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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