Viewing Month: January 1985

Tabell’s Market Letter – January 04, 1985

Tabell’s Market Letter – January 04, 1985

Tabell's Market Letter - January 04, 1985
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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 January 4, 1985 For some years now, we have studied the familiar seasonal tendency of the stock market . tptage a.,-year..end rn.yL7and-'-it … hRs..,.been-t he..Cllstom of t-his-let-te-rtopoint-outsomeMhe—con—–I– Ourelusions-that can be derived from a study of this phenomenon. original study, going back to when the Dow-Jones Industrial Average first was computed in 1897. indicated that such a rally, however miniscule, invariably had taken place. However, two recent periods, 1976-77 and 1977-78, provided exceptions, with the DJIA, in each case, reaching its year-end rally high prior to the first day of January. At this pomt, 1984-5 could be another, since the high of 1211. 57, reached on December 18 and equalled on December 31 has not been bettered. The following facts about the year-end rally may be noted. 1. The year-end rally often has been of great magnitude, occasionally contmuing through the entire subsequent year without a 5 correction being recorded. It frequently contInued with only minor interruptions for as long as six months into the new year. In 1961, 1963, 1964, 1967, 1971, 1975, and 1976, the rally continued into February, March or beyond. However, on other occasions, it has been of only a few day's duration reaching a top extremely early as was the case in 1983-4 when the rally peaked on January 6 which turned out to be the high for the year. In 1960, 1970, 1973, 1974, 1981, and 1982, the rally reached a peak by the first week in January, and, as noted above, the 1976 and 1977 year-end rallies failed entirely to carry into January. 2. There has been a persistent tendency for the rally to begin early in years when the market has been up, and late in years when the market has been down. In recent upward years, 1967, 1975, 1979, and 1980 are examples, the rally commenced from early December. In recent downward years, 1962, 1966, 1969, 1977, and 1981, the rally began late in the year. 1984, a flat year, saw an early start on December 7. -I3. The important thing to watch in connection Ylith the market action in the early.-IDonthsl –ortne new year f.Tn atorementioneo hgtire, the Dec-ember low .. This low has been broken in 51 years out of the past 84. However, in 30 of these 51 cases, it was broken in January and February. For example, in 1970, 1973, 1977, 1978, 1981, and 1982, the December low wabroken in early January. Since 1937, it has never been broken later than mid-March with three exceptions, 1965, 1974, and 1981, when it was finally penetrated in August. In 1984, it was broken on January 25. Thus, if the market is able to hold above its December low for the first 2t months of the year, chances become good that this low will not be penetrated. 4. In years when the December low has been broken, the subsequent trend has been downwards two-thirds of the time. 1962, 1966, 1969, 1973, 1974, 1977, and to some degree, 1984, are typical cases. 1965, 1978, 1980, and most recently 1982 were exceptions. 5. The magnItude of the rally is an important clue as to the year's market trend. For example, an advance of 10 or more from the December low has been followed by an upward or neutral market in 36 of the 42 years that such an advance has occurred. An advance of less than 10 or more from the December low before an identifiable correction takes place has been followed by a downward market in 30 of the 42 years. In 1963, 1964, 1971, and 1980, the year-end rally approximated 10, and in 1972, it was 17. In 1962, 1970, 1973, and 1977, for example, it was less than this figure. 6. The length of time in which the rally continues into the new year is important. For example, in 24 years, the rally continued into March or later. In 20 of these 24 years, the eventual trend was upward. In 1964, 1972, 1975, and 1976, the year-end rally continued into March and in – , – ,1961, 1967, 1971, and I1J80, into February. This year, therefore, the December low, reached December 7 at 1163.21, will become an important reference point to watch. If the Dow is able to surpass its December 31 peak and advance from this low by 10, roughly to the 1280 level, or continue a rally into February or March, the long-term historical implications would be bullish. AWT rs Dow-Jones Industrials (12 00 p. m.) S & P Composite (12 00 p.m.) CumulatIve Index (/3/85) 1183.86 164.15 2lO3.61 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. No statement or epresslon 01 Opinion or any other mailer herein contained IS, or IS to be deemed to be, directly or Indlrectfy, an oller or the soliCitation of an offer to buyor sell any security referred toormenttoned The matter IS presented merely forthe convenience of Ihesubscnber While \\Ie believe the sources 01 our information 10 be reliable \\Ie In no wa.y represent or guarantee the accuracy Ihmoo\ n)! 01 \hes\atemn\s made hemin A.ny action to be taken by the subscnber Should De based on his o\\ln investigation and Information Delafield, Harvey, Tabell Inc, as a corporation ano ItS officers or employees, may now have, or may latel take poSItions or trades In lespectto any securities mentioned m thIS or anv future Issue, and such posItion may be olHerent from any views nowor hereafter eKpressed In thiS or any othellssue Delafield, Harvey TabeJl Inc, which IS registered With the SEC as an Investment Clovlsor may gIVe advlcetol!s Investment advisory and other customers mdependenlty of any statements made In thiS or In any other ISSue Further Information on any security mentioned heretn Is avaltable on request

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Tabell’s Market Letter – January 11, 1985

Tabell’s Market Letter – January 11, 1985

Tabell's Market Letter - January 11, 1985
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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 January 11, 1985 a. . . .– — —Two -weeksago7 we 'issuedour–annual-stock-l11arkt-forecast.for -rheyear1985–T6- great extent it was, to be honest, a hedge, and for this we must apologize. Part of the reason for the uncertainty we expressed was outlined in our forecast letter itself. For technical analysis, central to the development of a forecast is an interpretation of past market history. However, with 1984 safely tucked away into the history books, it remains at this point, in our view, impossible to categorize that year precisely. As we noted, it remains uncertain whether last year was, (1) a bear market, (2) a top formation preceding a-bear market yet to come, or (3) part of an ongoing bull market. Part of our embarrassment, of course, was an accident of the calendar. Year's end is the traditional forecast season, and the logical forecast span is for the year just ahead. Had the last 12 months of market action terminated in any month other than December, we suspect we would have solved the problem by finding topics for discussion other than an attempt at precise formulation of the outlook for the next 12 months. A related question is the precise nature of this letter. To many of our readers, its major thrust may appear to be market timing. This is understandable in view of our practice, in recent years at least. of using it as our major vehicle for discussion of the market in general. We have not, in this space, recommended individual stocks and have only to a limited degree commented on the relative attractiveness of various broad market groups. The reason for this. however, is the simple one that we utillze a number of other vehicles for the purpose of communicating individual stock recommendations to our clientele and thus tend to reserve the letter for general market discussion. ThIS is, therefore, despite appearances, not truly a market-timing letter. It is, rather, a letter based on the discipline we have tried to practice for the past 30 years, i. e., technical -analysisc-A-few-words-on—th-e–clistinction-betwe-en—the-two,r-e–p-erhaps'in—ord-er. Market timing or, if you will, market strategy can be thought of as a sub-discipline of technical work, the other major sub-discipline, equal if not greater in importance, being stock selection — a process which interacts with conventional fundamental security analysis as an input to portfolio management. The reason for the practice of market timing is the well-documented existence of a phenomenon known as co-variance, which is nothing more than a fancy word for the obvious fact that stocks tend to move up and down together. Historically, the more intensely this phenomenon manifests itself, the more an interest in timing tends to emerge in the financial community. It is no accident that the latest such emergence was following 1973-1974, a period during which just about all stocks moved downward, in concert, and severely. Now the co-variance phenomenon has existed throughout recorded history, and we most certainly do not expect it to go away, but the extent to which it has prevailed has certainly varied widely since 1974, and we suspect that it has shown an overall tendency to diminish. A recent case in point is certainly the past 18 months, during which over-the counter stocks have been in an ObVIOUS and severe bear market at precisely the same time that vast segments of the higher-quality listed market have been moving almost uninterruptedly upward. What we are saying, in other words,is that market timing is a devise to be used selectively, and a choice always open to the investment manager is simply not to use it at all. The year just past saw a fairly sharp downswing in January-February and an equally sharp upswing in August-September. Both emerged suddenly with very little warning, and it is dubious how successful conventional timing techniques were in dealing with either one despite assorted claims to the contrary. If 1984 can be categorized at all at this point, it can be as a year in which much -intellectual- energy which could profitably have been devoted to stock selection – was frittered away on attempts to guess the direction of the market. As we look at the intermediate-term outlook at this point, we see no indication that such will not continue to be the case. It will certainly continue to be the task of this letter to monitor the market for signs of a broad move in either direction and to forecast such when it appears appropriate to do so. It is, however, equally appropriate to suggest that no evidence for such a forecast exists, and that portfolio performance is more likely to depend on portfolio content than on general market trend. Dow-Jones Industrials (1200 p.m.) 1221. 07 S & P Composite (1200 p.m.) 168.50 Cumulative Index (1/10/85 2154.69 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. . -' No statement or erpreSlon 01 opinion or any other mailer herein contained IS, or IS 10 IX.! deemed 10 be, directly or Indirectly. an offer or the solicitation of an 01lerlo buy or sell any security referred toor mentioned The matter IS presented merely forthe convenience 01 the subscriber While we belleve the sources of our Informal Ion to be reliable, weln no way represent or guaranteethe accuracy thereat nor of the stalements made herein Any action 10 be taken bylhe subscriber should be based on hiS own Investigation and information Oelafleld, Harvey, Tabel! Inc, as a corporation and lIs oftlcers or employees, may now have or may taler tare, positions or trades In respect to any secuflltes mentioned In thiS or any future Issue, and such pOSItion may be dllterenl from any views flOW or herealler expressed In thiS or any other Issue Oetaf!eld Harvey Tabell Inc which IS registered With the SECas an Inveslmenladvlsor, may gIve advice 10 lis Investment adVISOry and other customers Independently of any statements made III thiS or III any other Issue Further Information on any securrty mentioned herein IS available on request

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Tabell’s Market Letter – January 18, 1985

Tabell’s Market Letter – January 18, 1985

Tabell's Market Letter - January 18, 1985
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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 January 18, 1985 — -.oI).,. theJflce.pf dt.,. the…..marke4 has ,spnt t,.-he …last fiv–'llonths —e..vr smcethevioJenJ. J .uly-A ugust rally. 11'1 yet'iIi.other of Its familIar trndlh'g' raffg-es. this on'e'delmeated roughly …oy.. 1240 rid 1160 on the Dow. Underlying thIS achon, however, there has been marked internal improvement, and this Improvement has been even more pronounced in 1985 tradmg so far. Nowhere 15 this more noticeable than in the action of breadth statIstIcs over the past five months. We reproduce once more below the charted history of dally and weekly breadth mdices SInce the 1982 low. (As most readers are aware, these mdIcators are computed based on the number of advancmg and declimng stocks for each day or week.) The classic interpretation of these mdIcators suggests that, when successive new hIghs In the Dow are unaccompanIed by new highs In bread1h. a divergence condItIon, mdicatmg an incIpIent bear market eXIsts. Note the actlOn of the two indices between June, 1983 and January, 1984 Conversely, protracted periods when breadth outperforms the Dow are normally suggestIve of bull-market condltlons. -L3illL 1 I M I DOW JONES INDUSTIAL AVERAGE DAILY BREADTM INDEX EEKLY BREADT INDEX The action of the two breadth mdicators smce August of last year is, therefore, instructive. There has been a series of SIX successive Dow peaks at around the 1240 level. Each one has been accom- panied by a new high in both breadth indicators. Even more significant is the level of the weekly breadth mdex m relation to Its peaks of June, 1983 and January, 1984. Both these highs have been ex- ceeded, thus erasIng entIrely the potential negative divergence condition on that mdex. ThIS has not yet occurred on the daily breadth mdex, WhICh. historically. tends to have a slightly greater downward bias. but that mdex is close to bettermg its January peak and not all that far away from Its June, 1983 bull-market high, This trend, as noted above, has accelerated in 1985 so far. As our readers know, we have com- puted a normal druly relationship between the number of advancing stocks and the change m the Dow based on almost 60 years of market hIstory. Based on that relationship, the number of advancing stocks has been above normal and declining Issues below normal on 12 of the 13 trading days since December 31. Based on weekly breadth action (with druly pOSSIbly soon to follow) any potential bear-market signal has now been cancelled, or, at the very least, such a '3ignal was gIven by the June-January dIver- gence. and a tl mmi-bear-market was completed at the August low. We mentioned this latter possibIlIty last month In our 1984 reVIew, and, we admIt, perhaps prematurely. discarded It. In any case, current breadth action must at the moment be construed as hIghly posItive, and we WIll be commentmg further on its implications. Dow-Jones IndustrIals (12.00 p.m,) 1225.27 S & P Composite (12'OD p.m.) 171. 01 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC CumulatIve Index (1117/85) 2217.84 No statement or eKpreSSlon of OJIln1on or any other matter herem contained Is, or Is to be deemed to be, directly or Indirectly, an oller or the soliCitation of an oller to buyor sell any security referred toor mentioned The matter Is presented merely tor Ihe convenience of the subSCriber While we believe the sources of our information tobe reliable, we 111 no way represent or guarantee the accuracy thereol norofthe statements made herein Any aCllon 10 be taken by Ihe subSCriber should be based on hiS own investigation and Information Delafield, Harvey, TabeH Inc, as a corporation and Its oltlcers or employees, may now have, or may later take, pOSitIOns or trades In respect to any securities mentioned In this or any future Issue, and such position may be dlnerent from any Ylews now or haleafter expressed In Ihls or any other Issue Delafield, Harvey, Tabell Inc, which IS registered With the SEC as an If'Ivestment adVisor, may give advice to liS Investment adVISOry and othel' customers mdependenlly of any statements made In thiS or m any other Issue Further mformatlon on any security mentioned herein IS ayallable on request

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Tabell’s Market Letter – January 25, 1985

Tabell’s Market Letter – January 25, 1985

Tabell's Market Letter - January 25, 1985
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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 January 25. 1985 —– –The. o,rrnerly-subtlelmpvovementwhlChhlld-bcen–undcrlying -mo.rketctlondurmg..thre-;Fall-of 1984 and which became more cVldent as the 1984-5 year-end rally extended iilfo -January-, finally became totally obvious this week as stock prices reached newall-time highs. The above statement wIll. we suppose. not be fully official untIl such time as the laggard DowJones Industrial Average which remains some 20 pomts below its November, 1983 closing peak of 1287.20 finally follows the more broadly-based stock-market indicators mto new high ground. The Standard & Poor's 500. however, in reachmg the 175.23 on Monday.bettered its previous all-time high of 172.65' by a considerable margin and subsequently tacked on another couple of points in later tradmg. For those who are infatuated with round numbers, the New York Stock Exchange Composite, which had never closed above 100, surpassed that level on Monday. and the Standard & Poor's IndustrIals find themselves flirting with the 200 level as against a preVIOUS hIgh of 194.84. The Dow-Jones TransportatIOn Average, it is true. despite its superior performance in recent trading remru.ns, at around 603, a hair's breadth below Its January, 1984 closing level of 612.63. Nonetheless, we feel that heraldmg a new stock-market high this week IS hardly premature. Breadth action, which was one of the major precursors of improvement in the fIrst place, remams superIOr. We noted last week that weekly breadth had moved to new high territory. Daily breadth, which had been outperformmg the market whIle remaining below previous highs, thIS week bettered its peak of January, 1984, achieved when the Dow was selling at levels slightly over current ones. and its previous bull-market high, made in June, 1983, is not that far away. The year-end rally, whether measured in terms of the Dow or the S & P, has almost achieved the 10 status which has, in the past. tended to signal good market years. Thanks to the San Francisco 4gers, even the Super-Bowl indicator, for heavens sake, IS favorable. In short, It may be said that bul- market conditions exist. As we have suggested in previous letters, the eXIstence of such conditions at this stage poses some problem for those of us obsessed with cycle indentIfication. These questions center around whether the present upswmg is the first leg of a new bull market which began on July 24 last year at 1086.57 or is an extension of the upswing which began at 776.92 on August 12, 1982 and was interrupted by a 1.4-monthJliatus .duringhlch''-the-populai'–3.JJ-exages…failed.dochieve–the-'-new-'-highs-rnost-of-t-hem-at-t-am—–\ ed thIS week. This argument, we admit, has some of the flavor of medieval scholastic discussion regarding the number of angels who could dance on the head of a pin. It is of something more than purely academIC interest however. If a bull market began at 1086, a 60 advance from that level, equivalent to the August, 1982-November, 1983 advance,lOuld suggest something in the mid-1700's on the Dow as an absolute minimum obJectIve, WIth targets well over the 2000 level certainly within the range of plausibility, (There eXlst past bull markets which have scored gains of well over 100.) By contrast. a 100 gain from 776 would put the Dow at only 1550, and, of course, it would be plausible to expect that an extended bull market migtt end well short of that target. Abandoning theory for a moment, plausible conservative objectives for the DJIA, based on point-and-flgure work, appear to exist in the hIgh 1300's to the low 1400's. The most important point to remember perhaps. is that under current conditions, a high volume advance accompanied by breadth and momentum confirmation, the most unlikely eventuahty is a sudden reversal to the downside. We all know that markets do not go up forever and that at some point and from some level, the present advance will top out and turn down. Such a reversal, however, will almost certamly be accompanied by a protracted period of noticable deterioration. This is something to be worried about when it occurs Until such time, however, the only sensible posItion would appear to be an aggressively invested one. It is a time, in other words, when market timing should take a back seat to the problems of stode selection. This will, as always, in the months ahead, present some rather thorny problems. Over the past year, leadership has centered on consumer /defensive groups, food, soft drinks, and tobacco, for example. and on the fInancial area, banks, insurance companies, and utilities. There exists some eVIdence, admittedly highly preliminary at thIS stage. that the former group may be losing some degree of ItS upside momentum. However, there IS no evidence that the market recovery will not contmue to be fueled by strength in the consumer-spending sector. It appears entirely possible, for example, that retail and leisure-time stocks may pIck up the mantle of leadershIp dropped by the consumer-product producers. Meanwhile. relative strength in the fmancial sector suggests continued above -average price action. Prospects for contInuatIon of the bull market will be importantly affected by two other major sectors. One of these IS energy, and current technical patterns here, with a few notable exceptions, suggest that little near-term leadership is likely to come from this area. The other sector WhICh could contribute new fuel to the bull market's fire is, of course, the severely depressed hIgh-technology /overthe-counter universe. RelatIve strength here has picked up In recent weeks. It is, however, diffIcult to determine, at this stage, whether this is due to a fundamental trend reversal or simply to a deep oversold condition coupled with high volatility. AWT rs Dow-Jones Industrials (12 – 00 p. m.) 1270.76 S & P Composite (12 00 p. m.) 176.88 CumulatIve Index (1/24/85) 2288.48 ANTHONY W, TABELL DELAFIELD. HARVEY. TABELL INC. No statement or e..presslon of OpiniOn or any other mailer herein contamed IS, or IS to be deemed to be, directly or Indlrec1ly, an ofter or the soliCitation of an oller to buy or sell any security referred to or mentioned The mailer IS presented merelyfof the convenience of the subscnber While we believe the sources of our Information to be reliable, we In noway represent or guaranteethe accuracy thereof nor of the statements made herem Any action to be taken by the subSCriber should be based on his own Invesflgallon and mformatlon Delafield, Harvey, Tabell Inc, 8S a corporation and ItS offIcers or employees, may now have, or may later take, posillons or trades In respect to any securities mentioned m thiS or any future Issue, and such position may bc different from any YICWS nowor hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabell fnc which IS registered With the SEC as an mvestment adYlsor, mavglve adVice to Its mvestment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further mformatlon on any secuflty mentioned herein,s available on request

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