Viewing Month: December 1985

Tabell’s Market Letter – December 06, 1985

Tabell’s Market Letter – December 06, 1985

Tabell's Market Letter - December 06, 1985
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— – – – – – – – – – – – – 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 December 6, 1985 Last week's stock market was yet another calculated to set commentators searching for superla- tives. what wIth a 25-point Wednesday advance and a brief flirtation with 1500 before a pullback on — – byThursda;y..Erom-,,–1J. . . tecJ the Dow– at -& -round- tnical. goi number nt….of..- view.. ther.e Mosf significant were morejffiportant occurl'ences wa-s the attainment .of a new high- tbhyandaailnyo-thberreastdtetmh.p,L…. . (\veekly breadth had already reached new peaks last Friday.) For Dow-theory buffs, there was also the achievement of a new peak by the Transportation average. Breadth analysIs, of course, IS a matter of mterpretation, and there are possible adjustments to normal breadth statIstics which, perhaps, should be made in the current envIronment. Nonetheless, it cannot be gaInsaid that conventIonal breadth interpretation now suggests an mtact bull market wIth a rather lengthly life span ahead of it. The latest rally, which began Dn Sepiel.!lber. 20 at 1297.94 and WhICh has advanced 14.37 Oller 52 tradmg days, has two predecessors in the current bull market — the initial explosion starting on August 12, 1982 and the start of the bull market's second phase which began m July, 1984, One unique element of this upswing is that, unlike its two predecessors, it did not begin after a lengthy decline. The present advance has essentially constituted an acceleration of an ongomg uptrend. 1985 is only the fourth year in the past 60 that has managed, so far at least, to finish without a correction of as much as 5 in the Dow. (The other three were 1954, 1958, and 1964.) The present market is compared wIth the other two on the chart below WhICh measures the action of the Dow plus daily breadth for the first 100 days of the three markets in question. The two earlier upswings have had their base adjusted to the equivalent of 1297.94, the tarting point fot tbe most recent ris'e. 9QSl '1iJ, 12 1982(-0-) DOW JONES lNOUSTIRL What is most notable is the extent to which the 1982 takeoff rally dwarfs the other two. Its initial advance, to a point relatively higher than today's Dow, was completed In Just three weeks. The pres- ent rise ,is 11 weeks old. By November 3, 1982, there had occurred a 37 advance, which would be equivalent today to a rise to 1780. The breadth index shows that the number of stocks advancing on the 1982 rally far eclipsed that of the two later rises. -… – – .. The 1984 move, although not as strong as the 1982 case, also far eclipsed the current one In Its initlal stages. The present rise, however, has caught up and has currently reached a point hIgher than any attained in the first 100 days of the 1984 advance. In terms of breadth, the current rally lag- ged in the fIrst couple of weeks, continuing the dismal breadth performance of late summer. Since early October, however, breadth has maintamed a steady advance and has moved ahead to a point almost com- parable WIth the 1984 experIence. The current rise, therefore, perhaps not surprisingly, shapes up as being somewhat less dynamic to date than were the first two legs of the upswmg. There seems to be little doubt, however, that its momentum will be sustainable for some time to come. Dow-Jones Industrials (12 00 p. m,) 1477.75 S & P Composite (12 00 p.m.) 202,67 Cumulative Index (12/5/85) 2625.14 ANTHONY IV, TABELL DELAFIELD, HARVEY, TABELL INC, No statement or e/presslon 01 opinion or any other matter herern contarned IS or IS to be deemed to be directly or indirectly, an offer or the sollcltallon of an offer to buyor sell any secunty referred 10 or mentIoned The matter IS presented merely lor the convenience of the subscriber While we believe the sources of Our Informal Ion 10 be reliable, weln no way represent or guarantee the accuracy thereol nor allhe statements made herein Any acllon 10 be tallen by the SuDsconer Should be based on hiS own Investigation and mformallon Delafield Harvey, Tabell Inc, as a corpora\lon and Its ollicers or employees, may now have, or may later take P051tlons or trades m resect to any securities mentioned In thiS or any future Issue, and such pOSition may be different Irom any views now or heleafter expa;ssed m thiS or any other Issue Delafield, Harvey labell Inc whIch IS registered With theSECas an mvestment adVisor, mayg!ve adylce to Its InveStment advISOry and other customers mdependently of any statements made In thiS or m any other Issue Further InformatIon on any secu'lty mentioned herem IS avaIlable on request

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Tabell’s Market Letter – December 13, 1985

Tabell’s Market Letter – December 13, 1985

Tabell's Market Letter - December 13, 1985
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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 December 13, 1985 The week's market performance can, certaInly. be said to have been satisfactory. It placated – SrOeptitnedm-nbuemrb'e2r0.,'.ftio'eaAk-s16b.'5y-afdivaalhlcy-e;-ipnos'ttihng,D,oclwosienajbu.sote5-6J.tr!aLdainndg ,extende days. – dA,ltthhei)ui-ngtherwmeeddiaetme,onrissetra.lLteedguinasio-n'–'.-'-,'I week that the vigor of the uptrend. compared with a couple of its predecessors, was less than extra- ordinary. it was certainly nothing to sniff at. With new highs having become almost a regular fixture, it is perhaps worthwhile to reexamine the market's behavior in light of cycle theory. The market has not yet outgrown the cloak of conventional cycle analysis. but that garment is growing more and more uncomfortable. This raises a few questions. The basic tenet af cycle theory, let us recall, is that the market tends to move in repetitive up and down patterns, with these patterns possessing a definite and fairly regular periodicity. Our own interpretation identifies 23 major cycles since 1896, and scholars have carried a eimilar oattern back to the late 18th century. The average length of these cycles,rreasured from low to low,has been 45 months giving rise to the familiar term 4-Year Cycle. Skeptics regarding this pattern should attempt the exercise of listing all major market lows since 1938. With two exceptions (1946-49, and 1953-57) the low years will be seen to have occurred regularly at four-year intervals. Using monthly closing prices, and assuming a closing new high in December, the present cycle, whose monthly low was in July of 1982, is now 41 months old. Since the average cycle length is 45 months, and there have been ample instances of cycles in the 50-55 month range, there still remain some 4 to 14 months for a typical cycle completion. Let us recall, however J that we are measuring cycles from low to low. The current episode J therefore J must find time J in its relatively brief remaining lifespan, for a correction of the advance which continued through this month. What we are talking about here is the shape of the current cycle, or. in other words, what percentage of its total length is spent in an advancing phase. This shape, has, historically, varied widely, but there is ample precedent for as much as 90 of a given cycle consti- tuting the upward portiolll If we assume a maximum length of 55 months, with 90 of those months advancing, we are looking at a 49-50 month expansion phase, one which could take us into Fall, 1986. 1-; –'–ThlLw.t.-hoWllCl'!lingJ!e.,nwximurrV.nJe,!,,-9fhj!loxp'1!Ic . , – It is the strength of the current rally that causes some difficulties with this interpretation. . Breadth, as we noted last week, has recently moved to new peaks, and these peaks generally have significant lead time on peaks in the averages. There remaIns room in breadth analysis for a market topping out as early as next Fall, but just barely. There does exist, as we have noted in the past. a way out of this dilemma which is to posit a completed cycle at the month-end close of May, 1984 (July was the actual lowl. and a new major cycle upswing starting from that point. There are, however, problems with this interpretation. It is possible to regard November. 1983-Summer, 1984 as a completed cycle bear market — there have been smaller ones on record — but the resulting cycle length of 22 months is historically without precedent. The only comparable case on record was the 23-month cycle of August, 1921-July, 1923. As if to compen- sate for the shortness of that swing. the market then produced the most extended cycle on record, running 76 months through November, 1929. If the mere mention of that year causes trepidation, let us firmly note that, if such an experience is to be repeated, we are still in the early stages of the projected cycle, with some pretty astounding upside targets well ahead of us. We cannot say we are totally comfortable with this latter alternative, especially since the present rise has many of the hallmarks of a late-phase extension advance, which brings us back to the conven- tional interpretation outlined above. Even on this basis, however. it becomes evident that the current cycle is likely to run to the long end of the historical range, suggesting a continuation of recent strength for some time into 1986 at least. AWTrs, Dow-Jones Industrials (12 00 p. m.) S & P Composite (1200 p.m.) Cumulative Index (12/12/85) 1523.85 208.32 2644.23 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. – No statement or expression 01 oplOion or any other matter herein contained IS or Is to be deemed to be, directly or indirectly an offer or the soliCitation of an oller to buy or sell any security referred loor mentioned The matter IS presented merely lor the convenience 01 the subscriber While we believe the sources of our Information to berehable, we In no way represent or guarantee the accuracy thereof nor 01 the statements made herein Any action to be taken by the subSCriber should be based on hiS own Investlgallon and information Delafield, Harvey, Tabell Inc, as a corporation and ItS officers or employees, may now have, or may later take pOSlhOflS or trades In respect to any securities mentioned In thiS or any future Issue, and such position may be dillerent from any vle…..s now or heleafter expressed 10 thiS or any other Issue Delafield, Harve , Tabel! Jnc ,WhiCh IS registered With the SEC as an Investment adVisor, may give advice to ItS Investment adVISOry and other customers mdependently of any statements made In thiS or In any other Issue Further Information on any security mentioned herein IS avaltable on request

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Tabell’s Market Letter – December 20, 1985

Tabell’s Market Letter – December 20, 1985

Tabell's Market Letter - December 20, 1985
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'11'li\flUE LL' S 1i\1il&.\R MIE'11' LIE'11''U'1E1Rl 600 ALEXANDER ROAD. PRINCETON. NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC (609) 987-2300 December 20, 1985 Our regular readers are well aware of the ritual traditionally observed by this letter at each — year-end fiV!-,-r.st deote ne issueto..,;looking backw4., reviewing .thyearjust .. paJ-,,-pJus anypr;…,—,-,, vious relevant history; The following issue then attempts to draw on this background to look ahead and formulate a forecast for the year to come. This week's piece. the first of the customary duo, will therefore be a review of the year 1985. Our task this year is an unusually pleasant one. 1985 was the best stock-market year in the past decade. Or, if you prefer, the fourth best year in the past fifty. It becomes slightly less im- pressive when one takes the early years of the century into account. It is only the fourteenth best year for the Dow-Jones Industrial Average since it was first computed in 1897. However, the market did distinguish itself by consistency. We noted a couple of weeks ago that 1985 will probably be one of the only three instances of a year which passed without a 5 correction. In any case, at its high close so far (1553.10 on December 16),the DJIA was up 28.19 from its December, 1984 close of 1211.57. The most recent better year was 1975, which saw a 38 advance in the Dow. 1954 and 1958 produced 44 and 33 rises respectively. All the other larger advances go back more than 50 years, the latest being 1935. For the record, the biggest-ever full-year advance for the Dow was 82 in 1915. In order truly to lay the groundwork for a forecast, however. it is necessary. as we have been mercilessly reminding our readership, to confine examination not just to 1984 J but the entire pro- cess which began on August 12, 1982. Almost (-every financial commentator has recently made the dis- covery that, since that date, the DJIA has just about doubled. (To be precise, it has advanced from 776.92 to 1553.10, a 99.9 rise.) This is, admittedly, impressive, but, as us old folks are fond of reminding our younger colleagues. The trouble with you kids is you've never seen a real bull market. It This is illustrated by the fact that two of the years which outperformed 1985 were out of the lU50's. For that decade and the previous one, bull-marKet advances of approximately the current magnitude were the rule rather than the exception. Since we are presenting in this letter an historical review, it is perhaps worth taking a truly long-range look. It has been demonstrated here In the past that the period of the 1940's through — 'i;.– the -earlyr960-rs constitutea.-a-stocK-market era one In W1llch-Uie supercyc1etreficj'–was upwardaT-ia—–oI- rate of a bit more than 9. A second such era was entered around 1966, when the Dow first approach- ed 1000, a level it was unable significantly to better until two years ago. That trend was, obiously, flat. With the Dow now at 1500, it is apparent that we are in the middle of a third such epoch, which started either in August, 1982, or, arguably, eight years before, in 1974. Based on the evi- dence so far, adnittedly flimsy for the time period with which we are dealing, bull markets of this new era have a tendency toward magnitudes reminiscent of the 1950's. We have even less evidence for the characteristics of the typical new-era bear market. Based on the 1978-1980 experience, the current breed of bear may be a somewhat mild and less than ferocious creature. A possible reason for this may be the recently demonstrated tendency for large market sec- tors to fluctuate out of syncronization with each other. A most recent obvious example is the Over- the -Counter market. It was the leading participant in the early stages of the current rise,with the OTC Industrial Index moving from 178 to 408 by June, 1983. Over the next year, accompanied by no more than an intermediate-term correction in the listed sector, it had dropped to 250. It was not too far from that level, at 278, just last October. It is now, at around 326, still at a 20 discount from its 1983 high. Quite clearly, the rosy outline of stock-market history we have been discussing in this space so far must read like fiction to investors in smaller stocks. A review of recent stock-market history, therefore, becomes more and more complex as we probe it more deeply. On the simplest level, of course, we are looking at a market, measured by the Dow or the S & P, which has doubled over three and a half years. If history teaches us anything, it is that such markets are vulnerable. On the other hand, there exists a large subset of the stock uni- verse for which the picture is quite different and where the component stocks are still available not too far from two-year lows. We are further, on the evidence, in the early stages of what appears to be a new stock-market environment, one in which the past 20 years or so of historical experience may be somewhat less than . relevant. All these factors must besynthesized in order …to. arrive at a 1986 ——forecast. .. AWTrs Dow-Jones Industrials (1200 p.m.) 1555.39 S & P Composite (1200 p.m.) 210.62 Cumulative Index (12119/85) 2668.46 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. A VERY MERRY CHRISTMAS TO ALL. NO statement or ellpmsslon of OPiniOn or any other matter herein conlalnOO IS Of IS to be deemed to be directly Of Indlreclly, an offer or the sohcllatlon of an oller to buy or sell any security referred to or mentioned The mailer IS presented merely lor the convenience of the subSCriber While we believe the sources of our Informallon to be reliable, we In no way represent or guarantce the accuracy thereof nor ot the statements made herem Any acllon \0 be laken by the subSCriber should be based on hiS own Investigation and Information Delaheld, Harvey, Tabel1 Inc. as a corporatIOn and lIS ollicers Of employees may now have, or may tater take. positions or trades m respect 10 any sccurilies mentioned In thiS or any future Issue, and such pOSition may be Dif/erent trom any views now or hereafter epresscd In thiS Of any other Issue Delalreld Harvey Tabell Inc which Is registered With the SECas an Investment adVisor, may give adVice 10 Its Investment adVISOry and other customers Independently of any stalemants made In thiS or In any other Issue Further InformaUon on any seCurity menhoned herein Is aVBllableon request

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Tabell’s Market Letter – December 27, 1985

Tabell’s Market Letter – December 27, 1985

Tabell's Market Letter - December 27, 1985
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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) 9872300 December 27, 1985 A forecast for 1986 inevitably recalls the cliche about good news and bad news. To give the I ood neWB– first,…,. we -think-t-hat-the-market .–'-next-!-year.is..Jikelytogo firsthigher and…thenlower. – The initial, optimistic part of that forecast is based on the simple fact that I from a technical point of view, it is highly unlikely that the extraordinary upward momentum developed during fall,1985 will dissipate quickly. Market tops generally require a protracted period of time to form and the actual high is generally not made on the initial thrust. Furthermore, higher objectives, in the 1700-1760 range, exist for the Dow,and it would be plausible to expect these targets to be attained on a continuation of the current move into early 1986. Having gotten the good news out of the way, it is necessary to look at the less-than-glad tidings. We think that a cycle top is likely to form sometime during 1986, followed by a full-scale, bear-market correction. Our readers are familiar with the rationale behind this forecast. They know that we are believers in the major-cycle pattern, popularly known as the four-year cycle I and the consequent belief that the rally which continued through last Friday was part of a bull market now 42 months old. It is possible to project the upward phase of this cycle as far out in time as summer-fall, 1986. To extend it further would be straining credulity. This thesis of cycle maturity is reaffirmed by the fact that the bulk of issues which have provided the leadership in the current bull market are at, or approaching, long-term upside targets. The bad news, however, may not be all that bad. In setting out the historical background for our forecast last week, we reiterated the obvious fact that, with the market at an all-time high. some 50 above its previous peak, we find ourselves in a new super-cycle environment entirely different from that which prevailed during the 1960's and 1970's. The bull market so far has demonstrated many of the characteristics of an earlier era. the one during and following World War II. Bear markets of that era were often mild. (1953, for example, saw only a 13, nine-month decline in the Dow.) It is quite possible that the sort of correction we look for in the latter part of 1986 could be a good deal less severe than recent experience would lead us to believe. Whatever the shape of the 1986 1983 High 1984 Low 1985 HIgh market pattern, we think it likely to involve a' shift ,liose details are 'not- yet S -S ' &&PP 500 Consumer -Goods – -116678T.5I7 144.33 205.96 —1'13-c65—-z22783- .,…- – h , , – I totally clear, in market leadership. The S & P Capital Goods 185.30 155.81 211. 90 table at right traces the performance of S & P Oil Composite 163.85 150.40 204.63 five major indices, all adjusted so that NASDAQ OTC Industrials 229.83 140.74 185.65 their 1982 low is equivalent to 100. It demonstrates that consumer -goods, or, more properly, dismfla- tion-hedge issues, despite their supposed lesser volatility. have constituted a good portion of the up- side leadership in the current market. Basic-industry and energy issues generaQyhave tended to under- perform, and smaller stocks, leaders through 1983, topped out at that point and remain well below their highs. It seems to us highly likely that. during the market transition we envison, one or more of these groups, basic-industry, energy, and OTC/high technology. will regain investor favor. This could come to pass in a number of ways. The issues involved could assume leadership during the terminal phase of the present upswing and prove to be relatively defensive during the following correction. Alterna- tively, the emergence of new upside leadership could be deferred until the inevitable start of the next major upward cycle. Thus our 1986 forecast involves a year of transition, a continued bull market followed by a major correction with the process being accompanied by a shift in market leadership. As with any forecast, it is necessary to examine those factors which would invalidate it. Obviously, it would be called into ques- tion by the lack of appearance, durmg 1986, of the loss of breadth and momentum, which, based on cycle analysis, one would expect to emerge. This would suggest the alternative interpretation.of the m6.jor- cycle pattern previously discussed in this space, which would date the bull market from July, 1984 and thus give it considerably longer life. While we do not expect this to happen, We should be prepared for it. This, fortunately, is easy to do. The most plausible forecast, outlined above, calls for continued strength well into 1986. The obvious posture to take advantage od' such strength is that of a fully in- vested position, and it is with such a position that the investor should, in our view, enter the new year. Perhaps-.-more than in most years, however, he should couplethat position with a degree of alertness. The formation of a major top during the forthcoming year. albeit a process which has barely. if at all, begun, remains, we think, a fairly strong likelihood. Dow-Jones Industrials (12 00 p. m.) S & P Composite (1200 p.m.) Cumulative Index (12/26/85) 1536.01 208.87 2668.86 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL INC. WE WISH YOU ALL A HAPPY AND PROSPEROUS NEW YEAR No statement or expression 01 opinion or any other matter herem contained IS, or IS to be deemed to be, dlfectlV or Indirectly, an otter or the solicitation ot an oller to buy or sell any security retorred to or mentioned The matter IS presented merely tor the convenience 01 the subSCriber While we believe the sourcesot our Intormahon to be reliable we m no way represent or guaranteo tho accuracy thereot nor ot the statementS made herein Any action to be taken by tho subSCflber should be based on hiS own inveStigation and mtormatlon De\aUeld, Harvey, Tate!! Inc, as a corporatIOn and ItS otllcels or employees may IlOW have, 01 may later take, poSitions or trades m respect to any securl\les mentIOned In Ihls 01 any future Issue, and such POSition may be dl11crent Irom any views nowor hereal1er expressed m thiS or any other Issue Delafield Harvey labeli Inc which IS registered With the SEC as an mvestment adVisor, may give adVice to ItS Investment adVISOry and other customers mdependently of any statements made In thiS or m any other Issue Further mformatlon on any secu/.ty mentioned herem IS available on request

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