Viewing Month: September 1984

Tabell’s Market Letter – September 07, 1984

Tabell’s Market Letter – September 07, 1984

Tabell's Market Letter - September 07, 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 September 7, 1984 One of the,oldest.rationalesJor, the.anciel)tprBcctice of.C!,hartil)g.1he stock.markeLis, the theo- ry that areas of' potential future supply or demand manifest themselves in the past history of a given stock or index, Such areas tend to be signified on a typical chart by long, lateral trading ranges. Point-and-figure dlarts, where the length of these lateral trading ranges is determined by price activity rather than passage of time, often improve the accuracy of such analysis. With the market having quieted down a bit, examination of the point-and-figure configuration for the Dow, shown below, may perhaps be helpful. The graph shows each five-point fluctuation on the DJIA since early 1983, 1.300 I I.-SO I 1 I/So II I/()O 1075 There are four separate areas on the chart which are worthy of note, the being in the upper left-hand corner, between 1215 and 1290, representing the trading pattern of the second half of 1983, The general deterioration that accompanied this trading range at the time suggested it might constitute a potential top, This interpretation was confirmed by the precipitous downside breakout in early 1984 which reached 1120 in February. Following that low, the Dow was unable to make progress above the 1185 level, so that 1120-1185 became a second important trading range. That range was penetrated on the downside in early May. There was, however, some justification this time for believing that that range, unlike the earlier one, was not a true top. The index stopped declining at 1090 and held this level three times, forming a third range between there and 1135. It was this range that was penetrated on the up- side in last month's rally. The normal expectation at that point would have been that 1120-1185 would turn out to be an area of supply which would slow upside progress. Instead, the Dow moved through this area in a straight line. This suggested that the entire 1090-1185 area constituted a single pattern known, in technical jargon, as a fulcrum base. If this interpretation is the correct one, the 1120-1185 range should now constitute an area of support, since it obviously provided little in the way of overhead supply. A fourth range is now funning at a logical point, just under the original top. Currently this range is delimited by 1200 and 1245, and the market pulled away once again from the bottom of this range on Thursday. All this sets up some fairly important current parameters for the Dow. Ability to move ahead, above 1250, would suggest a further test of the overhead supply from last Fall's original top. Even- tual penetration of that supply, to a new alltime high, would be a final confirmation of the fulcrum- base hypothesis, and the upside price objective of that base, in the 1350-1400 area, would be established as valid. A downside breakout below 1200 would not necessarily destroy this pattern, but it would provide us with a test of whether the upper part of the 1185-1120 area really consti- hies the strong support that it theoretically should. AWT rs ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (12 00 p.m.) S & P Composite (1200 p.m.) Cumulative Index (9/6/84) 1210.80 165.81 2019.72 No statemnl Of expression of opinion or any other matter herein contamClIS. Of IS to be deemed to be, directly or Indirectly. an oller or the soliCitation of an olfer to buyor sell any security referred to or mentioned The maHer IS presented merely lor the convenience of the subscllber While we betleve the sourCes 01 OUI Information 10 be reliable we In no way represent or guarantee the accuracy thereof nor ollhe statements made herem Any action 10 be taken by the subSCriber should be based on hiS own Investlgalton and mlormatlon Delafield, Harvey, Tabel! Inc, as a corporatIOn and 1\5 officers or employees, may now have, or may later lale, poSI\!ons or trades In respect 10 any securities mentioned 10 Ihls or any future Issue, and such position may be different 110m any views now or hereafter expressed In thiS or any other Issue Delafield Harvey Tabell Inc whiCh IS registered With the SEC as an Investment advisor may give advice to Its Investment adVisory and olhel customers Independently of any statements made In thiS or In any other Issue Further Information on any securtty mentioned herem IS available on reQuest

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Tabell’s Market Letter – September 14, 1984

Tabell’s Market Letter – September 14, 1984

Tabell's Market Letter - September 14, 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 September 14, 1984 .- –Five 'weeks-agoas -might-be-expected; we were examining ;-inthis-space,the stock-market-explosion which had just moved the Dow up some 140 points over the course of'a fortnight. In the course of that examination we made the suggestion that that rally constituted a sort of behavior almost totally without historical precedent, and we went on to document the fact that the August rallies of 1982 and 1984 could be said to be unique events in market history. The singularity of these two occurrences, we pointed out, arose not from the extent of the advances, but the fact that they had erupted suddenly out of periods of extreme market dullness, Sharp market rises in the past had tended to be preoeded by equally sharply declining markets, producing the familiar, to technicians, selling-climax effect. Here, in the early 1980's, we are being confronted, on the record of the last two major bottoms, with a stock-market pattern that has, quite literally, never before occurred. So far, at least, this radical change in behavior appears to apply only to bottoms and not to tops. Historically, the latter have been slow to form, accompanied by an extensive period of fairly noticable internal deterioration. The top which preceded the intermediate-term decline of the first half of 1984 began its formation in June, 1983 and continued,irrCludlng a series of marginal new highs in the various averages, through January of this year, a timespan of seven months. This sort of gradual deterioration preceding the sharp January-February break which comprised the bulk of the correction, has any number of essentially similar precursors in market history. One of the basic rules of the game, at least, has not, apparently changd. Why, then, the new shape of market bottoms It is, we think, possible to find a convincing rationale for this new configuration, Let us, first of all, set out some elementary hypotheses about the nature of stock-market participants in the mid-1980's. The first such hypothesis is that the market has come, more and more, to be an institution- – -allydominatedone..T.hus,theplay.ers whose.daily. decisionsaffectthecourse….oLpriceactionhave – I become, to a larger and larger degree, professional money managers. Such managers, partially in response to academic doubts concerning the value added by their profession, have come more and more to be judged on the basis of performance. (Such judgment, laudable in principle, may be overdone in application, but that is another subject.) It should also be noted that performance is generally measured vis-a-vis a stock-market index, such as the S & P 500. Given the orientation of large numbers of market participants, we can go on to some simple statistics on returns available in today's financial markets. 90-day Treasury Bills at the moment provide a return of just under 11. Long Governments, with the return partially locked in, yield around 12H, with premiums for corporate issues of similar length. The dividend yield on the S & P 500 is well under 5. With manager performance measured, conventionall)l on a total-return basis, there exists, it must be admitted, a strong incentive not to hold equities except — and here is the rub — when the market is going up. Performance, let us remember, tends to be judged on a basis of total return annualized. To take what is admittedly a ridiculous figure, that return for the period July 24, 1984 to August 21, 1984 was 372 on the Dow-Jones Industrial Average from capital appreciation alone. To cite a figure which may be somewhat more realistic, it was 24.6 from August 12, 1982 to last night's close. Next to these numbers senior-security returns pale in comparison. It is not, therefore, hard to envision fairly large numbers of portfolio managers who, despite a basic prediliction toward a defensive posture, simply cannot afford not to be participants in a market which has started upward. Such portfolio managers become buyers who are likely to behave very much as individual sellers did in days of yore, Those sellers were afraid of losing their savings. Today's buyer, endlessly in competition with the S & P, is afraid of losing his job. Neither fear is likely to produce rational behavior. To the extent that the above hypotheses are ,correct, we may appropriately expect more of the sort of upside behavior that characterized two of the last three Augusts. It may even become more ubiquitous, We may, indeed, even have seen a mini-example of this sort of thing in the behavior of the past two days. The contrary investor today, therefore, may be the one who chooses not to join this crowd and is wary of trying to practice too-finely-tuned marKet timing. . AWTrs Dow-Jones Industrials (1200 p.m.) 1235.42 S & P ComposIte (1200 p.m.) 169.27 Cumulative Index (9/13/84) 2039.29 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. No statement or f)ypresslon of opinion or any other matter herem contained 15 or IS to be deemed to be, directly or indirectly, an offer Of the solicitation of an offer to buy orsell any security relerred 10 or mentioned The matter IS presented merely lor Ihe convenience of the subscriber While we believe Ihe sources of our information to be reliable we in no Way represent or gutrantee the accuracy tllereol nor 01 the statements made herein Any tClion to be lah.en by the subscllber shOUld be based on hiS own Investlgahon and Informalton Delafield, Harvey, Tabell Inc, as a corporahon and liS officers or cmployeos my now htve or may later lake, pOSitions or IradC's In respect to any Securities mentioned In thiS or tny future Issue, and such pOSition mty be dlfterent flam any views nowO! herealter expressed In thiS or any other Issue Delafield Harvey Tabell Inc which IS regrstered with the SEC as an Inveslmenl adVisor, may give advice to Its Investment adVISOry and other customers Independently of any statements made tn thiS Ol!fl any other Issue Further mformatlon on any secuflty mentioned herern IS available on request

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Tabell’s Market Letter – September 21, 1984

Tabell’s Market Letter – September 21, 1984

Tabell's Market Letter - September 21, 1984
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r .' 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 September 21, 1984 Avid readers of this letter, who feel they scrutinize it sufficiently closely each week to be awareoLeycery.nuance of-our currentmarketopinion, are .herewith givenpermission to stopread- – – ing at this point. With the market having spent essentially a' dull' '';'eek, we intend, for the benefit of less-than-avid readers, once again to summarize that opinion and some of the threads of evi- dence that lead us to it. The opinion can be summarized very simply. We think the market is likely to go higher. However, we are reluctant to expect a great deal from it, either in terms of percentage advance from this level or in time to be spent advancing from here on out. The three principal hypotheses which lead us to the above conclusion are as follows 1. A major bull market began on August 12, 1982. 2. The initial momentum of that bull market began dissipating around Summer-Fall, 1983. 3. This in turn led to the bull market's first (and probably only) intermediate-term correction, which ended on July 24, 1984. Ergo Whatever -Jan rommlly be expected to remain for a typical bull market after the above events have taken place still lies ahead of us. Let us examine the above hypotheses and their conclusion in a bit more detail. The first, we think, is essentially unarguable. The second is almost as patently obvious. On an elementary level one need only compare a chart of the averages, post-Junlil-1983, with the action up to that point. On a more sophisticated level, breadth and volume indicators began a deterioration in mid- 1983 which was remarked at the time not only by us but by almost all of our technically oriented colleagues. The third hypothesis, even today, may be a bit more controversial. The downswing which carried the Dow from 128V.20 on November 29, 1983 to 1086.57 on July 24, 1984 was the largest cOl'recl-ion. in the upswing-to that -date .Nocorrection -prior-tl-that-can.-be-called-anything other- — – – – than minor in scope, the worst previous decline having been approximately 7 in extent and under three weeks in length. The problem arises in the taxonomy of the seven-month period ended last July. The week before it ended we filled this entire space (without in any sense predicting its actual conclusion) outlining our reasons for calling it an intermediate-term correction rather than a full-scale bear market. We think the vigor of the rebound which materialized in early August vali- dates that thesis, although the final confirmation will obviously not take place until the Dow attains or at least approaches a newall-time high, something we expect it to do. The extent to which this scenario — so far at least — is consistent with historical norms is almost uncanny. Major market cycles in this century have averaged 45 months in length, with 61 of their lifetime spent advancing. Exact conformity with this pattern would call for a low in May, 1986 and a high in December of this year. The average percentage advance for all cycles had been 72 versus a rise of 66 for this one so far. Initial intermediate-term corrections have tended to materialize just about as far into past bull markets as the downswing which began in November, 1983. The only slightly surprising factor about the recent decline, in historical terms, was its length and extent. It constituted the longest and deepest recent such correction, with the single exception of January-October, 1960, which slightly exceed it both in terms of length and percentage decline,. , The three hypotheses above fix today's market firmly within a cyclical framework, a bull market which has undergone a completed intermediate-term correction and is now in its final phase. An examination of the historical record tells us, within fairly narrow limits, what can be expected from such a phase. The minimal expectation is a test of the previous high. This was the case, for example, in 1957. The average expectation notes the fact that some 70 of the move was likely to have been over around the start of the loss-of-momentum phase, in other words at 1240 on the Dow last June. If the 464 points gained to that point were 70 of the total advance, the ultimate rise would be to roughly1439, a figure we regard as plausible if a bit optimistic. From a timing point of view one would expect, as noted above, to see the ultimate high oc- cur sometime around the end of the year. There is a fairly wide historical latitude here, however, and an extension well into 1985 would hardly be unprecedented. , One of the functions of markets is to create surprises, and it would hardly be unusual for the market, which has adhered amazingly to the projected scenario so far, to vary widely from it between now and its conclusion. That variance J however, could come in either ODe or two directions, the downside or the upside. Our assessment at the moment is that the risk of the latter variation, a market which moves ahead further than we now suspect, is somewhat greater. It is for this reason that we think the investor should await further development from the posture of a relatively fully invested position. ANTHONY W. TABELL Dow-Jones Industrials (12 00 p.m.) 1223.49 DELAFIELD, HARVEY, TABELL INC. S & P Composite (12 00 p. m. ) 167.76 Cumulative Index (9/20/84) 2057.46 No statement or epres9lon of opinion or any other matter herem contamed IS, or IS to be deemed to be, directly or Indirectly, an oller or the soliCitation of an offer to buyor sell any secunty relerred loor menlloned The matter IS presented merely forthe convenience of thesubscflber While we belleve the sources of our Information to be reliable, we m no way represent or guarantee the accuracy thereof nor 01 lhe statements made herem Any action to be taken by the subscnber should be based on hiS own Investigation and Information Delalleld Harvey, Tabell Inc, as a corporation and Its ollicers or employees, may now have, or may later take, pOSlhons or trades In respect to any securities mentioned m thiS or any future Issue, and such position may be different from any views now or hereaitor epressod 10 thiS or any athOl Issue Delafield Harvey. Taboll Inc which IS registered With the SECas an Investment adVisor, maygwe aovlceto ItS Investment adVisory and other customers Independently 01 an statements made In thiS Olin any o'her Issue rmthet Inlorma\IOrI on any secunly mef'\lOneo herem IS available on teQues!

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Tabell’s Market Letter – September 28, 1984

Tabell’s Market Letter – September 28, 1984

Tabell's Market Letter - September 28, 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 1– —–r-'—-r——————————septem-er28,98-4———–,—-,—I With the Dow still locked in another one of its trading ranges, we decided this week to reexamine the recent action of individual issues to see if we could produce some additional insight into the internal behavior of the markp.t over the past year. To this end, we screened the price action of 1,643 individual stocks, 1,150 on the New York Stock Exchange, 167 on the American Stock Exchange and 326 Over-TheCounter. We tabulated for each of these stocks (1) its 1983-early 1984 high, (2) its low to date following that high, and (3) the highest price reached subsequent to that low. This enabled us to compute, for each stock, its average 1983-1984 decline, its subsequent percentage advance and the average percentage of decline recovered. The results are shown in the first four columns of the table below, with comparable figures for three market averages in the right-hand three columns. Decine 1983-1984 Advance 1984 of Decline Recovered NYSE -37.10 39.22 76.87 Average Stock ASE OTC -48.18 -50.84 52.29 47.64 69.08 59.80 All -41.01 4,2.21 72.69 DJIA -15.59 14.10 76.34 Averages ASE OTC ComE' -24.84 -30.86 15.61 13.23 47.24 29.64 At first glance, some paradoxes are apparent. The first thing that the table shows is that the average stock declined, during 1983-1984, about twice as much as the average representing the exchange on which it is traded. The second apparent paradox lies in the average percent-of-decline recovered to date. The average NYSE stock has recovered about the same as the Dow, but the average recovery for American Stock Exchange and Over-The-Counter stocks is considerably better. These anomalies, however, can be resolved by further examination. The table at right shows the date on which Stocks Making 1984 Highs each of the stocks made its 1984 high. As can Date NYSE ASE OTC Total be seen,these.highs werewideIydisperse,do''ve'rcJuI)e,.1!!ll3 355 a seven-month period. When the averages began July 1983 158 70 -174 . ,599 39 46 24i to flatten in June, a good many stocks had already Aug. 1983 50 7 8 65 started down, and the market indices were held Sept. 1983 90 11 15 116 up by fewer and fewer stocks that were continuing Oct. 1983 108 9 16 133 their advance. Thus, the uJtjmate decline in the Nov. 1983 92 6 11 109 averages was rather small, despite the fact that, Dec. 1983 60 7 14 81 as the first table shows, the average individual 1984 237 18 42 297 stock, sometime during the 1983-1984 period, under- went a significant correction in excess of 40. The ultimate lows for the individual stocks were also dispersed over time, although not as widely. Although the actual low for all three averages took place in July, 1984, only 549 of the 1,643 stocks made their lows during that month. 929 issues had already made their lows prior to the averages bottoming in July, and 165 stocks actually made new lows following the end of July. The rolling nature of the entire readjustment, thus, helped produce a relatively small decline in the averages. The second apparent anomaly lies in the extent Recovery 100 or more 50 – 100 Less than 50 NYSE ASE OTC 259 34 50 450 41 87 441 92 189 Total 343 578 722 of the individual declines recovered. This is accounted for by the fact that a significant number of issues, mostly on the New York Stock Exchange, have recovered 100 or more of their losses and moved ahead to 1983-,/ 1984 peaks. This is shown in the table at left. However, that table also suggests the narrowing of leadership that has taken place on the late 1984 rally. With the averages not all that far from new peaks. only 343 issues. to date. have. themselves, scored new highs. Even more negatively, 722 of 1,643 issues, including a majority of American Stock Exhcange and Over-The-Counter stocks, have recovered less than 50 of their 19831984 losses, and their prospects for new highs during -the remaining span of the bull'market appear dim. '. '. – All of this seems to us normal for the mature stage of a bull market. which is where we think we currently find ourselves. As has been the case at comparable stages of past bull markets, a great many issues have probably already seen their bull-market peaks. Breadth of leadership has unquestionably narrowed from what It was a year ago but most likely is still wide enough to cause further, albeit selective, general market strength. AWTlt ANTHONY W. TABELL DEL,a.FIELD, HARVEY, T ABELL IN C. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (9/27/84) 1210.03 166.83 2055.17 NO sle!emc'Il 01 epresslon 01 opinion or any O!hr mallcr herein conlBlned IS or IS lobcdeemed to /e, dlrect/yor mdlrectly, an offeror the SOliCitation of an offerlo buY Of self any security referred to or mentioned The matter IS presented merely lor Ihe convemence of Ihe subscriber While we believe the sources Olou! mformatlon 10 berehable, we In no way represenl or guarantee the accuracy thereof nor ollhe statements made herein Any acllon 10 be tafen by Ihe subscT/ber should be based on hiS own Investlgallon and mtormatlon Delafield Harvey Tabefl tnc as a corporation ana Its officers or employees, may now have or may later lake, poSlllons or trades In respect to any SeCuT/lleS mentioned In thiS or any future Issue, and such pOSition my be dilleren/Irom any VHWS now or hcHaller expressed In IhlS Of any olher Issue Delalleld Harvey labell Inc wfTfCh 1 regIstered With the SEC as an investment adVisor, may give advice to ItS mvestment adVISOry and othel cuSlomers mdependently at any statements made m Ihls or m any other Issue Further mformallOnOn any secUT/ty menllonC! herein Is available on request

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