Viewing Month: April 1983

Tabell’s Market Letter – April 08, 1983

Tabell’s Market Letter – April 08, 1983

Tabell's Market Letter - April 08, 1983
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r TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 081540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE April 8, 1983 While the market exhibits short-term dullness and the financial community worries about an antiC.i,Il!.t..ed intermediate-term correction, an event is taking place that could have a profound effect on most I t….,—l';klt;;111'A'';,,n;Wf;et-hhe-a-.vlenvt.oestmbeanbclik,('eutipme-a-1nodr…e.xmoasmt .irneead-erssonmOfefi17k'y,''O'l'''',t;;J'''t''.!X;.'(.'..;..t,ed!y'-;,–,;'1I-.. It has long been a theory of this letter that the market changed behavior radically in the mid- 1960's. Prior to that time, each successive major high and low had been higher than the corresponding figure for the previous market cvcle. Starting on FebruJlry 9, 1966 \l(e saw the first of a series of buUmarket highs in the vicmity of 1000 on the Dow-Jones Industrial Average, and, in 1970 and 1974, new cycle bear-market lows were scored for the first time. In contrast to the secular rising trend of the previous 25 years, the secular trend for the Dow for the past 17 years has been just about flat. We first drew attentIon to this phenomenon in 1971. It has continued unabated since. If one assumes that the flat trend began with the 1966 high and continued, at least, through last August1s low, it can be described mathematically via a computed trendlirre. the central, thick line shown on the chart below. That line starts at 864.28 in 1966 and its slope (.0025 points per day) is so flat that it can barely be seen on the chart. It has risen, after 4,303 trading days, only to a current value of 875.08. DOH JONES INDUSTRIAL RVERRGE MONTHLY I– I -'L ltrLII,I — III I II! What is interesting about the chart, however, are the three lines drawn above and below the cen- tral computed trendline. These lines are based on a statistical measure called the standard error of estimate. and they measure the amount by which a given series deviates from its central or estimated value. The standard error for the 4,303 days of market history under study is 79.6931 points. The six outer lines on the chart are drawn, respectively, I, 2. and 3 standard errors above and below the central estimate. What is cruciaI9Sthat the Dow spent mosf'of last month above its estimated value by more than three times the standard error. It has done so only once before, on the downside, in 1974. Assuming the Dow observations to have been distributed normally. some two-thirds of the 4.303 days should have shown a close one standard error from the computed trendline. and some 95 should have been two standard errors. Something over 99 should be wlthin three standard errors. As of January of this year, the actual data conformed almost precisely to these theoretIcal estimates. It is, as the chart clearly shows, no longer doing so. In other words, 1114.16, which happens to be the present computation plus three standard errors. is a crucial figure. Continued ability to hold above this figure will tell us little about the shape of the future market trend. It will however suggest one fact of tremendous importance, that the flAt secular trend that perfectly described the market for 17 years from 1966 through 1982 is no longer in effect. –oI1 )\WT rs Dow-Jones Industrials (1200 p.m.11114. 45 S & P Composite (1200 p.m.) 151.41 Cumulatlve Index (4/7/83) 1737.18 ANTHONY W. TAB ELL DELAFIELD. HARVEY, TAB ELL No statement or exprenlon of opinIon or any other matter hereIn contained IS, or IS 10 be deemed to be, dHecily or l!'Id,recily, on offer or the 501lc.101l0n of on offer to buy or sell any security referred fo Of mentioned The maUer IS presented merely for the convenience of lhe subscriber While we bel.eve Ihe sources of our In(ormatlon 10 be reliable, we ,n no way represent or guarantee the accuracy lhereof nor of Ihe statements mude herein Any action 10 be token by Ihe subscriber should be based on hiS own Invesllgallon and information Janney Montgomery Scotl, Inc. os a corporation. and Its offICers Of employees, moy now have, or may later toke. positions or trades In respect 10 any seCUrllle mentioned In Ih,s or cny fulure Issue, and such position moy be different from any views now or hereafter expressed In Ih,s or any other Issue Janney Monlgomery Scott, Inc, which IS registered With the SEC as on Inveslment adVisor, may give odvlce to Its Investment odvISory and olhel C'Uslomers Independently of any slalements mode In thiS or In any other Issue Furlher informatIon on any seCl.Hlty menlloned herein IS available on request

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Tabell’s Market Letter – April 15, 1983

Tabell’s Market Letter – April 15, 1983

Tabell's Market Letter - April 15, 1983
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.- 1ArBELa..' s &l1iUii\RET LeTTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEM8ER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE –e-'– , – – ,, -.–April,151983,, n iViost'maJor stock-market indices moved ahead this week to cycle and 'alltime nighs, once again underscoring the folly of becoming obsessed with putative corrections under bull-market con- ditions. More importantly, however, the move by the Dow-Jones Industrial Average back to the middle 1100's returned that indicator to the zone we discussed last week, the area which calls the continued viability of the 17-year, flat trading range into question. Evidence for the existence of a new super-cycle environment thus continues to accumulate. The emergence of bull-market conditions became apparent shortly after the August low. Since that time, as the upswing began to take on characteristics of its own, it has become obvious that the market's behavior is more characteristic of the sort of up market seen during the 1950's and 1960's than the more recent, comparatively tepid bull markets. If this is the case — a point we have been making for six months now — we are still, only seven months after the low, in the very early stage of the cycle. It is necessary to keep reminding ourselves that bull markets typically last two to three years. It remains unlikely that this one will terminate anytime during the near future or, indeed, that a correction of anything more than minor proportions will occur until a much later stage. Given this scenario, the upside penetration of the 17-year trading area is likely to become more and more obviously decisive. It is almost impossible, in our view, to overestimate the importance of this apparent change in the cyclicl environment. We have become so used to the sort of markets that have prevailed since the middle 1960's that we tend to forget that things can, indeed, be different. It is neces- sary to examine dusty chart books to remind ourselves that between 1949 and 1966 the Dow-Jones Industrial Average advanced from 160 to 1000. The same sort of advance, taking the 1974 low as a benchmark, would produce a price of 3600 for the Dow. 1-4——-\We-supposeiti..-necessar-y.toadd,thatt-he.abO)1eJs.not aforecast,.As'.eI!ointed out last week, all that exists at the moment is a growing chain of evidence that the 17-year super cycle of 1966-1982 has come to an end, This evidence tells us nothing about the sort of environment that is likely to replace it, and, indeed, the current bull market and the subsequent cycle bear market will probably have to proceed to completion before we have any firm guidelines with which to work. The 1949-1966 period is cited purely as an example of the sort of fortune-building vehicle the stock market can be. That period, however, is not a figment of the imagination. It happened, and something like it could, happen again. It is necessary, of course, to ask ourselves why this should be occurring at this particular point in time. The post-World-War- II super-cycle bull market grew, we now know, out of a series of wrenching adjustments, which began in 1929 and included a depression and a world war. It began also from a period of profound undervaluation of common stocks. It is difficult to compare historical periods, but it is at least arguable that the adjustments of the past 17 years have been comparably profound. We have seen, since the middle 1960's, the shattering of many tenets of conventional investment wisdom, a shattering comparable in many ways to the destruction of faith in common stocks which took place in the 1930's. 1968 saw the demise of the gunslinger investment manager, and 1974 laid rest the one-decision-stock theory, under which theory supposed professionals blithely paid blatantly unjustifiable prices for Favorite- 50 stocks, many of which are nowhere near those prices 11 years later. The magnitude of the price correction produced by these changes is properly understood when one recalls that the past 17 years of no upside progress in common-stock prices has occurred in the midst of a wildly inflation- ary environment. Most investors are familiar with the inflation-adjusted chart of the Dow which shows a constant-dollar decline between 1966 and 1982 almost as great as that of the 1930's. The resulLof this, of course, was to produce, in the late 1970's and early 1980's,a valuation level for equities measurably comparable to that which existed in the late 1940'8-;– — —– — – — Given this background, the possibility of an end to the almost-two-decade adjustment in the early 1980's and the emergence of a subsequent new environment is less surprising. We have cited beforethe ancient Chinese curse May you live in interesting times. n The 19HU's may plulluse JU'l such a time for the stock market. AWT rjs ANTHONY W, TAB ELL DELAFIELD, HARVEY, TABELL Dow-Jones Industrials (1200 p.m.) 1169.21 S & P Composite (1200 p.m.) 158.52 Cumulative Index (4/14/83) 1793.82 NObSlalemenl or e)(prelon of opinion ar any olner moIler herein contolned IS, ar IS Ie be deemed to. be, dmctly or Indirectly, an off!;!r or Ihe ollcilolton of on offer toon uyo or sell on security be hellob e, we In referred no woy Ie or m(!nlloned The malter presented merely represenl or guo'ontee Ihe accuracy thereof nor fOf Ihe c.onverlence of the subscriber While oNe believe the 50urces of our tnfarmoof Ihe statements mude herein Any oct, on 10 be token by the subscnber should be PnoOselhonosn or 1 I own rades inVestigation IrI reSpect 10 and any eI-ncIfJorrlmIIaStiomnen tJiaonnnedeyIrIMtohlntgoormaenryy Scoll, future Inc, 0 0 Issue, and corporation, and lIS off,eers or sucn position moy be different employee5, mo.,. from any views now now nove, or moy later teke, or hereafter eypressed In I IS or onV her;dsue Janney Montgomery Scoll, Inc, which IS registered WITh the SEC as on Investment odvisor, mQV give adVice to 1\1 Investment adv'SQry ond cthel Cl./stomers In epe ently of any statements made fI'l thiS or fI'l any ather IsstJe further IMformolton on ony security mentioned herem,s avadable on requesf

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Tabell’s Market Letter – April 22, 1983

Tabell’s Market Letter – April 22, 1983

Tabell's Market Letter - April 22, 1983
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER New YOAK STOCK EXCHANGE. tNC MEMBER AMERICAN STOCI( EXCHANGe April 22. 1983 The major stockmarket indices continued last week to move into newall-time high terri- .-,.- JoO'.Onjg,e;effcLoJ..thtsongoJnL!ltrengthwasthatit…llpJllU,entJym,uted.for.thetimeL, ..J behlg. tile widespread' forecasts of imminEint corriiction ,.,' By ;contrast;-Thursday's-New -York ..,…, Times headed its market summarY by saying Analysts predicted the Dow will break 1200 by the end of the week. This happy event had not come to pass at this writing. and it mayor may not do so. However. it hardly qualified for the Fearless-Forecast-of-the-Year award. since the average had closed at 1191 the night before. and a nine-point rise in the current environment cannot be ,considered a particularly earthshaking event. Contrary opinion. of course. tells us that the time to worry about a correction will be when all concern about one has disappeared and forecasts become uniformly bullish. It will. therefore. be interesting to see what happens when the market. as it inevitably will. starts failing to post new peaks for a week or two. If the correction talk reemerges at that stage. we will be duly encouraged. Meanwhile. on an objective basis. the upside momentum which the market continues to be able to display. even seven months into the aEIvance, remains somewhat spectacular. Three short-term corrections. in the 5-6 range. have taken place. At no time. however. from August 12 to the present. has the market displayed deterioration which could be characterized as intermediate-term in scope. To detect swings of intermediate-term magnitude. 65 days of data have. in the past. constituted a useful time period for study. For example. a 65-day moving average of each day's percentage of advancing issues constitutes a useful measure of the market's behavior on a medium-term basis. This figure peaked last November when. for the 65 days ended Novem- ber ,12.)t,showedthat 48.5 of all issues traded had, estingly enough. this was the second highest'peak the osnenaveesrnaagse,evadevr arnecaecdheedacShIndcaeyb. reIandtenri- statistics have been maintained. The only time it has ever reached a higher level was June 21. 1933. at which time the Dow-Jones Industrial Average was at 95.91. on its way to 194.40 four years later. Indeed. the figure has managed to move above a peak of 46 on only eight occasions prior to the recent one. In most cases these peaks have been scored in the rela- tively early stages of major bull markets and at times when there still remained a great deal of room on the upside. A recent example was in February. 1971. like the present less than a year after a major (May. 1970) low. The Dow at the time was at 887 versus an eventual high of 1050. What is particularly significant. however. is that. on an absolute basis. intermediate- term momentum. even after having pulled back. 'as could be expected. from its high of Novem- ber. remains highly positive. The 65-day average percentage of advances dipped just below 43 last week and has now again risen above it. This 42-43 level even though down from highs reached last November is still a higher figure than has ever been attained in many past bull markets. Furthermore. almost invariably. there have existed. in past upswings. inter- mediate-term pauses where the 65-day percentage of advancing stocks has dropped into the high 30's. say to the 37-38 level. These pauses have themselves generally taken place well before the ultimate highs were reached and have often been accomplished without a great deal of correction for the averages. Even this very early sort of sign of loss of momentum has not yet occurred. It continues to seem to us that the expectation of serious weakness at this stage is like – – seeing a finely tuned racing'car'proceeding-down the track-at-full speed-and deciding to-jump in front of it. Before such weakness occurs. there must occur some sign of loss of upside momentum on an intermediate-term basis. This has conspicuously'' failed to take place. AWTrs ANTHONY W. TABELL DELAFIELD. HARVEY. TAB ELL Dow-Jones Industrial Average (1200 p.m.)1194.95 S P Composite (12 00 p. m. ) 160.44 Cumulative Index (4/21/83) 1826.63 No statement or eXpres.llOn of opinion or any other motter herein contolned IS, or IS 10 be deemed to be, directly or indirectly, an offer or the ohCllatlon of an offer 10 buy or sell any security referred to or menlroned The motter IS presented merely for the convenience of the subscriber While e believe the sources of our Informa tlon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herem Any action to be taken by the subscrtber should be based on hiS own invetlgallon and Informalton Janney Montgame'Y Scott, Inc, as a rporallon, and It officers or employees, moy now hove, or may later lake, posItion. or trodes In respect 10 any s(!Cunlles mentiOned In Ihls or any future ISSUe, and such poslllon may be different from any views now Or hereofter epressed In thl, or ony other ISsue Jonney Montgomery Scott, tnc which ' reglslered wllh the SEC 0 an Investment adVisor, may give adVice to Its Inveslment advISOry and olhel cvstomers Independently of cny slalements mode In thiS or In cny olller Issue Further information on cny seomty mentioned herein IS ovolloble on requeSI

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Tabell’s Market Letter – April 29, 1983

Tabell’s Market Letter – April 29, 1983

Tabell's Market Letter - April 29, 1983
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. TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVHill0N OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – April 29, 1983 We are, to be honest, unable to think of a great many advantages to getting old. One of ! – —-t-he..;-few,such, .,.for-the-st0ekar,ket-obs.er-ver,atc-Ieast ,-is..,a.longerexperiencewithdifferentsorts of market enVironments.. HaVing celebrated, this week, the 29th anriiversary-of 0';1' e'ritrance into the securities business, We have found ourselves perhaps a bit less astounded by the market's be- havior since last August than some of our younger colleagues. When we started our Wall Street career, in the dark ages of 1954, the industry was populated with hoary veterans of 1929, who regularly assured us that The trouble with you kids is that you've never seen a bear market. We find ourselves, today, being able to chide anyone with less than 17 years experience for their lack of understanding of the past seven months on the grounds that they have never seen a bull market. We cite our approach to galloping senility, not simply to appear avuncular, but because we think, at this stage, the point is relevant. We have, in recent issues of this letter, documented the thesis that the market's recent extraordinary strength suggests that we are entering a new super-cycle environment very different from that which prevailed between 1966 and the summer of 1982. We have, we trust, made it clear that there exists precious little evidence at the moment to suggest exactly what the shape of that environment will be. Nevertheless, the last extant ex- ample of a different sort of market environment is the one which prevailed, approximately, between 1949 and 1966. Since we were, ourselves, actively staining our hands with stock-chart ink during a goodly portion of that period, it may be helpful to try to convey some sort of flavor of just what the good old days were actually like. The watershed date, which may, historically, wind up being compared with August 12, 1982, was June 13, 1949. On that day the Dow-Jones Industrial Average closed at 161. 60. It then com- menced an advance which lasted exactly one year throuS'h June 12, 1950. It reached 228.38 for a 41 increase, which compares not unfavorably with the .present 56 rise since last August. To those 'who think that bull markets need corrections, the period is instrUctIve. In that entire one-year period there were five identifiable corrections. The largest one was 2.86, and the longest one lasted for nine days. The longest period of the entire year during which the market failed to post a new high was five weeks in February-March, 1950. This happy state of affairs might have gone on longer were it not for an unusual event — the outbreak of the Korean War. This caused a correction of all of 13 over a relatively short 22- day period. However, four months later the Dow was again at a new high and continued to move on to new peaks regularly for another 15 months, albeit this time interspersed with more frequent and deeper corrections — eight such instances up to January, 1953, the deepest one being 7.81. There then ensued what has come to be called a bear market, largely only because purists like ourselves insist on dividing the market up into four-year cycles. It lasted nine whole months and brought the Dow down 13 once more. After this interruption, the advance resumed, and a year later, in January, 1954, we were again at new highs. The process of achieving new highs continued another 31 years, with seven identifiable short-term corrections in the process, two of which were marginally over 10. After another 14 months of back-and-forth swings in a trading range, the first bear market approaching 20 in magnitude occurred from July to October of 1957. We are talking here, remember, about a period of just over eight years — eight years be- fure the Dow ever posted a decline of greater than 13. It did so only twice, and only two periods of as much as a year went by without the Average posting a new high. The total advance was 222, the equivalent of a move of the Dow to 2500 from the August, 1982 low. It was followed, moreover, by two further major-cycle bull markets, which space does not permit recounting here, but which continued for another nine years. Some individual stock advances during-the -eight-year, 1949-1956 period were truly' spectacu- lar. International Paper moved from 3 3/4 to 40. Aluminum was then considered a growth industry, and Reynolds Metals moved from 1 3/4 to 55, a 3000 rise. Now even in the light of this sort of record, the malet's behavior since August is pretty exceptional, and we wish to take nothing away from it. However, to those of us who are aware from experience what bull markets can really be like, it is slightly less surprising. The major lesson, moreover, afforded by those early years is that exceptional strength, once begun. tends to persist. It is a lesson worth keeping in mind as the market continues to post new highs. AWT rs ANTHONY W. TAB ELL DELAFIELD, HARVEY. TABELL Dow-Jones Industrials (12 00 p. m. ) 1215.17 S & P Composite (1200 p.m.) 162.99 Cumulative Index (4/28/83) 1850.56 NQ slalement or exprenlon of opinion or any other molter herein contained IS, or 15 to be deemed 10 be, directly or indirectly, on offer or the soliCItation of on offer to buy Qf sell any security referred 10 or mentioned The molter IS presented merely for the conventence of the subscriber While we believe the sources of OUf Informo tlon 10 be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action to be token by the subscriber should be bosed on hiS own Investigation and information Janney Montgomery Scolt, Inc, as a corporotlon, ond liS offuers or employeu, may now have, or may loler toke, POSitions or trodes In respect 10 any seCUrities mentioned In thIS or any futurc Issue, and such pOSition may be different from any views now or hereafter expressed In thiS or any other Issue. Janney Montgomery Scott, Inc. which IS regIStered With the SEC as on ,vestment adVisor, may give advlCc to Its tnve!otmenl advisory and othel customers Independently af any statements mode In thiS or In ony other Issue Further Information on any !ealrlly menlloncd herein IS ovalloble on request

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