Viewing Month: April 1984

Tabell’s Market Letter – April 06, 1984

Tabell’s Market Letter – April 06, 1984

Tabell's Market Letter - April 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) 9249660 – April 6. 1984 avin gicbeen- unableto. generate sufficientdemand toproduce-an-effective bot tom at -theI1-30- H'AO, level. the Dow moved this week to a new low. suggesting that the basing process' may. as we suspected. take some time and involve lower levels over the short term. We continue to feel. though. that tliese lows will not be all that different from the ones already posted. Interestingly. the collapse was triggered by a not-unexpected rise in the prime rate and constituted yet another manifestation of the current conventional wisdom regarding the stock market and interest rates. That now current conventional wisdom seems to run as fOllows. Bond yields are now in the vicinity of 13. The recent inflation rate is in the vicinity of 4-5. Subtracting one from the other produces an extraordinarily high real rate of return of 8-9. Since this is roughly twice the current yield on highgrade stocks. the recent rule of thumb has been that. when the bond market catches cold. the stock market gets pneumonia. Even when bonds are compared to stocks on an absolute basis the results are pretty dismal. The most recent P IE ratio for the S & P 500 was 11. 37 which translates to an earnings yield of 8.8. again. pretty paltry compared to the 13 figure above. This common perception. since it is now in the rather advanced stages of development. has had the opportunity to become a great deal more sophisticated than the simple observation of interest rates and has evolved into the well-established sport of Fed watching. The Fed. of course. has been dragged. kicking and screaming. in recent years into the perception that its major function is controlling the rate of growth of the money supply. Monetary economists. who are largely responsible for this perception. would minimize the effects. over the intermediate term. of such a policy. properly administered. on interest rates. Wall Street has not bought this perception. It has long been convinced that the Fed's res- ponse to excessive money-supply growth will be to ratchet interest rates upward. However. we are well beyond simply postulating that the market will rise when money supply falls and vice versa. The moneysupply game is now somewhat like the beauty contest suggested by Lord Keynes. where the object is not to pick the most beautiful girl but the girl whom the other judges will percieve as most beautiful. Each ,week. these days. the sages.,make a guess as to what the money sllP.plyn.g be with the market lending to move in the following week bas'ed on whether the actual change was greater or lesser than that guess. The reader may have detected the fact that we tend toward a certain skepticism as regards this entire process. Space permits only the barest outline of the reasons for such skepticism. To begin with, the concept of the real interest rate is an elusive one. one dealt with perceptively by David Ranson in Tuesday's Wall Street Journal. Mr. Ranson suggests that what we may be seeing at the moment is not high real interest rates but a high level of inflationary expectations. This seems eminently logical. In- flation rates have been falling only for a couple of years now and had been rising for a couple of decades before that. It is hard to find strong levels of conviction backing the premise that the current relative- ly low inflation rate is permanent or the even more radical premise that the drop in the inflation rate which started in the early 1980's is likely to continue. It seems to us clear that built into the current level of bond prices is a perception of renewed inflation. This perception could be correct. but like many such notions in the past. i.e . the inevitable post-war depression of the late 1940's. it could prove to be wrong. Moreover. while many analysts are pointing out that stock returns look low in relation to bonds. few of them are citing any historical evidence to suggest just what that relationship. in fact. ought to be. In fact. this relationship has varied widely over time. and. although high bond yields certainly place some sort of effective ceiling on stock prices. it is difficult to tell just where that ceiling exists. Our biggest objection to the current conventional wisdom. however. is that it is currently approach- ing total reductio ad absurdum of turning the world upside down. A continuing recovery. we are told. will produce greater loan demand. followed by upward pressure on the money supply. followed by restrictive Fed action. followed by rising interest rates. followed by lower stock prices. Ergo — and we have seen this written in so many words — a strong recovery (and better corporate profits) is bear- ish for stock prices. We are. perhaps. old-fashioned. but this seems to be a bit far out. None of the above is meant to suggest that the current preoccupation with interest rates is about to go away soon, and. indeed. it has been ingrained long enough so that it will probably die hard. It has reached the stage, however, where some real surprises could be produced when, inevitably I for whatever reason, the current theoretical house of cards collapses. AWTrs ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL INC. Dow-Jones Industrials (12 00 p.m.) S & P Composite (1200 p.m.) Cumulative Index (4/5184) 1130.13 155.13 1942.70 No statemont or expressIon of opInion or any other matter herein contained IS, or Is to be deemed to be, dlrecllv or indirectly, an alter or the soliCitation of an offer 10 buy or sell any security referred loor menl10ned The malter Is preseo1ed merely for the convenience of Ihe subscnbor While we bellevelhe sources at our mformallon to be reliable, we In no way represent or guarantee the accuracy Ihereof nor of the statemenlS made herem Any action to be taken by the subscriber should be based on hiS own Iflvestlgatlon and Informallon Delafield, Harvey, Tabell Inc, as a corporatIOn and Its ofllcers or employees, may now have, or may later lake, positions or 1rades In respeclto any secuntles mentIOned mlhls or any future Issue, and such posl\lon may be dllfcrent from any views now or hereafter expressed m this or any other Issue Delafield, Harvey, Tabell Inc, which Isreglsterel With the SECas an Investment adVisor, may give advlceta Its Investment adviSOry and other customers IndependenUyol any statements made m thiS or In any other Issue Furthermformallon on any secunly mentioned herein Is avanableon request

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Tabell’s Market Letter – April 13, 1984

Tabell’s Market Letter – April 13, 1984

Tabell's Market Letter - April 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 April 13. 1984 '''' T!!!Irsdy's bIznrre nction J with the Dow up 26 points and last-hour volume one of the highest .figures -for tlie bUlliiiarket-.-d6es nor;-byitself .change thTdesunorys)fOltfermmaflfeCpicture. Rather. It provides the ground work for future improvement in that picture should major breadth and volume indicators be able to follow through. The key question is not a short-term forecast, but rather the nature of the process in which we now find ourselves. It has been the position of this letter. based on the study of past market cycles. that that process is a correction in an ongoing bull market rather than a cycle bear market. Let us document our reasoning a bit further. S rI'Ihl HIllH ,LOW Torr'L M05 MOS 0, LOW (,S OF HIGH (i , OF HATE IJIA ——– ——– ———riAl – IJJ fI ——– ItA 1 E LtJIA HfJ OV MiV .DV DEC Hi.EV LOW F fi.V HIGH ——– JUN 1896 30.2 Arh t899 54.90 JMI 1901 411.94 55 14 6' S, -11 0 0 JAN 1901 48.94 JUN 1901 57.10 NOV 1903 3.47 14 5 15 17 -43 NOV 1903 32.47 JAN 1906 73.76 NOV 1907 4,79 '6 54 127 -012 ,.NOV 1907 42.79 NOV 1909 70.34 OCT 19l1 55.52 .7 51 6. -21 OCT 19.11 5S.! DEC 1912 64.37 HM'.' 191 !. 60. EJJ J4 16 -6 MAR 1915 60.83 NOV 1916 105.97 lEe 1917 74.38 33 00 61 7. -30 .OEC 1917 74.38 OCT 1919 118.92 AUG 1921 67.11 22 50 60 -44 UG 1921 67.11 MAR 1923 102. ni JUL 19Z3 86.91 2J I. S3 53 -15 JUL 1923 86.91 SEP 1929 343.45 NOV 1929 23B.9S 76 74 .7 295 -30 NOV 1929 238.95 APR 1930 279.23 JUL 1932 54.26 5 1. 17 -61 .,JUL 1932 54.26 FE 1934 103.46 SEF 1934 92.63 26 1. n -10 16 66 132 130 110 1' .0 130 275 OJ 10. 1..2,,9 165 112 66 3J4 61 37 SEF 1934 92.63 MAR 1937 IB6.41 APR 1938 111.28 43 30 70 101 -'0 APR 1938 11) 213 NOV t9J8 149.82 APR 1942 95.35 .6 7 15 35 -36 .,AH 1942 95.35 JUN 1946 20.62 NOV 1946 169.89 so 50 116 -17 .,NOV 1946 169.89 JUN 1948 189.46 JUN 1949 167.42 31 19 12 -12 JUN 1949 167.42 JAN 1953 289.77 SEP 1953 ;!64.0 51 43 S. 7J -.SfP 1953 264.04 JUL 1957 508.52 DEC 1957 435.69 51 .0 .3 -14 DEC 1957 435.69 DEC 1961 731.14 JUN 1962 561.29 54 .S S. 68 -23 171 120 S6 17. ISS 165 ISO .0 137 .2 153 ,1.7,5 JUN 1962 561.28 JAN 1966 983.51 OCT 1966 807.07 52 43 63 75 -16 ocr 1966 907.07 OEC 1968 9-43.75 MAY 1970 700.44 4J 26 .0 17 -26 .129 I'tA'f-1970700…44.JAtt-I-973-999'02-DEC-H1 …- 6 t 6 . 2 – 5 5 – – – 3 2 – 5 . – 4 3 – – 3 9 – – – – – 8 7 OEC 1974 616.24 SEP 1976 990.19 HAR 1978 757.36 39 21 54 r 61 -24 88 MAR 1978 757.36 APR 1981 997.75 JUL 1982 808.60 52 37 71 32 -1. 123 135 106 101 -AVERAGE -AVERAGE -AVERAGE JUNE 1896-HAR 1978 NOVEHBER 194o-HARCH 1978 OCTOBER 196o-HARCH 1978 .5 2. 61 72 -27 .7 35 72 55 -20 26 57 40 -29 127 131 106 125 12'5 100 The above table (in slightly different form) last appeared in this space in May. 1982 — in circumstances directly opposite to those today, since we were then probing for a low yet to occur, rather than attempting to determine whether a prior peak constituted a major high. The statistics can be, how- ever, useful in both circumstances. They show some relevant numbers, based on month-end closing prices. of the 23 completed major stock-market cycles since the Dow was first computed in 1896. The present cycle, on a month-end basis. began in July, 1982 and has continued, to date, through November. The advance so far has been 58, and in terms of percentage advance. there is nothing in the table to contravene the thesis that the rise so far could have completed a bull market. Although the average advance for all 23 cycles is 72. the cycles since World War 11 have shown smaller average percentage advances than has the recent rise and the cycles since 1966 smaller ones still. It is when we look at the time factor that the thesis of a bull market which ended last November runs into difficulty. As can be seen from the table. the average length of the advancing phase of the 23 cycles has been 29 months, with the post-war cycles a little longer. Through November, the current cycle had moved ahead for only 16 months. Now there are, as the table shows, four previous cycles that have posted shorter runs. The most recent one, however, was 1938. the previous one was the 1929-1932 bear market. and the other two go back into the early part of the century It is difficult to envision those experiences being terribly relevant to today's conditions. An even stronger argument is provided if one manipulates two of the columns in the table. The one headed total months shows an average cycle length, from low to low. of some 45 months, giving rise to the popular term ''four-year cycle'J It also shows that the average cycle. spends 60 of its lifetime in an advancing phase. If the period July. 1982-November, 1983 constituted 60 of the current cycle. it will wind up being only 26 months long. hslf the length of the last one. 60 of the average length. and shorter than any cycle in history other than 1932-34. We must confess we regard this as unlikely. It is interesting to speculate on the timing of the present cycle were it to conform exab'tly to the average of this century. If it lasts for precisely 45 months, the next major bear-market low will be seen in March, 1986, A 29-month advance would place the ultimate peak in December of this year, to be followed by a bear market which would consume most of 1985. There is obviously a great deal of room for variance in these figures. but we think that variance is unlikely to be so great as to make a late-1983 major top a credible hypothesis. AWTrs Dow-Jones Industrials (12 00 p. m.) 1155.98 S & P Composite (1200 p.m.) 158.83 Cumulative Index (4/12/84) 1944,79 ANTHONY W. TAB ELL DELAFIELD. HARVEY. TABELL INC. No state'llent or expression at oplnton or any other malter herein corltlllned Is, or Is to be deemed 10 be, directly or indirectly, an ofter or the SOliCitation of an offer to buyor sell any security ret erred toormentlonC! The mailer IS presented merely for the convenience ollhesubscriber While we believe the sources of OUf Informatlonl0 be reliable, we In noway represent or guarantee the accuracy thereot nor of the statements made herein Any action to be Ilken by the subscriber should be based on his oWl'linvesllgatlon and mformatlon Delafield, Harvey.labell Inc. as a corporalon and Its officers or omployecs. may now have or may later tae. pOSitions or trades In respect to any securIties mentioned In thiS or anI,' luture Issue, and such pOSition may be dlflef'mf from an\ Views nowor hereafter eJ(pressed (fl Ihls or any other Issue Delafield, Harvey. Tabell Inc, whIch IS registered wr!tT the SEC as an (flvestment advrsor, may give advice 10 Its Investment adVISOry and other customerS Independentlv 01 any statements made In thiS or In anI,' olher Issue Further mformatmn on any secunty mentioned herem 15 available on request …' .— c C . . .

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Tabell’s Market Letter – April 19, 1984

Tabell’s Market Letter – April 19, 1984

Tabell's Market Letter - April 19, 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 April 19. 1984 One of the many criticisms that have been leveled in this letter over the years is that we are prone to the use of long and obscure words, We have no apology for this. We are —. '' -oy circumstarices. compelled to-produce 'some'-800'worcts-of-the-Engltsh language'ElachCweek, – – and we like to think that we have gained. in the process. some appreciation of the versatility of that language (There are. for example. about twice as many words available in English as there are in French or German). We see no reason why we should not utilize all the diverse weapons available in this arsenal. The above is by way of introduction to the subject of this piece. which is anthropomor- phism. Webster defines it as an interpretation of what is not human or personal in terms of human or personal characteristics. We became ourselves victims of this practice on our recent Antarctic vacation as we walked among flocks of penguins. These little birds may be the most lovable of all animals precisely because they resemble nothing more than silly. awkward little fat men wearing tuxedos. There exists an not-uncommon inclination among financial writers to anthropomorphize the stock market. This often takes the form of presenting it as a continual war between two sets of contending forces. identified respectively as bulls and bears. One of our respected colleagues. indeed. heads each issue of his letter with cartoon figures of a bull and a bear. each drawn with distinctively human characteristics. This view of the market. as a continuing battleground between contending armies. has some degree of justification in early history. It is impossible to read about the exploits of the Goulds and Livermores. or the organized armies of professional market manipulators. without gaining the impression that the stock market was. at one point. just such a battleground. The poor investor. in those bad old days. must have felt like a peasant who was unfortunate enough to have a war being fought back and forth across his farm. Every once in a while. even today, a market emerges in which the battleground analogy appearJLespeciallyap.t..-M.ode.l'n day.,Jlcarfare., we have learned., moreover. tends to' be.of the guerrilla variety. and this analogy, also. app'ears appropriate for the present day. How else. for example. to visualize the action of April 12th For most of that day. we saw a market lazing along sleepily. Suddenly. an ambush by bullish forces drove the Dow up 20-plus points in an hour and a half on extraordinary volume. The surprise attack remained successful until early the following morning. At that point. it was equally easy to visualize the bear forces regrouping and driving prices sharply lower the next day. A miniature version of the same attack and repulse occurred on Tuesday and Wednesday of this week. This view of NYSE trading as a battle to take and retake territory can be extended to some of the basic precepts of technical analysis. As opposing forces sweep back and forth over the same ground. battle lines become defined. Technical work has recognized this fact from its earliest days and has attached great significance to upside and downside breakouts from long trading ranges. just as the military tends to recognize the significance of a decisive penetration through a long-held enemy front. In today's market. for instance. it is fairly easy to see the army of bulls having dug their trenches at the 1130 level on the Dow with the bear front line existing at around 1190. Many years ago. this sort of information might have had the status of a military secret. known only to the professional intelligence corps of market technicians. However. in today's environment. the location of the two opposing battle lines is well known to anyone who looks at the daily chart in the Wall Street Journal. At some point or another. one of the two lines will be breached. We confess we would have a greater belief in the validity of an upside breakout. since it would be in accord with our present scenario of an intermediate-term correction which should. before too long. come to an end. We do not. however. regard a move to new lows as an unlikely possibility. nor would we view it as necessarily disproving this scenario….. Such a' move might well be the last push by the bearish forces prior to their finally running out of ammunition. AWTjt ANTHONY W. TAB ELL DELAFIELD. HARVEY. TABELL INC. Dow-Jones Industrials (Close) S & P Composite (Close) Cumulative Index (4/18/84) 1158.07 157.15 1954.11 NO statement or epresslon 01 opinion or anyotMr matter herein contained IS, or IS 10 be deemed 10 be, directly or indirectly, an olfer or the soliCitation 01 an offer to buy or sell' any seC1Jrlty referred 100r mentioned The matter IS presented merely for the convenience of the subscrlbor While we believe the sources of our mformatlon lobe reliable, weln no way represent or guarantee the accuracy thereof narof the statements made herem Any action 10 be taen bv Ihe subscriber should be based on hiS own Investigation and Information Delafield, Harvey, Tabel! Inc, as a corporahon and Its oltlccrs or employees, may now have, or may later take, positions or trades In respect to any securities mentioned In thiS or any lulU/e Issue, and such pOSItion may be dillerantirorn any Vlews now or herealtefeprcssed In this or anI,' other Issue Delafield, Harvey, Tabell Inc, which IS registered With the SEC as an mvestment adVisor, may give advice to lis Investment advisory and other customers Independenlly of any statements made m thiS Olin any other Issue Further mlormatlon on any secuflly mentioned herem IS available on reQuest

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Tabell’s Market Letter – April 27, 1984

Tabell’s Market Letter – April 27, 1984

Tabell's Market Letter - April 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) 9249660 April 27, 1984 . . . It ..ossible (althoug-,,-we',9ul'Ln()t.wgnJ .t().phthi('. distinctiol.1QQ..JJu'Ltp.!i'l1id5! techmcal analysIs mto two general approaches .. The first of these is the historical approach. This discipline maintains that, if a study of the historical record reveals that the market has behaved in a certain way'in the past, it will be highly likely to do so in any current similar instance, An example, appropriate to today's market, would be the statement that major bull markets in this cen- tury have had an average length of some two and a half years, and that it is, therefore, unlikely that the recent bull market topped out after 15 months. The second school may be characterized as the indicator approach, which says, in effect, that certain sorts of behavior tend to precede up or down markets and that occurrence of such behavior should engender optimism or pessimism as the case may be. An example, also valid for the current market, would be to say that poor breadth action has been displayed for the last 10 months and that such behavior has tended to precede bear markets. It is always necessary to synthesize the two approaches, It is futile, for instance, to remain obdurate about an historical scenario when indicators of what is currently happening stub- bornly refuse to confirm that scenario. This letter, it must be admitted, has recently leaned on the approach of placing the current market in its historical context, but it is certainly necessary to remain convinced that current indicator action is consistent with that historical context. Among the historical patterns we have been citing in this space are the following Major cycles, since 1896, have averaged just under four years in length and have spent, on average, some 60 of their lifespan in advancing. It is therefore logical to suppose that the major high for this cycle, rather than having occurred last November, is likely to occur at some time in the future. most probably sometime around early 1985. A second historical analogy is the election-year pattern (which. in recent years, has tended to coincide with the four-year cycle, although this has not always been the case). This – – .pattern-suggemnlfe-likelihoou-of-flatness-or-modEirate-weakrressili.-th'e–r;i'Stha1fortne year, a forecast which has been confirmed so far. followed by strength in the second half. We have, for example. pointed out that. in 17 of the 21 elections years in this century, the average price for December has been higher than the average price for June. A shorter-term historical pattern is the tendency, albeit ever so slight. for market weakness in May-June followed by the stronger tendency toward the well-advertised summer rally. A synthesis of all these patterns of historical behavior tends to suggest a market in which short- term weakness might continue, possibly over the next six weeks to two months. but where that weakness should be followed minimally by a test of previous highs. It should be noted that none of the above historical theses contravene the likelihood that, on the move from 776 to 1287. the Dow had already accomplished the major proportion of its ultimate rise. The question is whether the indicator approach. the observation of current market behavior. fits in with the above market scenario. Market breadth, as we noted above, has been poor for 10 months, and a breadth divergence has existed since either June or September. (This is the sort of fine point over which technicians like to quibble.) Much of this weak breadth action is the product of the abysmal behavior of secondary, particularly OTC, stocks which have been in their own private bear market ever since last June. To determine whether such behavior is consistent with the historical framework. it is necessary, however. to look at lead times. The breadth divergence. indeed, exists, and it is highly unlikely that it will be erased before the end of the cycle. It may, however, be dated back only to last summer and the average lead time of divergences over market tops since Worl(l War II has been 16 months, with three cases of two years or more on record. As good a measure as any of secondary stock activity is the speculation ratio, or the ratio of S & P Low-Price to High-Grade indices. This, of course, peaked in June. but, in most cases. the ratio peak has led market highs 'by 1332 months. There exists a myth that bull markets end in a flurry of speculative-stock activity. a statement which was true in 1968 and 1976, but has been false in most other bull markets including. contrary to popular impression. 1929. In short, the behavior of most market momentum indicators for the past 10 months has been abysmal, and it is not our intent to obscure this fact. Such behavior is. nonetheless, in our view. consistent with the historical scenario we have outlined above. –.I J AWTrs ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (12 00 p. m.) 1170.96 S & P Composite (12 00 p. m. ) 160.44 Cumulative Index (4/26/84) 1955,56 NO statement or oxpresslon of opinion or anyolhet mailer herem contained IS, or IS 10 be deemed to be, directly or Indirectly. an oHer or the sol1cltatlon of an oller to buy or sell any secunty referred to or mentioned The matter IS presented merely lor the convenience of the subscriber While we believe the sources of our information to be reHable, we In no way represent or guarantee the accuracy theroof nor of the statements made herein Any action to be taen by the subscriber should be based on hiS own investigation and information Delafield, Harvey, label! tnc, as a corporallon and lis officers or employees, may now have, or may taler lake, positions or trades In respect to any securities mentioned In this or any future Issue, and such pOSition may be dlfferenllrom any views nowor hereafter expressed In this or any other Issue Delafield, Harvey 1aOOl1 Inc, which IS registered With the SEC as an Inveslment adVisor, may give advice to Its Investment adVISOry and other customers Independently at any statements made In thiS or In any other Issue Further Information on any security mentioned herein IS avallable on reQuest

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