Tabell’s Market Letter – November 15, 1985

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS,INC (609) 987-2300 November 15, 1985 Beginning the week with a 27-point surge, together with an 11-point followup on Thursday, the Dow-Jones Industrial Average pushed further into newall-time high territory. As e-JjadSuggesred- wol.ila'be tJje . case';' itsoined-ii1new'nigh' grourid-by-the broader-oased—- '— ….,… indices, including the S & P 500 and the NYSE Composite. We expressed the view last week that there was nothing particularly surprising about the move to new high ground and went on to sug- gest that the most striking phenomenon of the past two months had been the resumption of upside leadership by those issues which had led the bull-market phase from summer 1984 to summer 1985 and had undergone severe corrections between July and September. This week, we attempted to quantify that phenomenon. Decile —— 1 2 3 4 5 6 7 8 9 10 A v e r a 712/84-7/19/85 e ————— 103.44 65.96 52.74 43.71 36.20 28.0'2 20.39 10.97 -1.73 -31. 37 F' e r C e co t a e 7/19/85-9/20/85 —– – ——- — 11. 83 0.33 -3.23 -5.34 -7.11 -8.74 -10.46 -12.69 -15.97 -25.72 C h a n e 9/20/85-11/12/85 —————'27.76 17.! 7 13.72 10.88 8.59 6.46 4.! 1 1.19 -2.86 -13.53 To do this, we studied the action of 1211 NYSE stocks over three market periods, the 1984-1985 upswing, which saw a 25 rise in the Dow, the correction from July to September and -the-I!ecent rise fr.om-September-to.this-X.u.esdayWeankedtheper.f),anof-eQ()hstkinch-.- , period by deciles of approximately 121 stocks each. The average performance Declle DeC11e for 7/19/85 to 9/20/85 for each decile in each of the three 7/84-7/85 1 2 3 4 5 6 7 8 9 10 periods is shown in the table above. Next we tabulated how 1 11 14 10 5 14 8 10 11 18 the stocks in each decile, based on 8 10 15 17 8 9 9 15 21 10 July, 1984-July, 1985 performance, fared during the correction, the re- 3 10 9 13 12 10 18 13 13 19 5 4 7 14 10 11 14 19 18 10 10 9 sults being shown in the table at right. As can be seen, of the 121 best performing stocks on the upswing, 38, or almost one-third, ranked in the 5 6 7 8 12 14 15 15 14 12 11 19 7 3 10 5 11 17 14 12 14 16 13 10 15 17 12 16 17 12 7 10 5 11 9 14 15 15 14 10 11 10 17 7 last two deciles for the July-September 9 19 13 15 9 11 14 18 5 4 14 correction. Similar bias was shown 10 20 12 6 5 6 8 11 13 6 27 for stocks in the second decile. What was truly amazing, however, is the extent to which the best performing stocks of last year!. rise have recovered and led the market on the upswing from September to date. Dc lle Dec 11 e for 9/20/85 to 11/12/85 The figures for this period are shown 7/84-7/85 1 2 3 4 5 6 7 8 9 10 in the table at left. Of the 121 stocks ranked in the 1 33 21 22 8 5 5 6 10 5 6 first decile for the year-long upswing 2 8 20 25 16 13 13 6 6 11 4 — a group whose average upside 3 13 19 11 13 12 18 11 9 8 8 gain for that year was over 100 — 4-., 10 8 9 20 '21 11 9 16- 11 7 33 issues, or almostone in four, were 5 6 11 12 21 18 13 15 16 5 5 among the best performers from Sep6 10 9 11 20 8 14 12 16 12 10 tern bel' to date. 76 issues, or almost 7 9 14 7 7 12 14 24 14 10 11 two-thirds of the group, ranked in 8 10 8 6 7 15 15 12 12 25 12 the first three deciles for the recent 9 8 4 12 6 9 8 19 10 27 19 rise. Broadening the study further, 10 14 8 7 4 9 11 8 13 8 32 of 363 stocks in the top three 1984-5 deciles, 172 stocks, almost half, also found themselves in the first three deciles for the most recent upswing. It is quite clear, therefore, that the recent advance has consisted largely of extensions of the moves of disinflation-hedge issues, notably in the consumer and interest-sensitive areas, which led the market in its previous major upside phase. Dow-Jones Industrials (12 00 p. m.) S & P Composite (1200 p.m.) Cumulative Index (11/14/85) 1444.38 199.14 2553.60 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. No statement or epresslon of opinion or any other matter herein contained IS, or IS to be deemed 10 be, directly or Indirectly, an olfer or the soliCitation of an oUer to buy or sell any secunty referred tOOf mentioned The matter IS presented merely !orthe COfwemence of the subscriber While we believe the sources of our Information to be reliable weln no way represent or guarantee the accuracy thereof nor of the statements made herem Any action to be taen by the subscnber should be based on hiS own Investlgallon and information Delafield, Harvey, Tabelt Inc, as a corporation and lis officers or employees may now have, or may laler take, pOSllions or trades In respect to any securities mentioned In thiS or any future Issue and such pOSItion may be dlflerenl from any views nowor hcreaiter epressed In thiS or any other Issue Delalleld, Harvey, Tabell Inc, which IS registered With the SEC as an Investment adVisor, may give adVice to ItS InveStment adVISory and other customers Independently of any statements made In thiS or In any other Issue Further Informahon on any secull1Y mentioned herein IS available on request