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 December 21, 1984 -. It is theCnormal-cllstom of thIS -letter to precede a yearcnd-forecast with-areviewof- the -year- ………-.-.. — Just past. Normally thIS is a fairly easy task, but reviewing 1984 within the confines of our normal space allotment constItutes somewhat of a challenge. On the face of it the stock market did absolutely nothIng last year, since the Dow WIll likely end the year at a level not far from its 1983 closing of 1258.64. Underlying this SImple statistic, however. are a myriad of complexities. The basic market pattern for the past 18 months can be traced out approxImately as follows. The dynamic phase of the rise from August, 1982 culminated in June. 1983. Following this, there occurred three minordo\.nthrusts and upsurges with highs in October, 1983, November 1983, and January, 1984. There followed a sharp, broad break which bottomed in February, 1984. which, in turn, led to a drift- ing, sideways-ta-lower pattern which brought about lows for the year in July. There then ensued the extraordinary rise In August of this year. which, generally, carried through to hIghs in November. The pattern SInce then has been weakness continuing untIl the market posted Its sharp rally early thIS week. WithIn the confines of the above general pattern. however. the action of the various averages has been incredibly diverse. The Dow, for example, made its high in November. 1983 at 1287.20, declined 15.6 to July, and rallied this November to a level 3.3 under Its peak of a year ago. The S & P 500 topped out a month earlIer, in October, 1983, declined a little bit less (14.4 to July), and Its high in November at 170.01 was closer to its year-earlier peak than the Dow. The Dow-Jones Transport Average shows yet a different pattern. It continued Its rally into 1984, peaking at 612.63 in .Tanuary. Its high in November of this year was only 536.20, but its subsequent action has demonstrated significant im- ,provement. Unlike eIther the DJIA or the S & P, It has moved above its November-24 high, although it remains almost 10 under its early-January peak. UtilIties, as we have had occasion to note in thIS space, show a different pattern still. Their 1983 high took place at the end of October. However. the DJUA was able effectively to hold its Febrmry I low in July, and, on the rally to November of this year, moved 3.6 above its 1983 peak. That strength 4h6SCGnt-inuedndt-hejlll.t-y.;Aver-FlgerJusthlS-W.e;ek-posted–o.buIEm.aJ;ket bjgpt 149 .93… —- Finally. while all this was going on. action in the Over-TheCounter market constituted a blood -r bath. The NASDAQ Industrial Index peaked earlier than all other major averages, in June, 1983. It rallied very lIttle in late 1983-early 1984 and, by July of this year, had plunged from 408.4 to 250.1, a drop of 38.8. It has furthermore demonstrated no ability whatsoever to post any kind of a meaningful rally and just about equalled its July low as recently as a week ago. In this wild dlversity of action, it seems to us. three possible scenarios emerge. There are more or less convinclng arguments for and agrunst each one, and they can be brlefly summarized as follows. A bear market beg-an in late 1983-early 1984. Thls possesses surface plausibility. Slnce, with the exception ot the UtilitIes, all of the averages mentlOned above reached hIghs during that period which have not, to date. been exceeded. It is certainly a true statement as far as the OTC market, with its 38 decline, is concerned. However. a bull market lasting only 10-17 months would be the shortest on record since 1938. Furthermore. the creditable performance turned in by large segments of the market throughout the year hardly seems consistent with conventional bear-market condihons. A bear market began last month. This scenario gains its plausibility from the fact that post- election-day highs in both the Dow and the S & P were close enough to their previous peaks so that 1984 can be described as a double-top formation. It gains further credItability from the existence at this pOInt of a breadth divergence of sufficiently long duration to suggest a market past its effective high. If the bull market's bfe is extended to November of this year, Its 27-month durahon puts it on the short side but not unusually so. Obviously, this thesis cannot, so far, be either confirmed or negated by recent market action. The bull market remaIns in effect. The hme factor is the greatest argument in favor of this one. It would be not at all without historical, indeed recent histOrIcal, precedent for the upswmg to continue its life well mto 1985. The Utility Average and a number of other market sectors show action consistent wIth thIS scenario. A number of measurements of underlying market vitality suggest that the performance of theyerl!geJ.Jhroughout . Counter -rtrguments -include- mO2f t…..!!c.2 J1alf-,,ol14 llnLdert!s .!..ma;. the breadth dive-rgence mentioned above, -plus the fact th atrai3-.m.!ornetnhg!lon-g' -.— failure of the averages to post new hlghs is highly inconsistent with traditlOnal bull-market achon. We will thus be faced next week with the task of issuing a 1985 forecast without really having in hand a clear identification of what the market was dOIng in 1984. We will, nonetheless, make an attempt to make some sense out of it and. in that light, examine 1985 prospects. AWTrs Dow-Jones Industrials (12 00 p. m.) 1197.66 S & P Composite (1200 p.m.) 166.15 Cumulative Index (12/20/84) 2079.91 ANTHONY IV. TABELL DELAFIELD, HARVEY, TABELL INC. A VERY MERRY CHRISTMAS TO ALL No statement or epresslon of opinion Of any olher mailer herein conlalned IS, or IS to be deemed to bo directly or Indirectly, an oller or the soliCitation 01 an oller to buy Of sell any secUrity relerred 10 or mentioned Thc matter IS prescnted merety lor the convenience of the subSCriber While we believe the sources 01 OUf Inlormatlon to be rellabte, we Inno way represent orguaranleethe accuracy thereof nor of the statemcnts made herein Any acllon to be taen bv the subscrlr.er shOuld be based on hiS own Inestlgatlon and information Delafletd, Harvey, TaDeli Inc, as a corpora lion and Its officers or employees, may now have or may later lake, POSitions or trades In respect to any secufilies mentioned In thiS or any future Issue, and such posJ/Jon may be different lrom any views now or hereaftcr e'pressed In thiS or any olher Issue Delafield, Harvey, Tabell Inc, which IS regIStered with the SEC as an Inveslment adVisor, may give adVice tolls Investment adVisory and other customers Independentty of any statemonts made In this or In any other Issue Further information on any secuflty mentioned herein IS available on request

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 December 28, 1984 .-w— —1 nrevlewin g the7stock -markeL ycar-…1984 e all udedlast….week..;..to;;..therfcttlat.,,)j. W–.extreme!y' diffIcult, even with the complete hIstory of that year behlnd us, to place it in the framework of a cyclical pattern. Thls, we suggested, made the formulatIOn of a 1985 forecast somewhat difficult. This can be illustratcd by indicatmg that the only thing that cycle theory suggests about 1985 is that it is unlikely to be hke last year. one which saw a change In the Dow of less than 5. It seems probable, in other words. that 1985 will close with the averages at a figure Significantly different from current levels. It is. however. dIfficult to decIde whether that figure will be hlgher or lower. Let us hasten to say that we are fully aware of the total uselessness of the above statement. Nonetheless. an examination of how we arrived at it may be of some help In formulatIng a more coherent forecast for 1985, or at least — and this should be the product of a forecast — a rational investment policy to be followed as we enter that year. In reViewing 1984 last week. we suggested that 1t could be interpreted In terms of three possible market scenarios (1) a bear market which began in late 1983-early 1984 coincident with the highs in most popular averages; (2) a bear market which began last month when those highs were tested; and (3) a contInuing bull market. Let us start out by affirming that the first of these seems 1nconsistent with the present evidence. We think the fact that, at Its November high, the Dow was only a b1t more than 40 points, some 3-t, below its year-earlier peak, plus the fact that large segments of the market moved on to new highs in the latter part of 1984, make the late-1983 and late-1984 peaks technically equivalent. Thus the 1984 experIence can be viewed in one of two ways, as an interruption in an ongoing bull market or as a broad top formation preceding a bear market whose most VICIOUS effects will be felt in 1985. Now the only thing we know for certaIn about the present cycle is its starting date, August, 1982. If it top pea In November, Its advancing phase will have lasted for 27 months. If a top is reached sometime in 1985 the advancmg phase will have lasted between 29 and 40 months, and a continued 1985 market rise with a top in 1986 will result In an advancing phase In excess of 40 months. Since the Dow was first computed in 1897, we have the history of 23 past major cycles to gUIde —. us .-On-the-face,oLl-t..–;-Ule.l!!il!.ha1)t–ffi-'!.fALjfL-.CUr.Jell.tlY…).1ht-tll.ro.Q.e.s.s oLtg .Ol!tJo. .. fairly strong. ThIrteen of the previous 23 cycles'have had …advancing phases'of 27 months or less. …– Closer examination reveals. however, that 10 of those 13 occurred prior to 1942 and thus may be less than reliable guides in the current case. The opposite reasoning is true for the ongoing bull-market theory. Only 6 of the 23 cycles have advanced longer than 40 months. However, five of these six were m the post-war perIod, and they conslltuted half of the 10 cycles recorded within that period. The least likely scenario seems to be that of a market topping WIthin the year 1985. 'Only four of 23 cycles have advanced for a period between 28 and 40 months. Again, however two of the three most recent cycles dId in fact fall into that category, the 32-month advance from May, 1970 to January, 1973 and the 37-month advance from March, 1978 to AprIl, 198!. All this helps explain, we trust, our arrival at the dilemma outlined in the first paragraph of thlS letter. The one redeeming feature of this dilemma is that it should be resolved fairly shortly, in all probability within the first couple of months of the new year. We have, in effect, as we have noted In the past, a breadth divergence which is now a full 18 months old, dating back, on our daily breadth work, to June, 1983. On the other hand, the entire second half of 1984 has seen a notable improvement In breadth. Basically market breadth, along with a great many indicators of underlying momentum has shown a distinct upward bias ever since last August. Further strength would likely erase the entire divergence and thus suggest the alternative possibility mentIoned above, a bull market extension through just about all of 1985. Failure to mount a meanIngful rally, however, would turn the breadth divergence and the potential double top formation Into oVn'lhelming evidence that 1985 is likely to constitute a bear- market year. In thIS connection we think analysIs of the year-end rally, which we will dicuss next week, will be of importance. The extent of this rally into the new year, generally a good indIcator, should go a long way toward resolving the present impasse. Meanwhile, if a 1985 forecast is dIfficult, an appropriate investment policy is more easily arrived at. That policy should be one of remaining, albeIt hIghly wary. fully invested. There exists a sufficient number of indIVIdual issues showing lIttle technical vulnerab11ity to suggest that holding them at least into the early part of the upcoming year is unllkely to be costly. even under the worst case scenario. There even exists a recent case (1976-1978) durIng which large numbers of indIvidual stocks Were able to maintain maJor uptrends throughout an ongoing full-scale bear market. Such might well be the case with any downward pressure that mIght develop over the next year. MeanwhIle a fully-invested positIOn will afford participation in what, admIttedly, is the less-lIkely scenario, a major extension of the upSWIng postponing the ultimate cycle top into sometime in 1986. AWTrs ANTHONY w. TAB ELL DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrials (1200 p. m.) 1200.86 S & P ComposIte (12 00 p.m.) 165.73 Cumulatlve Index (12/27/84) 2092.73 WE WISH YOU ALL A VERY HAPPY NEW YEAR No statement or epresslofl of Opinion or any other matter herem contained IS, or IS to be deemed \0 be directly Of mdlrectly an offer or the soliCllallon of an offer to buy or sell any secunty referred to or mentioned The malter IS presented merely for the convenience of the subSCriber While we believe the sources of our mlormatlon toberehable, weln no way represent or guarantee the accuracy thereof nor of the statements made herein Any acllon \0 be taken bv the SUbscriber should be based on hiS own IOveshgatlon and information Delafield, Harvey, label! Inc, as a corporation and Its officers Of employees, may now have, or may later lake, poSitions or trades In respect to any securities mentioned In thiS or allY future Issue, alld such position mOlY be dlflerell1 from MyVlflwS nowor hereal1er expressed III this or any other Issue Delafield, Harvey, Tabell Inc, which IS registered With the SEC as an In…eslment adVisor, may gl…eadvlce to Its In…estment adYlsory and other customers Independently of any statemants made mlhlS or In any other Issue Further information on an) security mentioned herem IS a…allable on request