 c- 293.79 81.8 Sep.1953 -13.0 255.49 Apr. 1956 521.05 103.9- Oct. 1957 -19.4 419.79 Dec. 1961 734.91 75.1 June 1962 -27.1 535.76 Feb. 1966 995.15 85.8 Oct. 1966 -22.1 744.32 Dec. 1968 985.21 32.4 May 1970 -35.9 631.16 Jan. 1973 1051. 70 66.7 Dec. 1974 -45.1 577.60 Sep. 1976 1014.79 75.7 Feb. 1978 -26.9 742.12 Apr. 1981 1024.05 38.0 Aug. 1982 -24.1 776.92 Mar. 1983 1141.74 47.0 Even the three advances that have been smaller than the current one constitute, in their own way, special cases. The October, 1966-December, 1968 rise involved only a 32 markup for the Dow, but it was featured by considerably more dynamic action in a whole host of secondary stocks. The cycle from October, 1946 through June, 1949 was essentially an attenuated one, constituting a base-building period for the series of dynamic advances that fOllowed. Interestingly enough, the February, 1978-August, 1982 cycle has many of the same characteristics, and this is,possibly not coinci'dentally, the third case on record in which the usual bull-market advance was so,,,ewhat subdued. There is much, in other words, to suggest that the present rise will turn out to belong comfortably in the family of previous upswings, posting an eventual rise of somewhere between 60-100. There exists one sense in which current behavior is Significantly different from that of the past two decades, and it is indeed an encouraging one. As noted above, two of the sub-par advances on the list have been in recent cycles, 1966-68 and 1978-81. The two intervening cycles, 1970-1973 and 1974-1976 were more normal in terms of advance, but, as the table shows, they both followed extremely steep cor- rections and thus required a sharp advance to recover the ground lost., By contrast, the 24.1 correction which took place between April, 1981 and-last August,' while UnqUestiona15lyoCcyCle-bear-marlet dimensions, was relatively mild. However, this comparptively tepid swing was followed by what appears, to date, to be a more conventional bull-market advance. The market may well be taking on the charac- teristics, in other words, of the cycles which occurred betwen 1949 and 1966, when mild corrections were followed by highly dynamic bull markets. As was pointed out last week, if this pattern is carried through to its conclusion, it would raise the strong possibility of a super-cycle upswing replacing the fiat super- cyle of 1966-1982. It is time, we think, that this question was explored in some depth, and we intend to do so in future issues of this letter. AWTrs ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL Dow-Jones Industrials (1200 p.m.) 1119.10 S & P Composite (1200 p.m.) 151. 31 Cumulative Index (3/10/83) 1736.36 No statement or expression of opinion or ony other matter here.n c.onlomcd n, or 1 10 be deemed 10 be, directly or mdHectlr,' on offer or the SQlu.1tollon of on offer to buy or sell ony secuTity referred 10 or mentioned The matter IS presenled merely for Ihe converllenee of Ihe subscriber Wh, e we beheve Ihe sources of our mforma lion to be reliable, we In no way represent or guorantee Ihe occ.urocy thereof nor of Ihe stotements mude herein Any action to be taken by the subscriber should be based on hiS own Invesllgatlon and Informotlon Janney Montgomery Scali, Inc. as a corporation, ond lIs officers or employees, may now hove, or may later toke. posillons or trodes In respect to any seCUrities mentioned In thiS or any future Issue, and such POSITion may be different from ony views now or hereafter eKpressed In this or any olher Issue. 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