Tabell’s Market Letter – September 28, 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 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