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-..'- – – – – – – – – – – , . – , ,,F '1 . TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9249660 . – . , November 11, 1983 Any-strueture ,(bmaH…….how–large-and-complexean be'brokenowrralmos1infinitely– into individual components. This applies tothe stock market, where ft is a truism that long- term moves can be separated into a series of short-term rallies and declines. We find our- selves. at the moment, 15 months into the bull market which began on August 12, 1982. Ap- plying a filter technique with a filter threshold of a bit over 3 to that market, we find that it can be broken into 20 separate components, 10 short-term rallies and 10 short-term declines. What is interesting is that it requires only miniscule changes in the nature of these components to produce quite a drastic alteration in the long-run picture. Between August, 1982 and May of this year, the Dow advanced 58 over some nine months. For the six months from May 6 through Monday, the short-term low to date, it was actually down slightly. It is worthwhile looking at the change in the nature of the short-term swings that have produced this rather dramatic reversal of market behavior. Some of the relevant statistics are summar- ized in the table below. Advances Advances Declines Declines Number of Moves 8/12/82-5/6/83 5/6-11/7/83 8/12/82-5/6/83 5/6-11/7/83 73 6 4 Average Change 12.07 6.75 -5.26 -5.10 Largest Change 20.32 10.45 -6.99 -6.48 Average Length-Trading Days 20 18 8 18 Longest Length-Trading Days 72 44 14 22 Change Entire Period 58,65 – 1. 44 58.65 -1. 44 Length – Entire Period 186 128 186 128 The upswing from last August to this May lasted 186 trading days and consisted of seven ,advancesandixdecline8-.-he ..average4vanee-was .. 12 ev-trading-days. T-helargestc–''-ll- was the take-off rally of August 9, and the longest the 72-day advance from January through May of this year. The declining phases during this period averaged 5 and lasted for a mean of eight days. This whole structure combined to produce one of the more dynamic bull markets in history. The components did not have to alter greatly to produce a market that has done nothing for six months. What has happened is that the average rise in the three advancing phases since May has been cut in half, to 6.75, although the average length of advancing phases has remained about the same. Interestingly enough, the average decline for the four short-term drops since May has been less than the average decline prior to May, only 5.1. The most significant change is that the decline phases have lasted longer. The Dow declinEd for 22 days from May 6 through June 8, 21 days from June 16 to July 18, 9 days from July 26 to August 8, and, to date, 20 days from October 10 through Monday. While declines in the bull market's early stage were often over in a bit more than a week, recent ones have tended to last almost a month. The change in market environment, therefore, has consisted of a switch to smaller, although not necessarily shorter, advances and longer, although not necessarily deeper, de- clines. This small change has produced the switch from a dynamic bull to a sideways market. What is perhaps relevant over the short term is that a bottom on Monday of this week would fit the decline ended on that date squarely into the context of its three predecessors since May. It would wind up being 20 days long, involving a 5.4 drop. Many short-term indicators had, at some stage of the game, reached levels associated with the bottoms of the last three declines and, moreover, have acted somewhat better on the recent fall than was the case last August. Indeed, despite continued declines in the Dow, downside volume, for . example, peaked on October 31 and has been declining noticably ever since, Declines. meas- ured on a 10-day basis. topped out on October 24 and have also been improving since that time, In other words, a short-term rally attempt from current levels would be entirely consist- ent with the market environment we have seen since last May. AWT rs ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL INC. Dow-Jones Industrials (1200 p.m.) 1242.17 S & P Composite (1200 p.m.) 164.40 Cumulative Index (11/10/83 1968.54 No statement or e)'pres5lon 01 oplfllon or any other matter herem contained IS or 15 to be deemed to be, directly or mdlrec1ly, an offer or the soliCltalion of an oHerto buy or sell any secunty referred to or mentlonlW lhe matter IS presented merely for the Convenience 01 the subSCriber White we believe the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereat nor of the statements made herem Any action to betaken by the subscriber should be based on hiS own Investigation and mlormatlon Delafield, Harvey, label! Inc, as a corporation and Its officers or employees, may now have or may later take poSitions or trades In respect to any securities mentioned In this or any future Issue and such POSition may be ddterent from any VieWS now or hereafter elfpressed m thl!; or any other Issue Delafield Harvey. labell Inc which IS registered With the SEC as an Investment advisor, may Qlve advice to Its mvestmen! adl'lsory and omer customers mdependently 01 any statements made In thiS or In an. other Issue Further Informal Ion on any security mentl(lned herein IS available on request ………. , .u .- .'