Tabell’s Market Letter – August 03, 1984

\. 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 – August 3, 1984 -Wml-;-wn-It-!t ha l–fi)n'A-fter flu b bin gaumm er ' rany-aneniptinI'Jlrnetlie- rrfllrRet'-w as a151 ….- to put on a spectacular show this week. including a 50-point. two-day rise and, most notably, record volume on Thursday and for the first hour Friday morning. Let us try to put this week's events in perspective. The recent fireworks can be viewed as one of seven short-term rallies which have taken place since the bull market began Start End Advance of Days on August 12, 1983. The rallies are 87i2T82 972I782 20.32 27 listed in the table at the right. 9130182 1113182 18.88 24 1124183 6116183 21.17 100 The first three mark the 2122184 3116184 4.42 17 start of each of the three component 6115184 713184 4.36 12 legs of the major-bull-market upswmg 7124184 812184 7.32 7 which, in total, took the DJIA from 776 in August, 1982 to 1248 in June, 1983. We have excluded the various rally attempts during the top- ping phase between that time to January, 1984, although they could, appropriately, have been included. The last three listed are the two aborted attempts at reversal in February and June. plus the current advance to date. How does the present rise stack up against its five predecessors First of all, it has already comfortably exceeded the total percentage advance chalked up on the two failed rally attempts. The table below sets out some other measures of upside momentum, the first three being figures for the first seven days of each advance, and the last four showing peak single-day statistics in the early stages. It will be noted that the statistics shown are measures of upside action exclusively. There was a time when measuring the depth of an oversold condition was an important part of a reversal test. This has e – –been—ress-true-recently-;'th,,–1as t full'SClrthrellirrg—-climllx-h-avirrg—uccurred9TI –,- ,ou. First Seven Da;)s Percent advance Upside volume as of total Total advancing stocks Peak Da;) Adv. stocks as of total Upside vol. as of total Vol. as of 25-day average ih)rt-term trading index 8112182 11. 88 67.62 7723 81. 04 95.75 231 .24 9130182 10.11 68.64 7098 74.27 87.16 194 .42 1124183 4.42 45.57 5750 60.78 77.78 112 .42 2122184 4.03 53.38 6005 67.17 80.12 110 .52 6115184 4.11 54.76 5738 54.08 72.97 143 .33 7124184 7.32 68.77 7183 73.56 87.90 203 .42 The numbers above are, it seems to us, self-explanaory. Based on most statistics, the advance seems to have equalled, or fallen just short of, the rallies which were the feature of August and October, 1982. Likewise, by most measures, it seems to have exceeded the other three rallies. This is not surprising. Indeed, it is just about what should have been expected. We outlined last week the fact that our preferred market scenario was to view weakness of 1984 to date as an intermediate-term correction within the framework of an ongoing bull market. If this week's action signals that that intermediate-term correction is over, one would expect the dynamics of the reversal to be less than those of the bull market's early stages, but greater than the failed rally attempts during the declining phase. This is precisely what took place. The question of whether our original scenario will turn out to be the correct one requires athe accumulation of further evidence. Part of our view has been the speculation that early1984 might turn out to be what is known, in technician's parlanceas- fulcrum base. consisting, as -it does, of two trading ranges, the first at 1140-1180, and the second, lower range at 1080-1140. The market rocketed out of that lower range this week. Normally, one would view the upper one as potential overhead supply. Therefore, if our thesis is correct, one would expect a move through the upper area without too much in the way of digestion. The Dow, indeed, did just that on Friday morning, reaching 1190 before pulling back. Ob- viously this breakout must be confirmed by further testing. If so, we will then be able to assess the upside prospects. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (\200 p.m.) S & P ComposIte (1200 p.m.) Cumulative Index (812184) 1185.29 160.98 1890.18 No statement or expressIOn of opInion or any other matter herern contained IS, or IS to be deemed to be directly or rndlrectly, an oller or the solicitation of an offer to buyor sen any security referred toor mentioned The mailer IS presented merely for the convenience of the subscriber While we behevelhe sources of our Inlorffiahon to be reliable, we In no way represent or guarantee the accuracy thereof norol lhe statements made herern Any action to be taen by the subscrrber shoutd be based on hiS own rnveslgatln and rnformatlon Delafield, Harvey, labell Inc, as a corporation and ItS ollicers 01 employees, may now have, or may later take, POSitions or trades rn respect 10 any securrtles mentlonea In thiS or any future Issue, and such position may be dl!ferent Irom any views nowor herea!terexpressed In thiS or any other Issue Delafield, Harvey, Tabell Inc, which IS registered With the SEC as an Investment adVISor, may glveadYlce to ItS Imestment adVisory and other customers Independently 01 any statements made lfl thiS or m any other Issue Further mformatlon on any securtty menl!oned herein IS available on request