-. –, 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 August 2, 1985 It is part of our normal occupation to confer with professlOnal portfolio managers, and it is – – interestingthat…-the-.o;maket action ofthe-past three-weeks has–engenderedmoreexcitement- and-fiiter-est among that comrnumty than any period we can recall In some time. This is true despite the fact that, on the surface, the market has been almost flat. The average price for the S&P 500 in the week July 8-12 was 192.32. and last night's close was 192.11. What has excIted the Interest has been the dramatic shift in leadership from defensive to cychcal stocks. apparently fueled by the perception of a number of research departments that the latter, for various reasons, represented relative bargains. The followlng table shows the corrections that have taken place from the July 8-12 week to date in four typical conservative issues and the rises that have taken place over the same time period in four typical cyclIcal issues. The contrast in market action between the two groups is marked. High Subsequent Low Subsequent July 8-12 Low Change July 8-12 High Change Bristol-Myers 65 1/4 59 3/4 8.4 Alum. Co. America 32 374 36 7/8 12.6 FPL Group 271/2 24 -12.7 Internat'l Paper 471/4 521/8 10.3 General Foods 833/4 761/2 -8.7 Phelps Dodge 17 1/2 24 37.1 J.P. Morgan 543/4 481/4 -11.9 U.S. Steel 263/8 31 17.5 In discussing this phenomenon last week, we suggested that. however dramatic the short-term shift might be, It would be WIse to stand back and take a longer-term view. This we attempt to do in the table below. which shows prices at various benchmark dates for the eight stocks in question along with the S&P 500. Bristol-Myers Change 1983 Change 7/31/85 8/12/82 To Date Hlh To Date 60 1/8 27 1/2 -;-IIS- 47 7 8 26 1/85 Change To Date 54578 10 FPL Group 24 1/4 16 3/8 48 21 1/4 14 22 1/2 8 General Foods 76 1/8 34 124 53 1/2 42 56 1/4 35 J.P. Morgan 485/8 24 3/8 99 417/8 16 45 1/2 7 Alum. Co. America –/.—–lnteratlPaper 36 23 56 47 3/4 I);!-I-I4—l6-I-I2-40—UO -25 39 1/2 -9 15 57–31-4 -111——- Phelps Dodge 23 3/4 18 1/4 30 4 -30 20 18 U. S. Steel 31 16 1/2 88 31 0 28 3/4 8 S&P 500 190.92 102.42 86 170.99 12 179.39 6 The first column shows Wednesday's close for each of the sample stocks. The next two columns show the price at the bull market's beginning in August, 1982, and the percentage change to date. For the bull market. so far, it is clear that the cyclical stocks remain lnferior performers. This underperformance is even more dramatic when one measures from the 1983 high. the end of the first phase of the bull market. All of the cyclicals show losses from theIr 1983 peaks, despite a 12 gain in the SliP 500, whereas defensive issues. In general, have outperformed the average since that time. The same is true. although to a less dramatic extent. when one measures from highs reached in January of this year. By and large. defensive stocks, despite the recent weakness, have turned in satisfactory performance Slnce January, whereas a fair number of cyclical lssues have yet to better highs of some six months ago. The pOlnt of the whole exerClse, of course. is to demonstrate that the recent outperformance of consumer-oriented, defensive issues by cyclical stocks remains, so far, a relative short-term phenomenon. There are. of course. two ways to react to this fact. One is to adapt the conventional wisdom, based largely on fundamentals. which states that defensive issues are exploited while cyclicals remain relative bargains. The theory is that falling Interest rates and dollar strength, WhICh have buoyed defensive stocks for three years, are now a thing of the past and that recent economic indicators suggest 8 recovery which will produce dramatic cyclical earnings gains. When one looks at the technical picture, however, a case for reserving Judgment emerges. The very fact that most cyclical stocks have not yet bettered highs made earlier In the bull market suggests that a fror amount of overhead supply remains to be penetrated. It is, indeed, true that the potential gains in cyclical issues are large. Essentially, while much of the rest of the market has been mOVIng ahead. such stocks have been forming bases, and the objectives of these bases, given upside breakouts, are substantial. By and large, howver, these upside breakouts have not yet taken place. By contrast, as we pOlnted out last week, three weeks is insufficlent time for the heretofore market leaders to have formed significant distributional tops. The tops have formed, true. but they are minor in scope. and downside objectives are close to being reached. A portfolio shift in the direction of cyclical stocks may. indeed, become desirable, but we would be inclined to await more technical evidence before suggesting such a shift on a wholesale basls. ANTHONY W. TAB ELL AWTlt DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (12 00 p. m.) S&P Composite (12 00 p.m.) Cumulative Index (8/1/85) 1352.26 191. 52 2616.62 No statement 01 eKpresslon of opInion or any other matter herein contained IS or IS 10 be deemed 10 be. directly or IndIrectly, an olfer or the soliCitation of an orler to buyor sell any security relerred to 01 mentioned The matter IS presented merely lor the convemence ollhe subscriber While we believe Ihe sourcesol our Information to be reflable we In no way represent or guarantee the accuracy thereof nor ot the statements made herem Any acllon to be taken by the subscnber snould be base! on hiS own mvestlgatlon and Informat1On Delalleld. Harvey labeH Inc, as a corporation and Its officers 01 employees, may now have, or may laler take, pOSItions or trades In respect to any securities mentioned in thiS or any future Issue, and SUCh POSition may be dilierent Irom any views nowor hereafter crpressed In thiS or any other Issue Delafield Harvey, 'rabell Inc, which IS reglsterecl With the SEC as an Inveslment adVisor, may give adVice to 115 Investment adVISOry and other customers rndependenlly of anv statements made In thiS or In any other Issue Further mlormahon on any security 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) 924-9660 August 9, 1985 I..,,-.,..,o,;n, .TusdaFyu.rtheOr us!,ojftnleisnsgcihsa..rJahic'tte.r.i,z.etd.trheisenwLleoewk.'sa market, round-1 centered 325,. shou l a d roundI -hold – 'fva;.rbr.0ad!tii6.'-&'';deculirnee,,,.,..-l-. -18' a potential for broadening' of the top to take place within the 1325-1340 range, and trading in that area followed by a downside breakout would be disturbing. Weakness, as we have been pointing out. has been concentrated in the deflation-hedge stocks that have been market leaders for the past year, and we undertook, this week, to analyze the point- and-figure patterns for 119 such issues. The stocks chosen were S at P 500 components in the Soft Drink, Drug, Food, Retail, Soap, Utihty. and Financial groups. It should be noted that, on a malar-trend basis, 98 of the 119 issues remain in up trends , and only five are in major downtrends. On aminor-trend bass there has. however, been some deterioration. Forty-two of the issues, or 35, are now in minor downtrends, despite the fact that only 27 of the 1500 stocks we follow are currntly in such trends. What is significant. however, is that, by and large, the downside objectives of these minor tops are being reached. The following table gives minor down- side objectives for the 42 stocks and the percentage change that reaching that objective would produce. An asterisk signifies that the objective has already been reached. It is interesting that the average risk, for the time being, appears to be something just over 5. Stock Close Dwnsd Stock Close Dwnsd -Ameritech 8/8 Obj. Risk 87 '/g- 9.20 Macy R.H. 8/8 Obj. Risk 6.67 Bankamerica 15 15 – Mercantile Stores 62 59 4.84 Bell Atlantic 87 88 – Mid. So. Uti! 11 10 9.09 Borden 37 34 8.11 Morgan JP 47 45 4.26 Bristol Myers 58 56 3.45 NYNEX 81 74 8.64 Cigna 54 50 7.41 Oneok 29 27 6.90 CNA Financial 51 48 5.88 Pac. Lighting 41 36 12.20 Campbell Soup 37 33 10.81 Pac. Telesis 72 74 – Capital Holding 21 18 14.29 .' ,. Eastern 3 4 ' 35 – hH. Con Nat'l Gas 40 36 O'.' 10.00 ./ .U 51 48 – Dayton Hudson 38 37 2.63 Quaker 48 44 8.33 Enserch 24 21 12.50 Ralston Purina 41 38 7.32 1st Instate Bancorp 47 42 10.64 Sonat 34 33 – Gen'l Foods 75 70 6.67 SW Bell 78 81 – Gen'l Mills 56 56 – Texas Commerce Bank 33 28 15.15 Heinz H. J. 52 48 7.69 Travelers 43 42 2.33 Hershey Foods 44 43 2.27 U. S. West 77 77 – Internorth 41 38 7.32 Upjohn 111 110 0.90 Kellogg 53 52 – Warner-Lambert 38 38 – Lilly Eli 82 76 7.32 Safeco 39 39 – In addition, 29 of the 119 stocks find themselves in neutral or sideways minor trends. These issues are listed below together with the downSIde breakout points. Were the top-broadening mentioned above to take place and these breakouts reached on a wholesale basIs, additional weakness in the defensive/consumer sector could be anticipated. Stock — American General Close 8/8 Downside Breakout 30 Stock Flrst Penna Close 8/8 -6- Downside Breakout 4 American Home Prod 59 57 GTE 40 38 Associated Dry Goods 63 60 Interfirst 11 9 Bankers Trust NY 66 66 Lincoln Nat'l 42 37 Barnett Bank, FLA 35 35 MEl Corp 40 36 Chemical NY 39 36 Manufactures Han 37 35 Citicorp Clorox- – – . 46 36 46 34 May Dept Stores NCNB. . 49 39 41 38 Coastal Corp 32 30 Phila Elec 15 13 Columbia Gas System 30 26 Proctor & Gam ble 57 50 Con Edison 33 31 Sara Lee 40 36 Continental Corp 41 38 Sterling Drug 30 29 Dart & Kraft 34 33 Texas Estrn 32 30 Federated Dept Store 58 56 USLife 38 34 Flrst Chicago 23 20 Dow-Jones Industrials (12 00 p. m.) S & P Composte (1200 p.m.) Cumulative Index (8/8/85) 1322.58 188.65 2590.11 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. No statement or e1preSSIon of Opinion or any other matter herein contained IS or Is to be deemed to be, dlreclly or Indirectly, an oller or the solicitation of an offer to buy or sell any secunly referred \0 or mentioned The matter 15 presented merely for the convenience of the subscriber While we believe the sources 01 our Intormatlon to be reliable. we m no way represent or guarantee Ihc accuracy horco! nOI 01 the statements made herein Any aellon 10 be taken by Ihe subscriber Should be based on hiS own investigation and Inlormatlon Oelafleld, Harvey Tabell Inc as a corporallon and liS ollicers 01 employees, may now havo or may later take, pOSitrons or trades Ifl respect to any seCUrilleS mentioned In thiS or any Illillre Issue, and sllch positron may be dillerent from any Views. nowor hereafter e,pressed In !hIs or any other Issue Delafield Harvey Tabell Inc, which IS registered With the SEC as an Investment adVisor, may give adVice lOlls Investment adVISOry and other customers Independently of any statements made In Ihisor In any other Issue Further Informallon on an securlly menlloned 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 (6091 924-9660 August 16, 1985 Many years ago the late Ralph Rotnem devised the remarkable Hemline Indicator which cor- related the direction of the stock market with rises and falls in the length of fashionable women's skirts, More recently, Robert Stovall discovered the Super-Bowl Indicator. Certain events this week have prompted us to divulge in this space, for the first time, our own hitherto-secret rule regarding stock-market behavior, It IS this, The direction of the stock market is inversely correlated with the fortunes of the New York Mets. We first fell upon this unique relationship back in 1969, known to the knowledgeable as the year of The Miracle. It was in that year that the onginal Amazin' Mets, a team which, in the seven years of its existence, had never finished better than next-to-Iast in the National League,came from 9t games back inAugust to win.38 of 49 games, overtaking the Cubs for the National League pennant and going on to take the playoffs andthe World Series. During that memorable August, our office was equipped with a television set, and the market had entered the worst period of lassitude in the 1968-1970 bear market, with volume running under 10 million shares, Under these circumstances, a great deal more time was devoted to watching the New York baseball team's remarkable rise than the New York stock market's dreary fall. The validity of the principal has been demonstrated, on a short-term basis, in the past three weeks, as the Dow has declined some 35 points coincident with the 10-game winmng streak which catapulted the Mets into first place in the NL East. We were, of course, unsurprised by the market's recovery attempt early Thursday morning, after the redoubtable Keith Hernandez hit into a double play, one run down with the bases loaded in the bottom of the ninth, A second rally try in the afternoon occurred at the same time that, out at Shea, Dr, K himself was being pummeled by the Phillies, Consiaer the record 'rne Mets were Dorn ih the year 1962 and set records for futility by losing 120 games and finishing 60t games out of first place, During that baseball season the market was posting one of its more important bottoms in May-June, with a test at World-Series time, instituting a four-year bull market which topped out in 1966, This was, of course, the first year of their existence In which the Mets managed not to finish in last place, They reverted to form the following year, and another bull market began, followed by the stock market's collapse in the Miracle year noted above, The bottom was during the season in 1970, when the New Yorkers failed to repeat and dropped to third place, Two more years of a bull market ensued during which the Mets could do no better than third, The market topped out in January, 1973 and was undergoing its initial declining phase during the summer when Tug McGraw's cry of You gotta believe was lifting the Mets to their second NL pennant. Not surprisingly, a strong bear-market rally took place during the World Series while the Mets were losing to Oakland, Many analysts date the end of the secular bear market, characterizing the Mets glory years, as having occurred in 1974, It is, therefore, not surprising that the denizens of Shea dropped to third in 1975 and 1976, and to last place in 1977, 1978, and 1979. Their improvement to fifth in 1981 coincided with the start of the most recent bear market, Just around the start of the season, The bottom was not reached until August, 1982, undoubtedly due to the fact that the New Yorkers were three games out of first place as late as June 20, before going 31-67 to finish last once more. 1983, one of the best market years in recent memory, coincided with another last place finish. The most recent correction, which bottomed on July 24, 1984, was coincident with the Mets surprising rush out of the gate that season. The market recovery, from 1086 to over 1200 in September, coincided, of course, with their blowing the pennant by losing eight of their nine final games with the Cubs. Needless to say, we find ourselves somewhat torn by the current implications of our here- tofore-proprietary discovery, since we remain, for the tlme- being! constructively inclined toward the stock market. We confess also to being, as our readers may have gathered, Mets fans. It will be interesting, therefore, to see how the ambivalence is resolved. At any rate, the Super-Bowl Indicator is still favorable for 1985. AWTrs ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrials (12 00 p. m. ) 1312.49 S & P Composite (1200 p.m.) 186.71 Cumulative Index (8/15/85) 2583.87 NO statement or epT(!SSlon of Opinion Of any other malter herem contained IS, or IS to be deemed to be, directly or indirectly an offer or the soliCitation of an offer to buyor sell any security referred 10 or mentioned The malter IS presented merely !altho conventenceol the subscriber While we believe the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor of Ihe statements made herein Any schon to be taken by thc subscriber should be based on his own investigation and Information Delafield, Harvey, Tabell Inc, as a corporation and Its olheers or employees, may now have, or may later lake, pOSlllons or trades In respect to any securities mentioned In thiS or any future Issue, and such position may be different from any views now or hCleaiter expressed In thiS or any olher Issue Delafield Harvey, label! Inc which IS registered With the SEC as an Investment advisor, may give adVice to ItS Investment adVISOry and other customers mdependenlly 01 any statements made In thiS or In any other Issue Further Intormahonon any security 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 – August 23. 1985 Having indulged ourselves last week in a mild flight of fancy, it 15 probably incumbent upon us ,.JQrgxertJQ..,.seri9usnss. Le.t usrgfOIe……..bE;!gin,, –…….— ….. ..,,',—', – – – – -On July .. Hi. -ust-Q'Ver8. month ago the Dow-Jones Idustrial Average attained a new alltime hlgh at 1359.54. That particular datum is the single most relevant fact to a technical analysis of today's stock market. It means. quite simply. that, as of that date. a major bull market was still intact. (Whether that bull market began in August. 1982 or July. 1984 is a philosophical conundrum that need not be resolved for purposes of this discussIOn.) Over the next month, 21 trading days, the average post- ed a 3.46 decline to 1312.50 on August 19. After a couple of days recovery.that low is again being tested. This modest decline from mid-July to mid-August has. it seems to us, engendered more than the normal amount of pessimism. Market sentiment. while by no means at extreme bearish levels. has turned considerably more conservative over the month. This may be due in part to the fact that the decline in certaIn market segments was a good deal more severe than the average would suggest. coupled with the fact that those market segments had tended for almost a year to be upside leaders. For money managers oriented toward short-term performance the shift. has, therefore. been more than a little disquieting. Even so, it is hard to see what all the fuss is about. Over the most recent segment of the ad- vance, from July, 1984, there haVE ben no fewer than three declInes that were both deeper and longer than mid-July-mid-August. During the previous segment, from August, 1982 to November, 1983. there were ten deeper declines, although, in the early stages at least, they tended to be over more qwckly. It is a falr statement, however, that there exists absolutely nothing in the recent action of the averages that would suggest anything other than a short-term correction which will, shortly, run its course, fol- lowed by a move to new highs. There do exist some minor symptoms of deterioration, symptoms which will become more dlsturb- Ing WIth persistence. The first such is, of course, the leadership shift noted above. The weakness in disinflation-hedge stocks has been unaccompanied by the clear emergence of new areas of leadership on a long-term basis. Basic-indlstry and the depressed high-technOlogy sectors are potential candidates for this mantle, but whether it will, in fact, descend upon them is not yet certain. This has produced, ,orthe–time–..being.,not4ceabledeterio-PBtion-inthose-indicat-ors-ba-sed-on-thenumber—of-advanclng-g-rOlIps'7.—-I Moreover, breadth actIOn, since the market started down, has not been particularly outstanding, and the decline in breadth indicators SInce mid-July has been somewhat greater than would have been expected gIven the miniscule drop in the major averages. This will, of course, make it more difficult for breadth to attain new highs on any subsequent advance. But, and this is an important but, both daily and weekly breadth indlces attained new highs a month ago coincident with the Dow. We will, once again. restate a central fact. Highs in breadth are regularly scored well ahead of highs in the market, usually with substantial lead times. For the record, the table below shows the relevant figures for the past eight bull markets. The lead time between breadth highs and market highs has ranged from seven to thirty months. BREADTH HIGH DJIA HIGH MONTH LEAD Feb 10 1951 Jan 5 1953 23 Mar 4 1955 July 12 1957 26 Mar 13 1959 Dec 13 1961 21 May 13 1965 Feb 9 1966 9 May 8 1967 Dec 3 1968 19 Apr 28 1971 Jan 11 1973 21 Feb 27 1976 Sep 21 1976 7 Sep 11 1978 Apr 27 1981 30 There exist, it must be admitted, a couple of special cases not suggested by the figures in the table above. F81rly slgnificant intermediate-term declines have, in fact, often been preceded by some- what shorter divergences. An example would be the 17 drop of January-September. 1960 prIOr to which the breadth lead was only nine months. Similarly, in the current upswing, a breadth peak emerged in June, 1983, leading by five months the decline which began in November and continued through July of last year. It is I nonetheless, advisable to reIterate the simple fact that major-market declines historically do not emerge out of thin air. They tend, rather,-to be preceded by a reasonably lengthy process of deterioration. This process may in fact have begun, and it will be the technician's task to observe and comment upon it. However, there is little reason not to expect at-least-somewhat higher market levels before It is complete. AWTrs Dow-Jones Industrials (12 00 p. m.) 1316.53 S & P Composite (1200 p.m.) 187.29 Cumulative Index (8/22/85) 2584.29 ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL INC. No statement or epfe5Slon 01 opinion Of any other matter herein contained IS, or IS to be deemed to be directly or Indlreclly, an olter or the soliCitation of an offer to buy or sell any security re/erred to or mentIOned The mailer IS prosented merely for Ihe convenience of the subSCliber While we believe the sources of our information 10 be rohable, we In no way represent or guarantee the accuracy thereal nor of the statements made herein Any achon to be taken by the subscnber should be based on hiS own Investigation and Intormatlon Delafield, Harvey, Tabetl tnc, as a corporation and Its officers or employees, may now have, or may later take pOSI\lons or trades In respect to any securities mentioned In thiS or any future Issue and such position may be dl!ferent 110m any views nowor herealter e;tpressed In th,s or any other Issue Detafleld Harvey. Tabell Inc, Wh1Ch IS registered WIth the SECas an Ir'lvestment adVisor may give advice to lis Ir'lvestment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further Ir'lformatlon on any security mentIOned hereIn IS available on request

'U'IBUER.R.' S Iil1lI 1Rl rE'U' R.rEVVIEUfl 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9249660 August 30. 1985 ''– . ….. ;-. -.– With -pre.Labor.;-Day.doldr-umsr,aboutAo -be… over- 7 .,it is. appropriateto–,-considerthe prospec;ts for the month of September. Seasonal patterns are not all that common phenomena in the stock market, and September possesses a somewhat unusual one. That pattern is somewhat at variance with our current view of the market's technical posi- tion. The major market averages reached their last recorded high back in mid-July. WIth the Dow at 1359.54 on July 19. A subsequent low was attained a month later on August 19 at 1312.50. Since that time the market has fIrmed without being able to mount any truly convincing sort of a rally. Thursday's close of 1335.12 having recovered just under half of the ground lost. Our own current view of market action is that an effective short-term low was probably reached two weeks ago. and recent dull pre-Labor-Day markets have constltuted a basing perIOd preparatory to a further attempt. likely to be successful at new highs. We outlined some of the reasons for this thinking in last week's letter. If one looks at the September seasonal pattern. however, it may well be that the scenario we envision may be pushed further forward in time. In summary. the month of September. as we have pomted out in the past. possesses. for whatever reason. a statistically significant downward bias. In the 59 years. or 708 months. be- tween 1926 and 1984. the market has advanced m September 23 times and declined 36 times. The average market performance for the 59 Septembers in question was a . decline of 1. 31. by far the worst record for any of the 12 months. It is the only month (May is the other) which has had more declining instances than advancing ones over the past 59 years. The declines in question are not notable for their severity. The two worst. not surpris- ingly. occurred in 1930 and 1931. with 15 and 31 drops. The worst recent instance was 1974 with a 10 decline. There have. however. been relatively few good Septembers. WIth a 13.5 rise in 1939 being the best performance. When examining any historical record like this one. it is always impossible to say. with 1-I-.clceo;r.1taln.1YJ whether or.noLit is a chance. phenomenon. .Standard. statistical testing, instead, de- votes itself to determining how likely it is that such a manifestation could be a random event. In the present case. application of such testing proceeds as follows. Over 708 months the Dow has risen 399 times. or 56 of the time .and has declined 309 times. We could simulate this historical record by placing 399 white marbles and 309 black marbles in a jar and mixing them thoroughly. Suppose we were then blmdly to draw a sample of 59 marbles out of the jar. representing 59 Septembers. The question is what would be the probabIlity of that sample's containing 23 or fewer white marbles. That probabIlity can be calculated. and it is considerably less than one chance in one hundred. On this basis. the September seasonal record must be considered significant. Oddly enough. the record seems consistent in both bull-and-bear- market years. Applying hindsight. 45 of the 59 years can be identified as having occurred durmg bull markets with 14 of the years having been bear markets. September was a down month in 10 of the 14 bear-market years. not a particularly astonishing result. However. of the 45 Septembers now known to have occurred during bull markets. 26. or 58. showed declines for the month. What is especially interesting about this September-decline tendency is that it appears to have intensified in recent history. Seven of the last eight Septembers. going back to 1977. have been down months. the only exception being 1983. Despite the great bull-market takeoff in August. 1982. a September consolidation period produced a mild decline for that month. Going a bit further back .there have been only three rising Septembers in the 16 years since 1969. Due to the smaller sample and the markets greater downward bias over that period. this result is no more significant than the overall record .but it is. certainly. consistent with it. While it is certainly within the scope of this letter to comment on such phenomena as this — along with such similar cases as the even-more-prevalent December rally — we have never considered seasonality so important as to be a maJor determinant of appropriate investment polIcy. That policy should, at this time, we think, remain positive as regards equitlS.'- – – ——. AWTrs ANTHONY W. TAB ELL DELAFIELD. HARVEY. TABELL IN C. Dow-Jones Industrials (12 00 p. m.) S & P Composite (1200 p.m.) Cumulative Index (8/29/85) 1330.53 188.03 2601.90 No statement or CJI'preSSlon 01 OPinion Of any other matter herem contained IS, or IS to be deemed \0 be, directly or Indirectly. an offer or Ihesoitcltatlon of an oHer to blJy or sell any secunty referred 10 or mentioned The mlilter IS presonlf'd merely fortheconvcnlence of tho UbSCliber While we believe the sources of our ,nformation 10 be reliable we In no way represent or guarantee the accuracy thereof nor of the statements made herem Any actton to be taken by the subSCriber should be based on his own mvestlgatlon and mlormatlon Delafield Harvey Tabett Inc as a corporation anCilts ollicers or employees may now have, or may laler take, pOSitions or trades In respect 10 any securities mentioned In thiS or any future ISSUe, and such POSition may be diliert'nl from any Iews now or heroafter expressed In thiS or any other Issue Delafletd, Harvey Tabell Inc, which IS registered With tM SECas an mvestment adYlsor, may give advice tolls mveslmMt adViSOry and other customers rndependenl1y 01 any statements made m thiS or In any other Issue Further Information on any security mentioned hi;lrem 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) 924-9660 1- . September 6, 1985 – – w-e- — .SeH-cannib8J.ismfS -art-exerCIse -occasIOnally practlcedr-by mosCmarket-J.etter wnters and –in- tend .to indulge in it ourselves this week. ThIS letter will be a review of two recently-publIshed issues of thIS letter. Re aders may conSIder themselves warned In case they wish to crumple the piece at this stage and aim it at the nearest waste basket. Those still wIth us will recall we produced last week a rather lengthy disquisition on the tend- ency of the stock market to declIne during the month of September. It IS. 85 we pointed out, certainly not a umform tendency but a September decline has. indeed, occurred in 36 of the past 59 years. We noted last week that there 1S no way of saying with certainty that this 59-year record is not a random phenomenon. Statistical testing (which we apphed in this case) told us only the probability of such a record's occurrIng purely by chance. That probability is approXImately one in one hundred. This suggests, in other words, the strong likelIhood of a correlation between a given month's being the ninth on the Gregorian calendar and that month's seemg a declining stock market. ThIS constitutes correlation. and It can be used as an illustration of a baSIC statistical principal — one that is not Irrelevant to the practIce of technical market analysIs. That prinicpal is that cor- relation does not imply causatlOn. It was brought to our attentlOn many years ago by the gentleman who fIrst taught us elementary statistics and who, an academic hImself, was fond of CIting an ob- served high degree of correlation between college professors1 salaries and U. S. beer consumption. He could, actually, have picked a somewhat better example. It is. admittedly, highly unlikely that the simple raising of professorIal stipends could. in itself, dIrectly influence the consumption of malt bever- ages. Nonetheless. it is certainly reasonable to suspect that the two series are mutually correlated with some other economic time series. gross national product. perhaps. or, more hkely disposable personal Income. Thus, the example is not really as implaUSIble as it seems on the surface. Nor is the appar- ently evident correlation between the month of September and declImng stock markets. Now It is quite true that a causal relationship between the calendar and the stock market is dif- ficult to believe. Nonetheless, it is at least conceivable that there exists some other phenomena likely I —-..to occur during the month of September WhICh encourages sellers of stock, although, to be honest, we . nllve-notnirrSrS to what it might -.Portfolio-wtm1ow-dremrrg''—-o1ocurs—;n-September-bu-t-,—I also takes place in the other three quarters. The September quarter, due to vacations, tends to be a seasonally low one for corporate profIts. but this known fact. one would think, should already be built into market expectations. Even so. It is credible that there exists. somewhere out there among the forces that relate behavior to the seasons. something which could make September a more likely month for a stock-market decline than other months of the year. It is thus. probably, a wise decision, to take the September seasonal record into account. to some degree, in planning portfolIo strategy. What we are saying. of course. IS that a key element In such a decision must be plausibility — which brings us to the subJect of another recent market letter. the one we wrote three weeks ago on the tendency of the success of the New York Mets to produce stock-market weakness. We cannot resist in this instance commenting on a certain irony. This letter has been published for almost 40 years. and the bulk of its content has constituted an attempt at serious stock-market an- alysis. It is probabl.e. however. that no letter in our 40 years of publication has produced as much comment as this one WhICh was cl0n-a. frankly, in fun. One newspaper, indeed, chose to carry a syn- OpSIS, not only on the front page, but in an eIght-column banner across the top of the front page, a treatment which the strud New York Timu's last used for the first moon landmg. We are certainly not unhappy about the wide notice taken of our feeble attempts at drollery, although we suppose a moral exists here also. The letter was essentially an attempt to use whatever skills we have developed in 30 years of writing, to make a correlation between two wicfely disparate phenomena sound plausIble. There do, unfortunately, exist occasional attempts. done seriously rather than humorously, to use the same sorts of skills to assert correlatlOns between other phenomena. What these attempts uniformly lack. of course, are serious and unbiased tests of real signIficance. No such tests were applied. of course. in the Mets letter but. even had we taken the trouble to nvent' a complex formula to force a correlation — something not impossible with sophistIcated number- crunching — it would have been meamngless. We are back again to the test of plausIbility, a test we have previously applied and found wanting in the case of the unusual purely-statislical record posses- sed by the infamous Super-Bowl Indicator. — – — – – – – What we are sa)ring .of course, is that based on such tests. there exists valid reason for paYlng attention to the month of September as a market factor and very little non-recreational reason for por- ing over New-York-Mets box scores. That distinctIon is quite clear in this case — less clear, perhaps, than it IS in published discussions of other market indicators. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrials (12 00 p. m.) S & P Composite (12 00 p.m.) Cumulative Index (9/5/85) 1331. 09 187.76 2583.18 No statement Of epresSlon 01 opmlOfl Of any other ma1ter herem COfltalned IS, or IS to be deemed to be, directly or lfI(lIrectly, an oHer or the solicitation of an offer 10 buyor sen any security referred 10 or menlloned The matter IS presented merely lor the convenience of the subScriber While we believe the sourcesol our Informa\!on to be reliable, we In no way represent or guarantee the accuracy thereof norol Ihe statements made herein Any action to be taen by the subSCriber should be baseO on hiS own Investigation and lnformalton Delalleld, Harvey, Tabetl Inc, as a corporation and I\S officers or employees, may now have, or may laler lak.e, pOslllons or trades in respect to any securities mentioned In thIS or any future issue and such pOSition may be dlflerenl from any views now or heleafter expressed In thiS or any other Issue Delafield, Harvey Tabell Inc whiCh Is rC9lstered With the SEC as an Investment adVisor, may give adVice to Its Investment adVISOry and other customers Independently 01 any statements made In Ihls or In any other Issue FUrther Information on any security mentioned herein IS aVailable on request

v Li\IEHELL' S (;Uj)Li\Ii lEV LIEVVIER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9249660 September 13, 1985 Portfolio management, and. perforce, technical analysis, which is its servant, divides naturally into two general disciplines. The first such discline Involves assessment QJthe over.all market.environment. 'demonstrated- stocks possess a– – – Thiff'1fssumes importance b-eC!ause;itfias n-repeafedly ihat-cl'– high 0 '- degree of covariance. Indeed. studies have shown that as much as 70 of the variation in stock prices can be attributed to movements in the general market. It therefore becomes folly to construct a portfolio with heavy equity exposure, however attractive those equities may be on an individual basis. if one feels strongly that the market in general is highly vulnerable. Once a decision on asset mix has been made, however. the second discipline, that of analysis of individual stocks, comes into play. To the extent that common stocks are included in that asset mix — and they almost always will be — an attempt obviously should be made to select those individual stocks likely to outperform the general market. The trouble with the above neat categorization, though, is that the two disciplines tend to inter- twine and fold back upon each other. From the technIcian's point of view, regardless of the number of macro-market indicators he may follow, his analysis of individual stocks will feed back into his analysis of the market enVlronment. When large numbers of stocks appear technically attractive on an individual basis, the analyst's market opinion will presumably be more bullish then when the opposite is the case. The same dilemma confronts the portfolio manager. Stocks present differing degrees of volatility, ex- pressed by the concept, borrowed from statistics. of beta, and a pessimistic market opinion presumably can create a bias in favor of less volatile stocks. Life is not easy, and. at the present time. the interaction of general market analysis and individual- stock analysis IS producing an unusual number of conflicting SIgnals and unresolved dilemmas. To begin with. our own analysis of general-market indicators. does not allow us to become excessively bearish at this juncture. Three weeks ago we noted that the market had moved to a new high coupled with a breadth confirmation as recently as July 19. The normal lead time of breadth on market highs, we tried to suggest, indicates that an imminent decline, before an attempt on new highs. is an historically unlike- lyoccurrence. On the other hand.we have the question of the current cycle's evident maturity. Read- ers are aware of our oft-argued opinion that the four-year cycle phenomenon is a real one and are equal- 1 I –'J)l-ARwaoLthefaotthatconveJltional-anely-sis-of-t-he.t–ey-cle-makes'it–now…thrce-years–plus-'-one …month-old–I This is decidedly long in the tooth and suggests that a decline commencing at a point not too far removed from the present and ending sometime in 1986 is a real possibility. Now let us superimpose our analysis of individual stock patterns on this picture. To some degree. such analysis must confirm the caution engendered by an examination of the four-year cycle ,if one comp- ares the sorts of patterns that exist today with those of, say, the summer of 1982. Three years ago, we saw hosts of stocks starting moves off bases that went back many years, bases which were the end pro- duct of long years of still earlier decline. Today we see, In many cases, the upside objectives of those bases having been reached. and we see precious few instances of stocks which have declined sharply, formed new major bases and now seem to be on the verge of maJor upside moves. Yet, individual-stock work does not lend itself to an excessively bearish bias either. We have been pointing out, indeed. we hope, while the game was underway, that last summer's trading essentially con- sisted of a shift in leadership. Disinflation-hedge issues, which had been upside leaders for a year. suddenly relinquished that position, formed small tops and began to move lower. Meanwhile, a num'ber of cyclical issues found new short-term relative strength and moved precisely in the opposite direction. It is. in general, possible to place these two contrary movements in a general context. The down- ward move in disinflation-hedge stocks was preceded only by short-term distribution, and the objectives of that distribution are close to being reached, meaning that much of the technical damage is largely re- paired. Cyclical issues. on the other hand, are among the minority that possess the sort of attractive long-range base formations we discussed above. The upswings, by and large, were moves from the bot- tom to the top of these long-term tradmg areas. There is, thus, both a bullish and bearish scenario for the two classes of stocks. The bullish one would call for the former leaders, having completed necessary corrections, to resume long-term upward trends and for the cyclicals to continue their recent moves by breaking out of their long-range bases. A bearish scenario would call for broadening tops in consumer- related stocks and the return to the bottom of their trading ranges and resumption of their slumber by cyclical issues. None of this, however, would produce a great deal of fireworks on the downside. – The purpose of this exercise. quite obviously. has been to pose questions rather than give answers, and we think it part of wisdom to recogruze that the stock market occasionally presents us with environ- ments when the former exercise is the appropriate one. Our own view, repeatedly stated. is that sub- stantial downside risk, while conceivably lurking somewhere out there in the nebulous future, is not cur- rently staring us in the face. The twin disciplines of market analysis and stock selection may. in the future, call for drastic action. the former toward reduction of equity exposure. the latter toward massive portfolio-shifting away from disinflation-hedge issues. We do not feel. however. that it is necessary to embark aggressively on either course at the present time. Dow-Jones Industrials (12 00 p. m.) S & P Composite (1200 p.m.) Cumulative Index (9/12/85) 1304.88 183.36 2429.81 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. NO stalement or cpressloll of OpllllOIl or any other matter herern contained IS, or IS 10 be deemed to be, dlreclly or indirectly an oHeror the solrcltatlon of an offer to buy or sell any security referred to or mentioned The matter IS presented merely for the convenience of the subSCriber While webelreve\he sources of our information to be reliable, we m no way represent or guarantee the accuracy lhercot nor of the statements rnClde herein Any action to be taken by the subscrrber should be based on hiS own Investigation and mformatlon Delafield, Harvey, Tabell Inc, as a corporation and ItS officers or employees, may now have, or may laler take, pOSIltonS or Irades in respect to any securities mentioned in this or any future Issue, and SUCh position may be different from any views now or heleafter e1pressed In Ihls or any other Issue Delat reid Harvey Tabelt 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 Information on any secunty mentconed herem IS available on request

V Lii.\BHE8.8.'S Iil1lI 1Rl &;;EV D.EVVCEOO 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC (609) 9249660 September 20, 1985 By no measure has the stock market, since mid-July, acted well, but there has been, within 1- thattme-, significan!.. dispariy..2etwe'l the action..9f thew…m2t \Vy foll\V(L ll!.arket. …nct ice,, ,Ir,–I the Dow-Jones IndustrIals and tile S '& P 500-' -. ' – ' – – . — -. — ' .. – – u. –'-.- – .- At Tuesday's close, the Dow found itself down a relatively minor 4.5, an amount which has been topped on no fewer than six occasions since the bull market began in August, 1982. The S & P, by contrast, was down 7.3 for the worst percentage decline since the long intermediateterm drop of November, 1983-June, 1984. The reason for this disparity can be readily ascertained by looking at the components and computation methods of the two averages. The Dow contains two stocks (Union Carbide and Gen- eral Foods), that are up almost 10 from their close on the day the Dow made its high. Since the DJIA is effectively price weighted, these stocks rank second and tenth in terms of weight within the average itself. The top 50 stocks in the capital-weighted S & P account for 40 of the weight of that aVer- age. The best performing stock in that group (DigItal Equipment) was, at mid-week, up only 5 from the S & P's peak date. Almost half of the largest 50 components were down 7 or more, with 11 double-digit percentage declines. – .. I l' I I, 1115 This has produced differing technical patterns for the two averages, which are shown above in their point-and-figure configurations, the five-point-unit chart of the Dow on the left and the one-point chart of the S & P on the right. The Dow pattern shows a protracted trading range between 1325 and 1290 which occurred durmg June. It has currently managed to hold above this level, while the S & P has broken below its comparaNe range between 191 and 186. The latter, however, at recent lows, has moved into a strong support area between 184 and 177, represented by trading during February and March. The corresponding level for the Dow is between 1300 and 1245, and it could well push further into that area. As the charts show, conservative downside targets are 1275 for the DJIA and 179 for the 500. The former would, in the case of the Dow, involve breaking the June low, but we would not regard this as serious since it would only bring it into line with most other indices. The deeper downside targets, 1220 and 174, respectively, breaking the March lows, appear to us as less realistic immediate possibilitIes. We would, rather, expect the February-March support levels to hold for the time being. The danger, of course, would be further protracted back. ing and filling in both averages at or just below -current levels. Such action could produce rather dangerous head-and-shoulders configurations. However, such patterns would fake time to develop. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (12 00 p. m.) S & P Composite (12 00 p. m.) Cumulative Index (9/19/85 1308.24 183.99 2403.25 .. No statement 01 eprcss!on 01 opinion or any other maHer herein contamed IS, or IS to be deemed \0 be dlreclly or Indirectly, an oller arthe soliCitation of an offer to buY or sell any security referred 10 or mentioned The matter IS presented merely for the convenience of the subscnber While we believe the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereof nor ollhe statements made herein Any action to be laken by the subscriber should be based on hiS own investigation and information Delafield, Harvey Tabell Inc, as a corporation and ItS officers or employees, may now have, or may later take, posl110ns or trades In respect to any secUrities mentioned In this or any future Issue, and such pOSition may be dillment from any views now or hereafter eypressed In thiS or any other Issue Delafield, Harvey, Tabell Inc which IS registered With the SEC as an Investment adVisor, may give adVice to lIS Investment adVISOry and other customers Independently of any statements made In thiS or In any other ISSue Further InformallOnon any security 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 September 27, 1985 It is occasionally necessary. In the course of market analysis, to adjust some f81rly standard ,;-compu!tion , A long;!iJ!1' ieJ.l-BJ1dcolleagueof….ours..took';.u&o..totask- for- this-408 few .,-y-ears-ago, when – – the oils were leading .. the-;-marketon -tlle'upside and we attempted'to prove internal weakness by recon- structing the S & P 500 with oil issues excluded, Our friend sent us a graph of a straight line and in- formed us that this was the S & P 500 with everything excluded. Nonetheless, we maintain that such adjustments can. in some cases. be useful. The necesslty arose pin this week as General Foods became the object of takeover rumors and managed to tack on 27 t poins in the first four days of last week. It Just so happens that GF is one of only 30 stocks in the Dow and, due to its high price, one of the most-heavily weighted components in that index. We therefore felt compelled to go back to the July 19 high and reconstruct a 29-stock Dow excluding it — an easy process following Dow-Jones own computation methods. This process shows the DJIA, which actually closed at 1312. 05 on Wednesday some 14 points above its Friday low, to have posted a new Wednesday bottom at 1284.99, almost eight points below its most recent bottom of last Friday. This should not, actually, be all that surprising. The S & P 500, which contains General Foods as a much smaller relative component, reached approxlmately 180 before rallying yesterday, versus the previous low, on September 17, of 181. 36. All of this does nothing more than underscore the fact that the market has not been behaving very well, something that could have been determined by forgetting market averages entirely and look- ing at the breadth figures for the past few weeks. As our readers know, we have computed a normal relationship between breadth and the Dow going back over some 35 years. Thus, there should exist, given the Dow change, a normal number of advancing and declining issues on any given day. For the 22 trading days from August 21 through yesterday, the number of advancing stocks has been below normal on 19 of them t and the number of declining issues has been greater than the normal figure more than half the time. We think this process of demonstrating fairly significant market weakness is a worthwhile I The persistence of such weakness, indeed, indicates that the corrective process -;Fbenisto its1r.illastk!firEM–lr— Thursday. The Dow, adjusted for also fairly target of 1275. With a corrective phase well underway, it becomes necessary to ask ourselves whether the pre- conditions for a bottom are in fact present. Within certain limits, it is our belief that they are. Those limits arise out of our continuing belief that the present process remains within the framework of an on- going bull market. Weakness, we are perfectly willing to admit, has been sufficient to provide what may be the first link in a chain of evidence suggesting irreparable damage to the bull market. We are going to operate, however, on the premise that the current drop does not constitute the initial stage of a major –cycle decline. Given that premise, a rally bottom could be expected to be accompanied by a moderately oversold rather than a deeply oversold condition. We are, we think, certainly approaching such a condition as of this week. We saw, for example, an expansion of new lows to figures in the 40-80 range on five recent tradIng days. This is the sort of level reached, for example I in late December last year, a point from which a fairly significant rally took place in January-February. It is a level at which a fair number of minor declines have managed to bottom in the past. The 10-day total of advances minus de- clines reached -3720 on September 17. ThIS is, on an historical basis, certainly not a low figure, but it is one which has managed to turn a fair number of short-term drops including quite a few recent ones. Thls sort of quasi-oversold condition may well turn out to be sufficient in the light of the way bottoms have lately tended to form. Full-scale selling cllmaxes have become almost historical CUriOSI- ties. The last demonstrable one occurred on Silver Thursday. back in 1980. Even major bottoms, August, 1982 being a prime example , have tended to mur after a protracted period of exhaustion. Such may well be the case in the current instance. If thIS is the case, we are probably, at the moment I closer to an effective low in terms of level rather than time. The seasonally-poor month of September is close to beIng over, but the aftermath of thepresent declining phase could well turn out to be a protracted period of sideways drift rather than any notable immediate rally. Such a sideways drift could well continue for another couple of months, until the normal year-end rally tendency manifests itself. Dow Jones Industrials (9/26/85) S & P Composite (9/26/85) Cumulative Index (9/26/85) 1320.79 181. 29 2385.18 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWTrs NO statcment or epresslon of Opinion or any other matter herem contaulOd IS or IS to be deemed to be directly or mdlrectly, an oller or the soliCitation of an offer to buy or sell any security reterred toor menhonod The matter IS presented merely forthe convenrence of the subscriber While we behevethe sources of oU/lnformallon to be reliable we In no way represent or guarantee tho accuracy ther(X)1 nor of the statemonts mado herem Any acllon to be taken bv the subscflber should be based on hiS own rnvesllgatlon and mformallon Delafield, Harvey, Taboll Inc, as a corporahOn and liS OfflcefS Of employees may now have, or may laler lake, poSItrons or trades In respect to any securities mentioned rn thiS or any future Issue, and such position may be dltlerent from anyvlcws now or hereafter opressed In thiS or any other Issue Delafield Harvey Tabell Inc which IS registered with the SEC as an Investment adVisor, may Qlvoadvlco to ItS Iflvps\menl adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further Information on any security mentioned herem Is available On request

TABELL'S MARKET LETTER 909 STATE ROAD, I3INCETON. NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC (609) 924-9660 October 4, 1985 -, —— ';. ;.r …Bl. -theyapf!.o!,!! plia.in–. -the!entral concern-of-this-Iet-tep,- despite occasional–. -… excurSIOns afIeld, has been the eqUIty market. Presumably. therefore. that market has also been the central concern of its readership. It is necessary, therefore, occasionally to remind ourselves of the basic place of the stock market in the investment scheme of things. Essentially It IS an area where, on certain occasions, exceptionally large returns can be attained. Reduced exposure to the equity market, therefore, entails a risk—the forfeiture of the opportunity to attain these exceptional returns. We can summarize our view of the market's current position by stating that that risk, at the moment. appears to be smaller than it has been for some time. Let us review the market's current position. The major benchmark, to which we have been referring ever since it occurred over three years ago, is August 12, 1982 which we have, since shortly after its occurence, been able to identify as a major four-year-cycle low. With that low now having receded some 38 months into history, the conclusion is almost inescapable that the upswing which began on that benchmark date is approaching maturity. We used the words almost inescapable above because there remained, through early 1985 at least, a pOSSIble way out of the dilemma. One could hypothesize a foreshortened cycle with its downward phase having been completed in July, 1984 with a new major-cycle starting on that date. The problem is that this hypothesis becomes increasingly less likely. For it to be valid, the market would have had to display, for a protracted period of time, the sort of vigor associated with the takeoff stages of bull markets. Indeed, by a number of measures, it ,did so during the latter half of 1984 and early 1985. During most of the fIrst half of 1985, however, upside action became more restricted, focusing largely on disinflation-hedge issues. Such a market would have been, of course, subject to mild correction at any time but, as we have been pointing out in recent weeks, the correction from the July 19th hIghs has involved somewhat more serious deterioration. This is uncharacteristic of a bull market's middle stage, which is where we 1 – -would-nowbc-were-said-bull-marketjusver-a-yeal'-el. – We have, purposely, emphasized the bearish case above in order to provide perspective. As our readers are aware, we do not view the intermediate-term outlook with serious trepidation and, indeed, continue to think it likely that new highs, above those of midsummer, may be attained before the year is out. The advance of 1985's first half, however narrow, was still sufficIent to carry breadth indicators to new highs, and the central factor is that such highs normally precede highs in the market averages. The problem is that the breadth deterioration which took place between July and September now makes it extremely difficult for further new peaks to be confirmed by market breadth. There still remain a fair number of encouraging features for the intermediate term. A number of the issues that were hardest hit in the recent correction have made significant progress in forming new short-term bases over the past few weeks and could make attempts at, minimally, testing their previous highs. This applies especially to the food and retrul groups but does not appear to be true of other former leaders, such as the financial sector. There begins to exist, moreover, some eVIdence of new market leadership. There have been, over the past year, three general areas which were candidates for inheriting this mantle. The first was the high technology/over-the-counter area, but this prospect evaporated when that sector's rally failed to follow through in January. The second possibility was cyclical issues, and this area remains a possible source of leadership although short-term relative action has deteriorated somewhat. In recent market action, though, a new candidate has emerged in the energy group. This is a significant market component, accounting for some 20 percent of the Standard & Poor's 500. It remains relatively unexploited, and continued improving technical action here could go a long way towards bolstering the near-term outlook for the market. It appears appropriate, therefore, to maintain reasonable equity exposure combined with shifting emphasis in the direction of areas mentioned' above … However, the number of favorably-situated issues seems to have been reduced sufficiently so that, from a practical point of view, it will become more and more difficult for the sorts of exceptional returns earned through mid-1985 to continue to be attained. For this reason, we are amenable to moderate decreases in equity exposure on any further strength. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00 p. m. ) S & P CompOSIte (1200 p.m.) Cumulative Index (10/3/85) AWTke 1324.71 183.09 2407.38 No statemenl or expression 01 OPinion or any other mailer herein contamed IS or IS to bo deemed 10 be directly or indirectly, an oHer or lhe soliCitation of an offer 10 buyor sell any secunty referred tOOl mentioned The matter IS presenled merely forthe conltenlenceof thesubscnbe, While we beheve the sources Of our Information 10 be lellable we In noway represent or guaranteelhe accuracy thereof nOI 01 the statements made herem Any action to be taken by lhe subSCriber should be based on hfs own mltesllgallon and information Defafleld Harvey, Tabell Inc, as a corporation and liS officers or emplovees may now have, or may laler take, POSitions or trades In respeclto any securities mentIOned In thiS or any future Issue, and such POSition mav be dillerenilrom any Ylews now or hCleafter expressed In thiS or any other Issue Delafield, Harvey Tabell Inc, whiCh IS registered With the SEC as an Inyestment adYlsor maygllte adyiceto ItS Investment adYlsory and other customers Independently 01 any statements made In thiS or In any other Issue Further InlormatlOn on any security menlloned herem IS available on reQuest