Viewing Month: January 1984

Tabell’s Market Letter – January 06, 1984

Tabell’s Market Letter – January 06, 1984

Tabell's Market Letter - January 06, 1984
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– 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) 924-9660 –.r.– – .. . . ''''''''–January6;– -f98i1 …-.. -!.;1o ….. . – J — It is unavoidable that this letter possesses some resemblance to letters which have ushered in past New Years. The reason for this is that our last issue of each year has, for some 20 years now, discussed the ubiquitous year-end rally and the near inevitability of that rally's continuing into January of the following year. Indeed, until six years ago, we would not have had to use the qualifying adjective near in the previous sentence since, until January, 1977, such a continuance had been the universal case for as far back as the Dow-Jones Industrial Average had been comp- uted. That year and the subsequent one constituted a two-year break in a tradition which has, happily, resumed. Thoe! of us aware of this fact were, therefore, hardly surprised at the stock- market excitement which ushered in 1984. From the technician's point of view, the performance was not without its impressive features. It is doubtful that, based on the week's action, the stock-market patient can be pronounced com- pletely cured, but he has, at least leapt from his hospital bed and is dancing down the aisles. The most impressive feature of all was, of course, the widely-heralded volume record with activity on Thursday setting a newall-time peak of almost 160 million shares. As has been widely noted, bull markets are fueled by volume, and, on Thursday, we got precisely that. The Wednesday and Thursday action of the averages was also reasonably persuasive. Wednesday's 16. 31-point advance in the DJlA was the best in over a month and was the largest point-change,save for six sessions, since the market desuetude set in last June. Even more impres- sive was the 2.7 4–point rise in the S & P 500, a fi gure which had been exceeded but twice, and only by small amounts, during the enitre- year 1983. Breadth, as every writer of a technical mar- ket letter in the industry has been pointing out, has been the weak sister of the trading pattern since June, and, in this lig!t, the ability to string together two consecutive days on which more – t-han1'200–;ssuesdvatrced-must-be-Viewedoptimistically-.,…-.mdeed,thisparticular-developmenhhas'-,,,….,,,-J not occurred since November of 1982, a time when the bull market was still in the giddy era of its youth. The patient is thus much improved, if not yet ready for release. First of all, neither the Dow or the S & P 500 have yet reached new highs, and the ability to do so would be encouraging. The senior average remains half a dozen points below its November 29 closing peak of 1287.20. Ability of the S & P 500 to reach new highs would be even more encouraging. That index,now around 168,posted its all-time high in October at 172.65, failing to reach new peak levels on the November rally. Unlike the Dow, which has presented a pattern of rising bottoms since last August, it had returned late last month to a twice-tested low around 161. Thus further strength here would be even more crucial than in the case of the Dow. Breadth, of course, is even more critical. As noted above, the existing divergence has been widely heralded. It continued through the last week in December, when the breadth index exceed- ed its November 7 low, despite the fact that the Dow held some 30 points above its comparable bottom. The two rallying days brought daily breadth to a level just under that attained on Novem- ber 29, when the Dow reached its high, and a couple of days of decent strength could bring it above that level and provide the first real sign of improvement in seven months. More time, and a great deal more strength would still be required before the divergence, which goes back to last June, could be erased. Finally, it seems to us, a healthy market would have to see some improve- ment in the comparatively disastrous action which has occured over the counter. A slight glimmer of light was provided when the OTC Industrial Average, in mid-December, managed to hold its November low, a low which culminated a 23 decline. However, the relative strength lines of the OTC Industrials, compared both to the Dow and the S & P, were reaching new lows as recently as December 28. There has been some recoverysince , but a vigorous market would require secondary and tertiary issues to demonstrate their natural volatility on the upside. Our own forecast, of course, expressed two weeks ago, is that at least some of these phe- nomena of improving health will manifesttliemselves and the market, at least during early 1984, will move on to new highs. Whether, along the way, enough vigor will be manifested to suggest a full-scale resumption of the cycle is a question which remains, for the time being, unanswered. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL IN!. Dow-Jones Industrial Average (1200 p.m.) 1281. 51 S & P Composite (1200 p.m.) 168.76 Cumulative Index (1/5/84) 2066.66 , 1 No statement or e)l'preSSlon 01 opInion or any other mailer herem contained IS, OilS 10 be deemed 10 be directly 01 indirectly, an offer or the sollcllaUon 01 an offer to buy olsen any security referred toor mentioned Ttle mailer IS presented merely for the convenience 01 the subscriber Whl!ewe believe thcsources olour Information to beretlable, we In no way represent or guarantee the accuracy thereol nm 01 the statements made herein Any action \0 be tak.en by the subscriber should be based on his own inVestigation and inlmmatlon Delalleld, Harvey, Tabell tnc, as a corporatIOn and Its ollicers or employees, may now have, or may later lake, poSllions or trades In respect to any securities mentioned In thiS or any future Issue, and such poslHon may be different from any views now or hclealterepressed In thlSOf any other Issue Delalleld Harvey Tabell tnc which IS registered with the SECas an Investment advisor may give adVice to Its Investment adVisory and other customers Independently 01 any statements made m thiS 01 m any other Issue Further fnlormallon on any security menlloneo herem IS av8l!able on request

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Tabell’s Market Letter – January 13, 1984

Tabell’s Market Letter – January 13, 1984

Tabell's Market Letter - January 13, 1984
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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 L..-. -'- –'- .. .JJ!rJ.!!!!!'y13,1984 —,…- It is- thehistoric function-of this -letter to cominenton the technical aspects-ofthe stock market. For this reason our readers are exposed to precious little economic analysis. This is not all a bad thing. Had we devoted a great denl of time to analyzing the economic prospects, visible around, say, August, 1982, we would have been a great deal more confounded than was otherwise the case by the stock-market explosion WhICh started in that month. It has. however, never been our contention that the stock market sails along oblivious to the state of the U. S. economy or that economic analysis is irrelevant to invest- ment management (although it may be less relevant thm. many suppose). At the moment, therefore, a few comments on the current state of the American economy appear appropriate. Obvious facts are often the ones most worth knowing, and there eXIst at the moment three such facts that should be totaUy familiar to any reader of a half-way decent busmess page. 1. A sUbstantial economic recovery has been in progress for the past 15 months. 2. The disastrous rates of inflation of a few years ago have been dramaticaUy reduced. 3. There exists and WIU probably continue to exist a massive federal budget deficit. Analysis of the above may be summarized by the phrase Two out of three ain't bad. In the words of the weU-known cliche. let us take the good news first. The annual percentage change in real GNP was 9.7. one of the higher figures on record. in the second quarter of last year and has continued at a respectable rate since. The year-to-year percent change of 6.1 is the best since the early 50's. Real per-capita disposable personal income, which had been declining since 1981 has reached a new high. The Increase in industrial production as of mid-summer also reached a level better than any seen in the past 30 years. Meanwhile. inflation, which approached effective zero at the start of the recovery, still remains, a year int.. that recovery, in the vicinity of the rates of the late 1960's and weU under half that rate of a few years ago. T.he..remarkablefactishow-JiH1e -of-t-hiss-fI'eCast. – It-dsnot-.-eur-tlsk-to-engage-in-political–.—f commentary or even to decide whether the present administration has any responsibility whatsoever' for what has transpired. However, those with a political ax to grind, were, a year ago, assuring us of the failure of Reaganomics, based on a set of forecasts for a turgid recovery which have, in the light of actual facts, proved incredibly short of the mark. Any rational analysis of the performance of the U. S. economy in 1983 must credit it with being one of the best of the past half century. The best forecaster of all, of course, was the stock market which, with a three-month lead on the recession trough, proceed- ed to post one of the most dynamic rises of that same half-century. The budget deficit. of course. persists. In the view of the pessimists, it is indeed likely to get worse rather than better. This has, also, produced some rather delicious political ironies. The Demo- cratic opposition, obviously in need of an issue on which to seize, has suddenly become a pillar of fiscal rectitude. Those of us old enough to remember the 1930's recall that we grew up listening to plaintive Republican wails that Franklin D. Roosevelt could not spend us into prosperity. Mr Roosevelt proceeded to win four consecutive elections. We doubt that this particular issue will do any more for the Democrats than it did for the GOP fifty years ago. We like to think of ourselves as being as fiscally prudent as the next man. and no claim is being made here that the deficit can be blithely ignored. Indeed. the scary fact is that. as of the third quar- ter of this year it reached an amount equivalent to net annual personal savings. The massive new gov- ernment debt required to finance the deficit has created a demand for capital which. coupled with relativ- ely low inflation, has produced some of the highest real interest rates in history. This factor, of course, is not unrelated to the stock market, and the existence of high real rates explains the equity market's sensitivity to interest-rate prospects. The credit market must now be considered a highly viable compet- itor of the equity market on a rate-of-return basis. What of the future It was only the supply side optimists among economic forecasters who were anywhere near on target a year ago in assessing the prospects for 1983 There was also, howyer, implIcit in their forecast, the concept that a dramatic increase in personal savings would substantially ameliorate the deficit problem. ThiS has emphatically not yet happened. However, time lags are uneer– tain, and we personally feel that the more wildly pessimistic deficit projections are highly suspect. As far as inflation is concerned, we think the dramatic reversal of the past couple of years has built deflatIonary elements into the economic structure which will keep prIce increases, for the time beIng, at least, within satisfactory limits. Meanwhile, there is eVIdence to suggest that the recovery, especially in terms of corporate profits, might still be in ItS,early stages. This could help make the stock market more comp- etitive with high real interest rates which are, it must be admitted, unlikely to go away over the near term. This interpretation of the available facts. at any rate, explains why the stock market, at this writing, is engaged in flirting with new highs. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrial Average (12.00 p.m.) 1273.03 S & P Composite (1200 p.m.) 167.99 Cumulative Index (1/12/84) 2084.47

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Tabell’s Market Letter – January 20, 1984

Tabell’s Market Letter – January 20, 1984

Tabell's Market Letter - January 20, 1984
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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 January 20, 1984 1984, as the press will shortly make us excruciatingly aware, is a presidential year, We 'haverackethe;behavio.r ofthe'stockarket-in-suchyearsback'1othgeginning qf-the.century, and the results are shown below. The table shows each election year since 1900, the president elected, and his party, followed by the average price of the S 8. P 500 for each month during the year expressed as a percentage of the previous December's close (i.e., 110 means the market was up 10; 90 means jt was down 10). .- Year T9llO Wf 99R Jman Feb Ilr3' Mmar ol Jun –gg -J-uglg Ag Sep 97 1904 Roosevelt R 102 99 99 101 99 99 103 107 112 1908 Taft R 105 100 105 111 117 117 123 126 125 1912 Wilson D 100 99 102 106 105 105 106 109 109 1916 Wilson D 99 98 97 96 98 99 98 99 102 1920 Harding R 99 91 97 9 91 89 89 86 89 1924 Coolidge R 103 104 102 100 99 101 101 113 112 1928 Hoover R 99 98 103 110 113 108 108 112 120 1932 Roosevelt D 103 101 102 76 66 59 63 89 102 1936 Roosevelt D 102 108 112 112 104 108 116 118 120 1940 Roosevelt D 99 98 97 98 85 76 80 82 86 1944 Roosevelt D 102 101 105 101 105 109 112 110 108 1948 Truman D 97 92 94 101 106 110 108 104 103 1952 Eisenhower R 102 100 100 100 100 102 105 106 104 lJlji-&-Eis!!nho.l\'.,—R 97 98 104 ,105 103 102 107 106 103 1960' – KimilEldy D 99 98 92 9 92 96 '93 '94 92 1964 Johnson D 102 103 105 107 109 108 111 110 111 1968 Nixon R 98 94 92 99 101 104 104 101 105 1972 Nixon R 101 103 105 107 105 106 105 109 107 1976 Carter D 107 112 112 113 112 113 116 115 117 1980 Reagan R 103 107 97 95 100 106 111 114 117 lncumbent party did not control Congress. Incumbent party not re-elected Oct 100 118 126 109 105 89 110 123 88 126 87 111 106 104 102 91 113 108 107 113 121 mNov Drnec 125 126 134 138 108 103 107 103 85 77 115 119 131 132 87 82 130 128 88 85 110 115 100 99 105 109 10,O0L…,…, 93 97 115 112 109 110 113 115 112 116 126 124 Presidential election years show a mildly bullish bias. Only three of them (1920, 1932, and 1940) are distinct bear markets. Thirteen of the 21 years are bull markets, and five showed a flat trend. Another noticable tendency appears to be flatness or moderate weakness in the first half. Twelve of the 21 years showed little market change through June. It is worthy of note that a downward bias tends to occur on two sorts of occasions. The first is when the incumbent party does not control Congress, which we know currently to be the case. The second is when the in- cumbent president loses the election. Only in 1976, when that occurred, was the market up more than 6 in the first half. Thus, the direction of the market over the next few months may be a good indicator of Mr. Reagan's chances in November. An interesting figure to watch will be the average price in April. There have been eight election years in this century where that price was lower or the same as the previous year end. In six of those eight years the incumbent president was replaced. , Also interesting is the distinct tendency toward a strong second half In 17 of the 21 years the average price for December was higher than the average price for June. This appears to be true regardless of the election results and even in bear-market years where, in the past, the market has rallied in the second half from the June lows. In only two years, 1920 and 1948, were there significant declines between June and December. The election year pattern, therefore, calls for little change in the market during. the first half, although some firmness is likely if Mr. Reagan is to be reelected. This history of election years, however, suggests that the second half of 1984 should produce a rallying phase. AWTrs Dow Jones Industrials 0200 p.m.) 1261. 51 S & P Composite (1200 p.m.) 167.01 Cumulative Index (/19/84) 2082.58 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. No statement or e,pres510n 01 opinion or any other mailer herein contained IS, or IS to be deemed to be, directly or mdlrec1Iy, an offer or the soliCitation of an offer to buy or sell any security referred toor mentioned Tho mailer IS presented merely forthe convenience 01 the subscriber While we believe the sources of our information to berehable, weln no way represent or guarantee 1M accuracy tMreo! nor of the statements made herein Any action to be taken by the subscriber Should be based on hiS own investigation and mtorma\lon Delafield, Harvey, Tabell Inc as a corporation an(! Its ollicers or employees, may now have, or may later lae, positions or trades In respect to any securities mentioned m thiS or any future ISSue, an(! such POSition may be different from any views now or herealler e)lpressed In thiS Of any other Issue Delafield, Harvey, Taboll Inc whiCh IS reglstere(! with Ihe SEC as an Investment adVisor, may give adVIce to lIs Investment a(!VISOry and other customers Independenlly of any statements made In this or In any other Issue FUrther Informa\lon on any secufliy mentioned herem IS available on request

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Tabell’s Market Letter – January 27, 1984

Tabell’s Market Letter – January 27, 1984

Tabell's Market Letter - January 27, 1984
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.-. 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) 924-9660 -'000 -.– . January 27, 198 The -marKet willbecc-down- a year- from tOday. -Why Because;t1ieLOs KngelRaidelS—- decimated the Washington Redskins in last Sunday's Super Bowl. We hasten to say that we do not believe this. We are sure that you, our readers, do not believe this. Indeed, it is a fair statement that anyone in possession of all his marbles does not believe this. Yet, in our disbelief, we are flying in the face of one of the most sta- tistically accurate stock- market indicators in the entire library of such tools. This leads us, or should lead us. to some reflections on the limits of statistics. . ' For those not familiar with it, let us pause to review the history of the infamous Super Bowl Indicator, a conception, we hasten to add, not original with us, having been long since remarked by a number of other analysts. The rule states that, if an original National-Football- League team wins the Super Bowl, the market will be up at the time of the subsequent contest, and, if an original American-Football-League team is the winner, the market will be down. Ridiculous, what Yet it has worked in 16 of the past 17 years. Its only failure was in 1970 when the Kansas City Chiefs trounced the Minnesota Vikings, thus forecasting a down market. Even in that year the market collapsed in the first five months and eventually rallied to be only modestly higher the following January. The rule kept the investor out of the 1969 bear market (New York Jets), the 1973-74 debacle (Miami Dolphins) and the 1977 and 1981 bear markets (Oakland Raiders). Now standard statistical testing would tell us the probability of any indicator's achieving such a result by pure random chance is somewhere in the vicinity of one in 1000, yet it is, on a moment's reflection, easy to see how the anonymous discoverer of the Super Bowl Indicator could have come up with it. The answer is that he had an infinite number of candidates for 1he-periecLstock-markeLindicB.tfromwhichto choose. Let us take S20rts alone. He could have tried Worid Seris resuhs, -Stanley Cup winners or left-handed finalists at -Wimbledon Anyone familiar with sports is aware of the multiplicity of statistics which are available to the diligent searcher. Havine- fixed on the Super Bowl, it was even necessary to fudge that one a bit, with the business about original NFL and AFL teams, regardless of their present affiliation. This was necessary to allow for four wins by the Steelers and one by the Colts of the AFC, all followed by good market years. The uncanny accuracy of the indicator is, therefore, easily explicable. When it comes right down to it, however, there is a much more persuasive reason that we should not sell all our stocks today and sit in front of our television sets next January to see if we should buy them back again. The reason for disbelief in the Super Bowl Indicator is that it makes no sense. There is absolutely no rational reason why the results of a sports contest should determine the outlook for the stock market. It is obvious that the two phenom- ena are totally unrelated. All of which leads us, as we promised above, to some remarks on the limitations of sta- tistical analysis. There exists a school of thought, most of our readers are aware, which posits that the stock market is efficient. This suggests, in other words, that all information, known or knowable, is instantaneously reflected in a stock's price and that, therefore, any attempt to achieve superior results via analysis is doomed to failure. It is based on statistical evidence a' great deal more extensive, but certainly no more persuasive than the evidence for the Super Bowl Indicator. A major body of evidence has now accumulated, of course, which refutes large portions of the theory via statistical evidence, but the ultimate reason, we think, for refusing to believe in the efficient market hypothesis is the same as that for skepticism regarding the Super Bowl Indicator. It simply does not make sense. All of us familiar with Wall Street are aware of the fact that an infinite number of decisions are made totally without regard for avail- able information, for reasons that are unrelated to the stock market and for reasons which may often be irrational. There is no justification, once having realized this, for imposing theoretical standards of efficiency on the equity market. The investor is as well advised to forget about these theoretical standards of efficiency as he is to forget about the results of the Super Bowl. AWT rs ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrials (12 00 p.m.) 1228.85 S & P Composite (12 00 p. m. ) 164.05 Cumulative Index (1/26/84) 2049.01 No statement or cpreSSlon of opinion or any other mattcr herein contained Is or Is to be deemed to be, directly or indirectly an oller or the soliCitation 01 an offer to buyor sel! any secunty referred to or mentioned The malter Is presented merely for the converllcnce of the subscnber While we believe the sources 01 our Information to be reliable, we In no way represent or guaranlee the accuracy thereot nor 01 the slalements made herein Any action to be taken by the subscriber should be based on hiS own investigation and Intormatlon Delafield, Harvey, TaooU Inc, as a corporation and Its officers or employees, may now hilve, or may laler take pOSlhons or trades m respect to any securities mentioned In thiS or any tulure Issue and such pOSition may be dillerent from any views now or hereafter epressed In thiS or anyolhet Issue Delafield, Harvey Tabel! Inc which IS regIStered w!lh the SECas an Investment advisor, may give advice to liS Investment adVISOry and othercuslomers Independently of any statements made In thiS or In any other Issue Further Informal Ion on any secunty mentioned herein IS available on request

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