Viewing Month: May 1984

Tabell’s Market Letter – May 04, 1984

Tabell’s Market Letter – May 04, 1984

Tabell's Market Letter - May 04, 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 May 4, 1984 In contrast to the change of the seasons, changes in the stock-market climate are often abrupt. H-isnecessaryonly- to recsll–midA ugust ,-1-982-;–whcn;- int-hespace 'ofafew,,short-daysTthe-stock-market weather was transformed from a tepid drizzle to the brightest of sunshine. Such has not been the case recently, however. The stock-market climate has, indeed, of late, been improving somewhat, but the improvement has been a good deal more Uke the weather. Indeed, it resembles, in many ways, the arrival of spring this year in the northeast, with the occasional sunny day being followed, almost regularly, by a return to cold and damp. Let us try to recapitulate what has happened so far. The bullish news has been provided over the past couple of weeks of trading by the action of the broad-based indices, the S 8. P 500 and Industrials and the NYSE Composite and Industrials. All four of these indices have now broken decisively out of the trading ranges in which they had been contained since their lows of February. The following table shows their Thursday close, what appear to be the most plausible upside objectives, and, for reference, their previous sll- time highs. 'c S & P 500 S & P Industrials NYSE Composite NYSE Industrials 5/3/84 161. 20 182.76 92.83 109.24 Objective 170-177 198-203 99-100 115-117 Old High 172.65 19.84 99.63 116.42 A cursory glance at the above figures reveals a certain uniformity. The objectives for all four indices are just about at, or ever so slightly above, their old highs. They are, moreover, hatldly far enough above current levels to imply that a new era of instant riches is in immediate prospect. Furthermore, what the table-does not shew is the existence, in all four cases of heavy overhead supply, start- ing not too far above present prices and continuing all the way to the objectives in question, suggesting —-t-hat-t-he-at-t-ainment—f-ev-en4heee-limit-ei—t-arget-s-is-not–going-to—be—-all-t'het–e8Sy' Meanwhile, a great many of the more widely followed averages are still waiting in the wings, confined within their February-May trading ranges. The table below lists four such indices with the same information as above, together with their breakout points, figures that have yet to be attained. Dow-Jones Ind. Dow-Jones Trans. Dow-Jones Util. NY SE Financial 5/3/84 1181. 53 514.40 125.48 89.39 Breakout 1190 530 130 91 Objective 1290-1300 575-590 ,134-135 96 Old High 1287.20 612.63 140.70 104.14 A few points regarding this second table may be noted. The Dow Industrials have' a pattern roughly similar to the broader-based indicators, with objectives in the neighborhood of the old high. In a sense, their pattern is even more constructive since the heaviest overhead supply does not get in the way until the 1225-1250 level. It is interesting to note, though, that neither the Transport, Utility, or Financial indices have broadened bases sufficiently to suggest a return to the areas of their old highs. Therefore, should a decent rally materialize at this stage, a potential serious divergence could result. We had not, as our readers have noted, expected that the improvement would occur this early on, and we would still not discount the possibility of a pullback into the original trading ranges, much as springwoother, in Princeton,New Jersey, at least, has failed to prevail for any length of time. Our original timetable had called for weakness extending into May-June. Nonetheless, as noted, positive action in some indicators, at least, has emerged as May begins. The relatively better action of the broad-based indices is, moreover, an unexpected bullish factor. The ratio of the S & P to the Dow-Jones, for example, is at the moment, extremely close to posting a new bull-market high. Ability to do this would be constructive, since, in most cases, such action takes place only under ongoing bull-market conditions. The poor action of the non-industrial averages, however, is not terribly surprising. It is no secret that leadership, going all the way back to last summer, has been narrow and growing narrower. We have not attempted to ignore this fact. It is simply our view, as we have noted, that this action is typical of a mature bull market, and thus more or less to be expected. Whether more harbingers of a stock-market spring will emerge is still a question. Indeed, if they do, to push the metaphor to the ultimate, they will probably be more indicative of an Indian Summer. We will be commenting in this space on such improvements as they emerge. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (1200 p.m.) 1173.68 S & P Composite (12CO -p.m.) 161. 07 Cumulative Index (4/3/84) 1969.74 No statement or expression of opInion or any other matter herem contained IS, Of Is to be deemed to be, directly or Indirectly, an offeror thesohcltatlOfl of an offer to buy or sell any security referred to or mentlOn('d The matter IS presented merely for Ihe con …emence of Ihe subscriber While we beHeve Ihe sources 01 OUf mformallon to be reliable, we In no way represent or guarantee the accuracy thereot nOf of Ihe statemonts made herem Any action to be laken by Ihe subscriber should be based on hiS own Invesllgatlon and information Oelahetd, Harvey, Tabell Inc. as a corporation and lts 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 positron may be dlfterent from any ViewS now or hereafter expressed In thiS or any other Issue Delafield, Harvey, labell tnc, which IS registered With the SEC as an Investment adVisor, may give advice tolls investment adVISOry and other customers Independently of any statements made in this or In any other issue Further mformahonon any security mentioned herein Is available on request

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Tabell’s Market Letter – May 11, 1984

Tabell’s Market Letter – May 11, 1984

Tabell's Market Letter - May 11, 1984
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I' 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 May 11,.984 Aair !Dount of newspaper 'space 'was-devote(i';-sorfierO '1iayS,,-go;'tolhe-'release- Ofthe-Com merce Department's Index of Leading Economic Indicators, showing that Index down slightly for the month of March. The market's response was paradoxical. It went up — on the theory that a cooling off of the economy was bullish. This flows in the face of the conventional interpretation of such an event which suggests that a cooling-off economy is bearish for stock prices. This historic interpretation, however, tends to lead to certain difficulties in practice. The leading indicator composite was designed by the B.E.A. to turn down in advance of the economy and, indeed, has, since 1948, uniformly done so. Relating this to the stock market, however, presents difficulties. First, the market also tends to turn down in advance of the economy. .Secondly, the economy and the stock market have not always shown a perfect correlation. Six of the nine cycle bear markets since World War II were associated with economic contractions. One, however, took place entirely without such a contraction; one recession (April, 1960-February, 1961) produced only ah inter- mediate-term market decline and another, the mini-recession of 1980, could not be correlated with the stock market. These cases are eliminated in the accompanying tables. The table at the right shows the PEAKS date of seven expansion peaks in the Monthly economy, the stock market, and the Leading Lead () leading indicator index. In four of the Economy Stock Market Indicators Lag (-) seven cases the leading composite, 11/48 6/48 1/48 5 while it led a downturn in the economy, 7/53 1/53 3/53 -2 did not lead the peak in the stock 8/57 7/57 9/55 20 market and most recently lagged it by 4/60 1/60 5/59 7 as much as five months. A further 12169 12/68 4/69 -4 limitation on the indicator's practical 11/73 1/73 3/73 -2 – – usefulnessisthat'it-'-often-'-turns'down.- -' 7/81 -4'/81 tl-!I'8110''''''—-5- for one or two-month periods and then reverses itself, and it is, additionally, released a month late. The turndown, therefore, often cannot be recognized until as much as three months after the fact, mak- ingthe indicator relatively useless unless the lead time is fairly long. As shown, this is seldom the case. About the only useful thing that can be said about the action of the leading-indicator composite at the moment, is that, if the turndown continues — and this is not at all certain —, it would be 'consistent with a cycle stock-market peak having been reached last November. PEAK With all the space devoted to the leader Monthly index, almost none was devoted to two in- Coinc. /Lagging Lead () dices, also maintained and released by the Economy Stock Market Ratio Lag (-) Commerce Department, which are designed to 11/48 6/48 1/48 5 be coincident with and to lag economic turns. 7/53 1/53 10/52 3 This is surprising, since an indicator based 8/57 7/57 5/55 26 on these two indices has proved more useful 4/60 1/60 4/59 9 than the leading-indicator index at past eco- 12/69 12/68 11/68 1 nomic peaks. That indicator is the ratio of 11/73 1/73 3/73 -2 the coincident index to the lagging index. 7/81 4/81 3/81 l This ratio's turning down indicates a slow- down in the rate of expansion and, as the table above shows, its lead time, both on the economy and the stock market, tends to be a great deal better than that of the leading-indicator index. It has led the market six times out of seven, and its eventual lead time has been better than the alternate indicator in every case. Little notice has been paid to the fact that this indicator, so far, has peaked as of January, declining in both February and March. Now the practical use of this index as a stock-market tool is subject to the same limitations discussed above, in addition to the fact that it is more volatile than the leading-indicator index and has also given at least one major false signal, in the early 1950's. It would, nonetheless, at this stage of the game, be appropriate to watch this fairly obscure ratio. If it remains below its January peak, the interpretation would have to be pessimistic. However, since the ratio normally shows a rather good lead time, that January peak would not be inconsistent with a stock-market high to be made later this year. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (5/10/84) 1160.07 159.18 1961. 05 No statement or expressIon of opinIon or any other matter herem contained Is. or is to be deemed to be, directly Of Indirectly, an oller or the soliCitation 01 an ollerlo buy or sell any secunty referred to or mentIOned The maHer IS presented merely for the convenience of the subscriber While we believe the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereof norol the statements made herein Any action to be taken by the subscnber should be based on his own Investlgallon and Information Delafield, Harvey, Tabelt Inc, as a corporation and Its officers or employees may now have, or may later take, POSitions or trades In respect to any securities menhoned In thiS or any future Issue, and such POSition may be dillerent from any views now or hereaftere)(pressed In thiS or any other Issue Delafield, Harvey, Tabetl Inc, which IS registered with the SECas an Investment adVisor, may give advice to Its Investment advisory and othercuslomets Independently of any statements made In this or In any other Issue Further Information on any securUy mentioned herein IS available on reQuest

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Tabell’s Market Letter – May 18, 1984

Tabell’s Market Letter – May 18, 1984

Tabell's Market Letter - May 18, 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 1— – May 18, 1984 It has not been a particularly good two weeks for the stock market, with the Dow Jones Inoustriall,-havin'g refrliated's6file-45points s-;ncereaching'a ,I11gh'of-H8eI'5,6 .on- May,2 r;S,even''of-the- 11 trading days since that time have been down days, and included a 14-point whack on May 4, followed by a rather tepid two-day rally, a further 11 point drop on May 9, and, finally, an additional 10-point loss on Thursday of this week, Predictably, all this was concomitant with credit market weakness. long bond prices reaching new lows early this week from which they have, so far, demonstrated little desire to recover, Two weeks ago, before the market began its most recent slide, we took the opportunity, in this space. to point out the fact that the broad-based averages, at least, had broken out on the upside of their February-May trading ranges, although some of the other indicators, notably the Dow Industrial and Transport l)verllge., had failed to do so. We left ourselves with a small loophole in that letter by suggesting that strength in early May was at some variance with the scenario we had been envisioning most of the Spring, which, on a seasonal basis, suggested that the market might once more test its lows, very probably sometime around May-June. Something like such a test did seem to be emerging in this week's trading. Indeed, the Dow-Jones Transport average, a particularly weak feature of weakness on Thursday pulled back to a closing low of 480.35, exceeding its April 6 low of 484.16 by a fairly significant margin. Actually, all of this has not, to date, substantially altered the pattern which existed a couple of weeks ago. The broader indicators, notably the S & P 500 and the S & P Industrials have simply pulled back once more into the trading ranges from whence they emerged, and it still appears plausible that these trading ranges constitute base patterns which, evidently, will broaden still further. In saying this. we do not preclude the possibility of a new low below the 1130 level for the Dow. It is certainly conceivable that the kind of pessimism which such a downside thrust would engender is needed before the market can mount .,sort of meaningful turn. Indeed, a ,,!e pointed out a highs, an -,';'pide prospect hardly calculated to set hearts By the time the current process is complete, there might well exist bases suggesting something more meaningful. The real question we are raising, from a technical point of view, is whether or not a typical volume selling climax is necessary to turn the market. Volume, until just recently, had been one of the marginally positive elements in the picture ever since lows were posted at the end of February. Consistently, through the two months following that low, upside volume had exceeded downside vol- ume,and, as has been widely noted, many of the recent downthrusts were accompanied by some of the lowest volume levels of the year. This pattern has been altered slightly in the past four of five days, as a certain amount of downside volume has entered the picture. However, even at Thurs- day's close, short-term downside volume indicators had failed to approach anything like their peaks of February. Whether a selling climax is required remains an open question; given the change in character of today's markets. The most recent major bottom in August, 1982 occurred, of course, entirely without one. On the other hand, We have had two fairly recent intermediate-term bottoms, 1978 and 1980, both of which featured selling climaxes with almost textbook characteristics. We would not want to hazard a guess as to whether one is required here. Climax conditions, interestingly, may already have appeared in the bond market, which, of course, has been the focus of most recent headlines. It is difficult to track bond markets as pre- cisely as the stock market, since volume figures are not available and back history tends to be lack- ing. However, it is possible to trace the percentage changes in, for example, individual long-term treasury issues. Such an 'oscillator shows Treasury 8 3/4's of 2003-2008 down in excess of 5 over a 10-day period at their Monday levels. During the short history available, such a level has gener- ally denoted what, can be called a deep oversold condition. Interestingly; as'oi-Monday, this issue, at its bid price of 65' 29/32 was down 24 from its high on May 6, 1983 of 86 28/32. During exactly the same period. the S & P 500 had declined from 166.10 to 157.50 a drop of only 5.1. So much for the safety of bonds versus stocks, at least in the recent market environment. It can be said, indeed that the stock market has held up fairly well given the abysmal credit market conditions. If bonds are currently truly oversold, a turn in this area could well turn the equity market without conventional panic-selling conditions emerging. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC . Dow-Jones Industrials (1200 p.m.) 1136.31 S & P Composite (1200 p.m.) 156.30 Cumulative Index (5/17/84) 1921. 29 NO statement or expression of Opinion or any other matter herein contained IS, or 15 to be deemed to be. directly or indirectly, an oller Of the solicitation of an offer to buyor sell any secunty referred to or mentioned The matter IS presented merely lor the convenience of the 5ubscrlbor While we beheve the sources of our Itlformatlon to be renable, we In no way represent or guarantee the accuracy thereof nor 01 the statements made herein Any action to be taken by the Subscnber should be based on his own Investigation and Information Delafield, Harvey, labell Inc, as a corporation and lis olllcers or employees, may now have, or may later take POSitions or trades In respect to any securities mentioned In Ihls or any future Issue, and such pOSition may be dillerent from any views now or hereafter epressed In thIs or any other Issue DelafIeld, Harvey, Tabell Inc. whiCh IS registered with the SEC as an Investment advisor. may give adVice to lIs Investment adVISOry and other customers mdependently of any statements made In this or m any other Issue Further mformatlon on any security men\loned herein IS available on request

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Tabell’s Market Letter – May 25, 1984

Tabell’s Market Letter – May 25, 1984

Tabell's Market Letter - May 25, 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 May 25, 1984 We have held, for some time, to a market scenario including an important low in the corrective process, which began last Fall, emerging in the May-June period. The weakness necessary to that scenario continu!,dmuring the-past- weekthe only difficulty-oeing-t1fat-it ',emerged in'a 'i'ashion- which has, to date, provided very little confidence regarding its imminent end. Having held for almost three month above the 1130 level, the Dow reached a new low on Monday and cO'1tinued to post new bottoms through all of the first four sessions of this week. By 'Thursday it was down 7.01 from a May' 2 high of 1186.56. The major problem, from the technician's point of view was, in essence, the utter torpor of the decline. On 10 of the 16 trading days since the drop started, volume was below the 90-million share level. Declines exceeded advances on 11 of the 16 days, but, even on the worst days, the number of declining issues tended to be in the 1000-1200 range, rather than in the area of 1500 and upwards which might connote a panic rush for the exits , We have, in short, the sort of market that is falling of its own weight — from a lack of bids rather than aggressive selling. The problem with this sort of action, historically, is that it can go on for quite some period of time, indeed, until such time as climactic actior clears the air. Meanwhile, the process was approaching a fairly crucial stage. That crucial stage, inCfdentaIJr was not the 1100 level on the Dow, with which that index was flirting at week's end. Our regular readers are aware that we do not share the common journalistic infatuation with round numbers, and we do not think 1100 as such has any particular significance. What was significant was the approach to those limits which have historically catagorized an intermediate-term decline and have tended to differentiate such a decline from a full-scale bear market. At Thursday's close, the Dow was down O'l'er a 123-tIlsding-day 'period 14.27 from its high of 1287.20, scored on November 29, 1983 following a 15-month, 65 advance. There have been, as we have .been pointing out in this space, many intermediate-term declines within the context of past bull markets. Indeed, as we have noted, there has not been a bull market in the modern era that has not included, -usually-in-its mature-stages,,-such-a-decline.,-.Since-,the45-months-fromAugust-,-l982-to-Novembcr.19831–1 had not witnessed anything resem1ting such a phenomenon, the weakness of January-February appeared to fit comfortably into this context. The trouble is that, as we approach the range of 14 in amplitude and 120 days of decline, the historical precedent begins to get thin. The bulk of past intermediateterm drops have been in the 10-12 range. We do have the weakness of January-October, 1960, in whic the Dow dropped 17.35 over a period of 205 trading days. Between April, 1971 and November, 1971 there occurred a decline of 16 on the Dow lasting for 146 trading days. We are, however, at the mo- ment, pushing against this sort of threshhold at a time when the market shows no immediate desire to reverse its downtrend. If we are talking full-scale bear market, the historic threshhold used to define such a phenomenon is 20, which would take us to somewheres around the 1029 level on the Dow. It does not further increase confidence to realize that most recent bear markets have comfortably exceeded that threshhold. On the other hand, we must confess that we still find it difficult to accept the full-scale bear market theory. It requires us to believe in the onset of such a phenomenon after a 15-month advance, something that has not occurred since 1938, and which, historically, does not tend to occur (although there have been exceptions) during the course of an election year. More important is our own reading of the existing distributional patterns and, while there is no doubt that they exist, they do not to us suggest a magnitude comparable to that which proceeded past cycle downswings. It has been furthermore, a characteristic of recent markets that patterns in individual areas tend to vary. The Over-the Counter market, for example, began to be taken apart almost a year ago, and, although the OTC average joined other indicators in moving to new lows this week, it has recently been performing no worse than the widely followed averages and there is ample evidence of basebuilding in this area. Energy, an area worth noting since it constitutes some 20 of the major averages, has been immune to the decline thus far and, .indeed, the Standard & Poor's Oil Composite Index reached a new two-year high just a week ago. The imponderable, of course, is the development which touched off the short-term weakness, the possibility of an impending banking crisis. However, recent action might even make us feel that we have learned something about the handling of such crises. As noted above, the market in the past three weeks was down some 7. The last wave of major bank failures produced the biggest bear market in history. We think, in sum, the decline has reached a stage where it is necessary to await the next rally attempt — and one will occur, if only on a short-term basis — before making a final decision on the cycle picture. However disappointing recent action may be, it is still possible that it is part of a process other than a cycle bear market. Dow-Jones Industrials (12 00 p. m.) 1109.30 S & P Composite (12 00 p. m. ) 151.60 Cumulative Index (5/24/84) 1852.50 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. No statement or expression of opinion or any other matter herem contained IS, Of IS to be deemed (0 be, directly or Indirectly, an offer or the sohcllallon of an offer to buyorsell any sec\wty referred to or mentioned The mailer IS presented merely for the conveOlence of the subSCriber While we beheve the sources of our mformatton \0 be rehable, we In no way represent or guarantee the accuracy thereof nor Of the statements made herein Any action to be taken by the subscriber Should be based on hiS own Investigation and tn/ormatton Delaflekl, Harvey, Tabell Inc, as a corporatIOn and ItS ofhcers or employees may now have, or may later take, positions or trades 10 respect to any securities mentioned In thiS or any fulure Issue, and such position may be different from any views nowor hereafter expressed 10 thIS or any other Issue Delafteld, Harvey, Taba!! Inc, which IS registered With the SECas an Investment adVisor, may give advice to Its investment adVISOry and other customers Independently 01 any statements made In thiS or In any other ISSue Further tnformatlon on any secuflly mentioned herem IS available on reQuest

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