Viewing Month: October 1984

Tabell’s Market Letter – October 05, 1984

Tabell’s Market Letter – October 05, 1984

Tabell's Market Letter - October 05, 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 October 5, 1984 ''J . tr …. – – – – – The Dow-Jones Industrial Average was off 8.51 points to close at 1182.85 on Wednesday, post- ing the lowest closing level in over two months, since August 2, when the DJIA closed at 1166.08. Technically, from a short-term point of view, the penetration of the recent 1240-1190 trading area, in which the market had been locked for the past 41 trading days, indicates from point and figure analysis a possible correction to the 1100 area. However, this does seem to be an excessive projection at this time because of the internal rotational leadership of the current equity market, previously discussed in th,S letter, coupled with constructive support present under current levels of the DJIA. To properly put the current position of the stock market in perspective, it becomes helpful to again examine, briefly, the performance of the DJIA from August 12, 1982, the start of the major bull-market cycle. We know from hindsight that the market advanced from that point from a low of 776.92 to a high of 1287.20 on November 29, 1983. This represented an advance of 65.68 and was completed in a period of 329 trading days. This across-the-board advance was completed without experiencing in the process anything approaching a 10 decline. From that time, two sig- nificant intermediate-term movements have occurred to date. The market corrected 15.59 from its November. 1983 high to a low of 1086.57 on July 24 of this year. This was followed from that July low by a rally of 14.10 to a high of 1230.73 on August 21. To date, this entire cycle is now 543 days old. Since the high in the DJIA was reached in November, 1983, the bull market, as it has gotten older, has changed its behavior significantly. No longer is the bull market advancing at an average daily rate in excess of one-and-a-half points per day as it did in its initial phase. Instead, it has spent the last 200 plus days fluctuating in a series of narrow, flat trading ranges which are relatively long in duration with initial wide swings out of these ranges oversport periods oJ. .time. To!urt1er focus on this change, of the 214 ;-;tra;,d;- I–I ing days from the November. 1983 high to date, only 94 have- been advancirig days on the DtIA While the remaining 120 days have been declining days. Intermediate Swings Date 11/28/83 7/24/84 7/24/84 8/21/84 nJ1A 1287.20 1086.57 1086.57 1239.73 (1) Pct.Chg. -15.59 14.10 Trading. Swings Date 1/09/84 2/22/84 7/25/84 8/14/84 DJIA 1286.22 1134.21 1096.65 1214.11 ( 2) Pct.Chg. -11. 82 10.68 (2)/(1) Pct.Chg. 75.82 75.74 It is interesting to note from the above exhibit that both intermediate moves previously discussed also confirm this new phase. The intermediate decline and advance completed the majority of the ultimate move immediately after dramatically breaking out of a trading area. The initial decline took 32 trading days to complete before the DJIA posted two successive plus days. Using the same guidelines, the initial August advance was completed in just 14 days. Again ,in both cases, the declining and advancing moves of the initial trading swings represented over 75 of the entire intermediate swing. What this suggests from a short-term pOint of view, is that the DJIA having broken out of a trading range on the downside will, if it is to significantly correct itself, do so quickly. If not, it will return to the trading range, albeit widening the downside limits of the range, in which it has been contained since early August. From the longer term point of view, the recent action of the market has not been unexpected. As we have continued to note in past letters ad nauseam, the present market cycle is in a mature, aging stage. We can continue to project higher levels in the DJIA possibly carrying into the early part of next year. However, any general market strength will be reflected in a narrowing select- ive sector of the equity market. RJS rs ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (1200 p.m.) S & P Composite (12-00 p.m.) CumulatIve Index (10/4/84) 1182.20 162.78 2018.41 NO statement or expresSion of opinion Or any other matter herein contained IS, or IS to be deemed 10 be, directly or mdJTeclly. an oller Of IhesoliCJlalJQn 01 an oller 1o bUYOfseIJany sccvfJly re/eITed to or mentioned The matter Is presented merety for the convenience of Ihe subSCriber While we believe the sources of our information 10 be reliable, we In no way represent or guarantee the accuracy thoreof nor of the statements made herein Any action to be taken by the subscriber should be based on hiS own investigation and mformallon Delafield Harvey Tabell Inc as a corporation and liS officers or employees, may now have, or may tater take, posItionS or trades m respe(t to any securities mentioned m thiS or any fulure Issue, nd such POSition my be different from any views nowor helealter expressed m thiS or any other Issue Oelafleld Harvey, Tabell Inc, which IS registered With the SECas an Investment adVisor, may give advice 10 ItS Investment advisory and other customers mdependenlly of any statements made In thiS or In any other Issue Further Information on any security mentioned herem IS available on request

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Tabell’s Market Letter – October 12, 1984

Tabell’s Market Letter – October 12, 1984

Tabell's Market Letter - October 12, 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 October 12, 1984 The recent short-term posltion of the general market remruns unchanged. From the fIrst of this f—mOiittheDow-JO;j-cs.!nduslMj\IAVFrngehis-spcnt-nioIjast-rwO'WlleJarbelow-ttre-clearly defiTedlnIl,,,,;t-…..,…. September trnding level of 1240-1190. closing at a recent low of 1175.13 on Tuesday of this week. then. the Dow hrts spent the remainder of the week trying to reverse thIS short-term, oversold downtrend. Lnst Febru.lrY in thIS letter we examined the record of the past malor-market cycles as we interpreted them from June. 1949 to dat and, in additIOn, suggested that a new cycle dId. In fact. begIn on August 12. 1982. Over SIX months IlUvc passed SInce that time and It IS mterestmg to reexamine the position of this current cycle WhICh we feel began over two years ago. The chart below shows the recent cycle with the major component swings in the S & P 500 from August, 1982 to date. Usmg a 10 filter, the high and low pomts are drawn to a uniform horizontal scale. The other data on the chart attempts to place. in perspective. the present cycle compared to the previous eight cycles mdentified. The horizontnl hnes drawn through the upper part of the chart show the length in trading days in each of these previous eIght cycles. UCLE. PlR) 00 ILOW-HIGH RDVRNCE) PERK CrCLE DATE 1–.g-); —-,—;–;;–,—c,.J1.96. 751 , JAN 1,,-,95,3 ('119.021 AUG 1956 1984 87 (-I 571 JUL 1984 147 82 OCl 1966 JUN A comparison of the length of these lines to the current cycle obVlously shows that each cycle has lasted a considerably longer period of time. The number of tradmg days 111 the current cycle is now 550 days old. This represents approximately 50 of the average length of the eight previous cycles (1053 days), and would indIcate approximately two years remaming In the present cycle. Cycles are measured fron low point to low pomt and a key questIon continues to be whether the high of October 10, 1983 constituted the peak for the current cycle. The relative times of the preVlous cycle peaks, again drawn to scale on the chart, are indicated by date and shows by the vertIcal tick marks on each of the cycle lengths. Again, It becomes apparent from the evidence presented in terms of relative length of time from cycle low to cycle peak that a possible further high could stIll be achieved. However, also shown on each cycle length is the percentage increase from cycle low to cycle peak. The recent percentage Increase of the S & P 500 from a cycle low to cycle peak is 68.57. ThIS increase 81though low in terms of the average advance of approximately 80 for the prevIOUS eight cycles has, in fact, already exceeded two previous periods, 1966-70 and 1978-82. It is interesting to note that the ilrst four cycles listed above reached their peak toward the end of their respective cycles while the last four cycles reached their peak toward the mIddle of their cycle length. What was dIfferent between the first four cycles and the last four cycles The fIrst four cycles occurred in a market enVIronment that was m a clearly defined cychcal long-term uptrend with an average annual inflation rate of under 2. The second group of four-year cycles occurred in an enVIronment which reflected a flat cyclical trend with an average annual inflation rate in excess of 7. It now becomes necessary for the market to accommodate the cycle theorist by postmg a new hIgh in the market. If this occurs, how the investor perceives the 10T'.g-term future of the market mIght give a c1ue to whether the cyc1e peaks 111 the middle of Its cycle, Le., flat cyclical trend, hIgh inflation rate. or toward the end of Its cycle. l.e . secular uptrend. low inflatIOn. Dow-Jones Industrials (1200 p.m.) 1195.23 S & P Composito (1200 p.m. 163.60 Cumulative Index (10/11/84) 2023.22 ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL INC. No Slatment or O)fPISSlon 01 OPlhlOn or any other matter herem contained IS Of IS to be deemed to be dlrecHvor mdlrecHv, an oHer or the soliCitation 01 an alter to buy or sell any security referred to or mentioned lhe mailer IS presented merety forlhe conenl!nce 01 the subscnbr White we believe the sources 01 our mtormallon lObo roliable, we In no way represent or guarantee the accurac; thereof nor 01 Ihe statements made herein Any acllon 10 be taf-en bv the subscriber should be based on hiS own invesltgallon and information Delatleld Harvev, labelt fnc, as a corporallOn and Its oillce's 01 employees may now have or may laler lake POSlllonS Of trades In resi)e;t 10 any secUrities mentlOnea In thiS 01 any futule Issue, and such posillon maybe Oillerent Irom any views nowor hcreailer e(pressed In thiS 01 any olher ISSUO Delatleld, Harvey labelt Inc, which IS regIStered With the SEC as an Investment adVisor may give advice to ItS mvcstment adVIsory and other customers Independently 01 any statemonts made In this or In any other Issue Further mtormalion on any secuflly menlloned herein fs available on request

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Tabell’s Market Letter – October 19, 1984

Tabell’s Market Letter – October 19, 1984

Tabell's Market Letter - October 19, 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) 924-9660 . –;—. – 9ct9ber19.,1964. – – – – ofThe upside explosion WhICh fodk 'place late Thursday and eariY Frida)' was -typicaf the – – recent market environment, in which long periods of time doing nothing are interspersed with sharp moves to new price levels. As this is written, the market is testing its mid-September peako and ability to move above that peak would suggest a further test of last year's highs. Meanwhile, new highs have already been attained in a number of market sectors including. notably, utility stocks which, until Thursday, were just about the sole upside feature. We mean no disrespect to one of America's more conservative industries in mentioning the proverb about every dog having its day. However, it does appear partIcularly appropriate in the current instance of recent utility action. If one looks at the widely-followed market indicators, the past month had not been. until yesterday, a good one for the equity market. Both the Dow and the S & P attained their most recent highs just about a month ago, in mid-September. and, at lows posted 10 days ago, were down 5.04 and 4.26 respectively. Meanwhile, the Standard & Poor's utility index, which was at the 69. 92 level on the day the other averages made their nighs, closed last night at 74.46 for a 6! advance, having, in the process, moved ahead on 16 out of 23 trading days. One fact widely noted in the reports on this phenomenon was the fact that utilities were seI- ling at an 18-year high dating back to the time, as the Wall Street Journal pointed out, that ham- burger sold for 50 a pound. This is indeed true, since, to be precise, the last time the S & P utilities sold above last night's close was on January 18. 1966. It is. however, an instance of damning with faint praise. Almost all the other major market indicators achieved new alltime highs some years ago and subsequently moved well above. and. for the most part, remain well above, those previous peaks. The DowJones Industrials. for example, were, on January 18, 1966, at 994 ;20- versusoday's—–evel -of-over -1200. – —-7—–,-,…——-!—1 The furor, however, prompted us into some examination of the -record of utility' stocks over the period in question. The actual aIltime peak for the S & P Index, not yet exceeded, was on May 12, 1965 at a level of 78. 20.The most interesting sidelight to this figure is that thedividends for the index for the year 1965 was 2.49 . thus providing a yield of 3.18. To those accustomed to to- day's returns, this figure may seem almost microscopic, but it was, in fact, 70 of the yield pro- vided by AA Public Utility Bonds, which, at that time, were returning in the vicinity of 4.6. Interestingly enough, if one takes the current yield on utility stocks, around 8.9, we find that it is just about 70 of the yield available on AA Public Utility Bonds. We have, in other words, spent 19 long years in arriving back at the same place. How we got there, however, is interesting. The rationale, then as now, for the purchase of utility stocks was the fact that they were expected to provide a growing income stream, and this, indeed, they have done. Over 19 years to the third quarter of 1984, dividends on the S & P Index have increased from 2,45 to 6.48. They have. moreover. done so at an impressively steady rate working out to an annual increase of 5.25. The fact that price, for almost two decades, has done nothing in the face of steadily increasing dividends is. thus, purely and simply a function of in- creasing money rates over the two decades in question. What we find most interesting is the return to the same relationship to utility bonds that prevailed in 1965. Actually this relationship — utility commons yielding som 70 of the return available on senior securities — prevailed throughout the late 1960's. After wild swings during the early 1970's, it stabilized in the late 1970's at around 85 and has spent the 1980's coming down once more to the 70 level. Curiously, if one compute,s the 20-year discounted values of (a) a steady income stream and (b) an income stream which starts at 70 of the first one but increases at 51 annually, one finds that they are about the same. The investor in public utility commons and public utility bonds 19 years ago therefore wound up receiving about the same return. It was not a very good return, of course, but that is another story. One wonders if the prospects for the next two decades are not somewhat different. The rate of growth in utility dividends could slow of course, but, without making any forecast for long interest rates over the next 20 years. we doubt that they are going to triple, which is just about what they did over the last twenty. Under these conditions. the results for utility equity invest- ors. even with the stocks at the same level that marked their historic peak, could be improved over the dismal record for the 1965-1984 period. AWT rs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (1200 p.m.) 1232.44 S & P Composite (1200 p.m.) 169.16 Cumulative Index (10/18.84) 2069.24 NO statement or e,,pfBSslon of opinion or any olhe' matter herein contained IS or IS to be deemed 10 be dlreclly or indirectly, an offer or the soliCitation 01 an offer to buy or sell any security reterred loor mentioned The matte/Is presented merely 101 the COfWenl(lnce of the subSCriber While we b1!lleve the sources 01 our mformahon to be reliable, we In no way represent 01 guarantee the accuracy lhoreof nor of the statements made herem Any aCIt!;m 10 be laken by the subscnber should be based on his own InvestigatiOn and mformatlon Dela/leld Harvey Tabell Inc as a corporation and Its officers or employees, may now have or may laler lake, pos/hons or trades In lespect 10 any seurllies menhonecl In thiS or any future Issue. nd such poslhon my be dlftarent from any vtews nawor he/ealler expressed In thiS or any other Issue Delatleld Harvey Tabeff tnc, which IS reglslered With the SEC as an Investment adVisor, maYQlveadvlce to ItS Investment adVISOry and Other customers Independently of any statements made m thIS or m any other Issue Further ,iormatlon on any security mentioned herem IS available on request

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Tabell’s Market Letter – October 26, 1984

Tabell’s Market Letter – October 26, 1984

Tabell's Market Letter - October 26, 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 October 26, 1984 .– . We devoteLt)us leterlast week to adiscussion of the recent short-term strength in utility stocks and explored th-e flliTdain(iilf1iJlhitOri(trelationshlp tfinCh';s. seeme'dto7xjstbetweenthe-;YielQs ,n'those . stocks and the yields on the long-term bonds issued by the same utilities. Due to space iimitations, we' did not have the opportumty to discuss in any detail the current technical patterns for utility issues, a subject that is not. Ilt the moment. without interesting implications, both for the stocks themselves and for what the patterns appear to suggest regarding current market expectations — especially expectations In the nrea of interest rates. As we noted last week. most electric -utility issues reached their alltime highs sometime around 1965, highs which most lssues have yet to exceed. Following thelr achievement of tlrse highs, they essentially sat out two major bull markets, 1966-1968 and 1970-1973. This did not, however, prevent them from being full-dress participants in the 1973-1974 debacle. and, at the culmination of that downswing, most posted 20-year lows. A fairly sharp recovery from an extreme oversold position took place between 1974 and 1976,and the general pattern was one of a fair degree of resistence to the 1976-1978 bear market. After secondary lows in 1980. a strong recovery set in, and downside resistence to the 1981-1982 bear market was also demonstrated. At varymg times within recent years,most stocks have managed to move well ahead of highs scored in 1976. Most laggard issues that had not moved above their 1976 highs earlier have been able to do so on the recent strength. It lS not necessary to be an expert technician to realize that what we are talking about here are extensive bases, bases which, in the typical pattern, extend from 1973 to 1981, an eight-year period. During those eight years the price fluctuations have been extensive, and it is those price fluctuations which build up patterns suggesting the ultimate upside objectives of the bases. Those upside objectives are. to say the least, impressive. It is not uncommon to find utility stocks with long-term objectives (and here the qualifier, long term, must be emphasized) double and triple their current prices. About half of all utility lssues — here it is necessary to be selective — have penetrated most or all of the -overhead 'Supply-tnat-'exists fromothe 'originabtops-of-the-late-lc9601nd-ea..ly-le-pointed-out. last week that a relationship. however variable, has existed between utility yields and long-term interest rates. It is therefore hard to visualize utilities possessing the sorts of price patterns they now display without deducing therefrom market expectations, not only for lower, but for significantly lower, interest rates. This expectation would appear to be confirmed by the technical patterns for stocks in other interest-sensitive areas. There exists a fair number of bond-market experts who are currently presenting an eloquent case. on a fundamental basis, for what appears to be the market expectation. That is their field, not ours, and we happily leave It to them. We cannot. however, resist the observation that often consensus expert opinions are correct on the direction of a trend but conservative on that trend's extent. We would not be surprised if this were the current case. It is, of course, possible to base an argument for lower interest rates on the familiar 1!real-inter- est-rate theory. The September CPI report, released this week, carne up with its usual indication of inflation running around a 4 rate, and it is difficult at the moment to visualize any immediate change in this trend. Recent wage settlements seem well in line with potential productivity increases. and we are currently watching OPEC slowly come apart at the seams in a scenario that could have been lifted from t any first-year economics text. While a simpleminded relationship between inflation and interest rates has. in our view, been thoroughly dlscredited, it is certainly hard to see inflationary expectations providing any upward stimulus for money rates. One can base the expectation of lower rates on nothing more than observation of long-term history. Interest rates have historically moved in long cycles, and those cycles have peaked at levels at or below the rates that have prevailed for the past four or five years. To one who has observed interest rates long enough, figures signiflcantly lower than current ones are hardly unthinkable. We walked into this industry as a callow youth 30 years ago and found a yield curve running from it to 3.. which everyone seemed to consider- perfectly ,normal. From this perspective. we find nothing unusual a!tu!. rates a 4 great deal lower than those currently prevailing. Quite obvlously, if the market expectation (and our reading of it) is correct, the financial environment will be greatly changed. As one example, interest payment constitutes some 70 of the current federal deficit, about which everyone, in this preelection period, appears to be concerned. Although the precise nature of the relationship can be questioned J we are certainly willing to accept some portion of the conventional wisdom regarding lower lnterest rates being bullish for stock prices. In any case. based on the apparent current market picture. we must count ourselves in the bullish camp as far as the long- term interest-rate outlook is concerned. AWT rs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (1200 p.m.) S & P Composlte (12.00 p.m.) Cumulative Index (10/25/84) 1207.16 165.26 2070.22 No statement or expression of opinion or any other matter herem contained Is, or 1 to be deemed to be, directly or Indirectly, an oHer or the sollcltallon of an oHerto buyer sell any secunty referred to or mentioned The mattor Is presented merely for Ihe convenience olthe subSCriber While we believe the sources of ourmlormallon to be reliable, we In no way represenl or guaranteelhe accuracy thereol nor 01 the statements made herem Any acllon to be taken by the subSCriber should be based on hiS own mvestlgahon and mformatlOn Delafield Harvey laben tnc as a corporafion and Its otllcers or employees, may now haye, or may later take, pOSItions or trades In respect to any securities mentlonea m thiS or any future Issue nd such position my be dlflerent hom any Ylews now or hereafter expressed In this or any other Issue Delafield, Harvey, labell Inc, which IS registered Wllh Ihe SEC as an InVell\ment adlsor, may glyeadYlce to Its Investment ad..lsory and other customers Independently 01 any statements made In thiS or In any other Issue FUher mformatlon on any security mentioned herem IS a..allab\e on request

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