Viewing Year: 1986

Tabell’s Market Letter – January 03, 1986

Tabell’s Market Letter – January 03, 1986

Tabell's Market Letter - January 03, 1986
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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 January 3. 1986 It is hardly news that 1985 was a good market year. with the S P 500 up 26.33. We thought 'it-of'possible'interest'to study'thellerformanceof–each of the individual-components of that index. The following table summarizes the study. using the 85 industry groups which com- prise the 500. For each group. the un weighted average percentage change of the components is shown. together with the total number of stocks in each group. the number of stocks advanc- ing and the number advancing by more than the 26.33 gain of the average itself. A total of 423 of the 500 stocks were up on the year. and 232 showed a better gain than the index. This latter figure. significantly less than half. suggests that much of the S III P's gain came from larger stocks. a thesis confirmed by the fact that only 38 of the 85 groups out- performed the S P. The figure also suggests that group identification was probably as important a factor as individual stock selection during 1985. For the 35 leading groups. everyone of the components was up on the year. and this statement is true of a total of 45 groups. For no fewer than 12 of the groups in question. every one of the components outperformed the S p. and for all of the lesding groups a substantial majority did so. Not surprisingly. the table clearly shows that the year's leaders were those stocks we have characterized as diSinflation-hedge issues. 37 of the 85 groups fall into this category. and 27 of those groups outperformed the average. 214 of the 220 component stocks were up and 141 showed superior performance. By contrast 16 of the 18 basic-industry groups underperformed the S p. with 64 of the 91 component stocks underperforming and 25 down on the year. 0' 0'Industry Broup HuIbor Total lIP StadsSIP I n d u s t ,. 6 r au' CIianH IIuIbor Total lIP StodI.SsIP — EHm!TAIHltElfT 8'1.25 4 4 4 LIFE IIISIIIWU 24.71 442 – aJIIf'UTER SRIIICES 67.82 3 3 3 NISCJ.lAIIOOS 23.SO 25 23 11 —-1-IID,A——U;tg1–1–t-r-nL' A—-lg—i— – – – f PlUUTIOH COHTROL RETAIL SPECiAlTY HOSI'ITAl Slm.IES TEXTILE APPARL ItFRS. ElECTROHIC IIAJOR COS. FOODS III1THIHE IHSWIIfCE DRUGS SAVINGS lLOAN aIII'AIIlES SOAPS COSNETICS TROCKERS ClllTAINER METAl 1 &lASS PIlII'ERTY-tASlIAlITY INSURANCE RETAIL STORES I(PARTMEIIT CHEMiCAlS TEXTILE PROooeTS BE\lERA6ES IIRElIERS BAHKSlHElI YORI( CITY MlISHING RESTAURAIITS PmERSODHRAIHlLJO(SANS FOOD DlAIN CON6LOHERATES F1If1111tIAL MIscru.AHE1RJS GENERAl IIERDfAIIDISE DlAIHS BEVERAGES DISTIllERS HOTElIltOTEL MlISHING !HEVSPAPERS) TELEPHOIIE !HElI) CIfPER TIRES 1 RUBBER AIR FREI6HT PAPER TRAHSP.-IIISC. LEISURE TINE CONTAINER PAPER RAIU!OIIOS 60.81 59.18 58.03 57.45 53.54 51.09 SO.13 47.39 47.26 45.37 44.39 43.46 43.43 42.87 41.05 40.75 40.61 39.61 38.94 38.30 M.33 36.16 lS.65 lS.JO 34.51 32.32 32.13 31.75 30.20 29.66 26.44 28.18 27.14 26.90 25.lS 25.32 25.20 25.00 24093 3 3 3 BAHJ(S!OUTSIDE MEV YORI( CITY) 19.39 5 5 4 NATURAl GAS 18.79 6 6 5 ruCTRICAL EOUIPMENT 18.26 5 5 5 AEROSPAC-DEFEHSE 17.94 3 3 3 AIR 'IRAIfSI'IIIT 16.97 18 18 17 ruCTROHICS-IHSTRUMEllTATIOH 16.00 6 6 6 ELECTRIC COMPANIES 15.38 12 12 10 ItACHIHltY COHSTRUCTION 1 MAT. 14.66 3 3 3 AUTO PARTS-AFTER IWIKET 14.51 4 4 3 HISCEllAHOUS!HIGH TECH) 13.39 7 7 4 OIl INTEGRATED INTERNATIONAL 13.33 4 4 3 FOREST PRODUCTS 12.08 4 4 3 IlACHIIlERY INIlU6TRIAl/SPECIALTY 12.06 5 5 5 ClDICAlS-DIV. 11.38 8 8 7 HARDIIARE 1 TOOlS lo.s9 8 8 5 OIL INTEGRATED DDIIESTIC 10.05 6 6 4 BlDG MATERIALS 9.78 3 3 2 RETAIL STDRESIDRUG) 9.67 6 6 6 AlUNIHlIIt 8.28 6 6 4 AUTO PARTS-Dl!6. EOUIPHEHT 7.33 5 5 3 TOBACCO 6.98 2 2 2 AUTOHOBILE 6.92 4 4 3 SHOES 5.39 8 8 5 GOLD 4.90 7 7 6 IfOSPITAL NAllAGEHENT COMPANIES 3.96 3 3 3 ruCTROHICS !SEMICONDUCTORS/CO 3.22 5 5 2 MACHINE TOOlS 2.57 4 4 2 AUTO TRUCKS 1 PARTS 2.56 4 4 3 STEEl 1.32 5 5 4 MANUfACTURED HOUSING -0.74 8 8 4 OIL WElL EOUIPNEIIT AND SRlJICE -1.66 3 2 2 aJIIf'UTER 1 BUS. EOUIP. -2.86 3 3 I HOltE BUILDING -J.03 3 2 I METALS MISCElLANEOUS -8.05 9 6 4 AGRiCUlTURAL MACHINERY -13.94 2 2 1 COII!IUlUCATlON EOUIPIIIfRS -23.34 5 4 3 OFFSHORE DRILLING -47090 3 2 lOlL CRUDE PRODUCERS -49.80 654 11 9 11 11 44 10 9 54 43 21 19 44 44 75 54 66 66 64 32 97 10 7 44 44 54 33 42 43 43 4I 64 52 32 83 31 7 – 2 14 9 53 3I 4I 63 40 30 5 2 1 2 I I 2 I 0 4 I I 2 I 0 2 5 0 0 0 0 2 I I I 0 1 0 I 0 O 4 0 0 0 0 0 0 AWTrs Dow-Jones Industrials (12 00 p. m.) 1546,67 S III P Composite (12 00 p.m.) 210.42 Cumulative Index (1/2/86) 2715.02 ANTHONY W. TABELL DELAFIELD. HARVEY, TABELL INC, NO statement or cplesslon of Oplr'lKln or.any other mailer herein contained IS, or Is to be deemed 10 be, directly Of mdlfectly. an oller or the 50llcllallon of an ofler to buyar sell any security referred to 01 menhoncd The mattlrls pre;ented merely for the convenience of Ihesubscflber While we believe the sou/cesol our mformatlon to be reliable. we In no way represenl or guaranlee the accuracy thereof no' of the statements made herem Any action to be taken by the subscriber Should be based on hiS own Investigation and mformaHan Oelaheld, Harvey, Tabell Inc, as a corporatIOn and liS 01110815 01 emplovees, may now have or may later tako, positions orlrades In respect 10 any securitieS mentioned In this or any future Issue, and such position may be dlfferentlrom any views now or hOlea/ter epfessed In this or any other Issue Delafield Harvey Tabell Inc which IS registered With the SEC as an II'Ivestment adVisor, may give advice to ItS Inyestment adVISory and other customers Il\dcpendently of any statements made In thiS or In any other Issue Furlher Informa\lon on any security mentioned herein IS available on requesl

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Tabell’s Market Letter – January 10, 1986

Tabell’s Market Letter – January 10, 1986

Tabell's Market Letter - January 10, 1986
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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 January 10. 1986 After posting a new high of 1565.71 in the Dow Jones Industrial Average earlier this week. – , the \!did.smeth!!lg..i. has not !,one in-over!-hree- years,…- -correct -its.!lLi, 87single- trading. session over 2-1/2. As spectacular as this 40 point correction was, it. of course, -is not ,unprecedented. In the post-war experience from January 1949 to date. there have been 31 similar corrections of at least the same magnitude. Taken by itself, this correction does not change our constructive view of the stock market. However. as the bull market continues to mature. these events should not be discounted. For some years now. we have studied the familiar seasonal tendency of the stock market to stage a year-end rally. and it has been the custom of this letter to point out some of the conclusions that can be derived from a study of this phenomenon. Our 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. 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. However. 1985-86 will not be an exception as the DJIA has already reached a new high on January 7th at 1565.71. The following facts about the year-end rally may be noted. 1. The year-end rally often has been of great magnitude. occasionally continuing 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 next year. In 1961. 1963. 1964. 1967. 1971. 1975. 1976 and. most recently. 1985. 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 1983-84 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 —Jrst-wekcinJanuary.——-;———-… — 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. 1985. an up year. saw an early start on December 2. 3. The important thing to watch in connection with the market action in the early months of the new year is the aforementioned figure. the December low. This low has been broken in 51 years out of the past 85. 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 was broken in early January. Since 1937. it has never been broken later than mid-March with three excep- tions. 1965. 1974. and 1981. when it was finally penetrated in August. In 1985. of course. the December low was never broken. Thus. if the market is able to hold above its December low for the first 2-1/2 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 down- wards 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 37 of the 43 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 ex- ample. in 25 years. the rally continued into March or later. In 21 of these 25 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 1980. into February. This year. therefore. the December low. reached December 2 at 1457.91. will become an important reference point to watch. If the Dow is able to advance from this low by 10. roughly to the 1600 level. or continue a rally into February or March. the long-term historical implications would continue to be bullish. RJSke Dow Jones Industrials (12 00 p. m.) 1519.03 S & P Composite (12 00 p. m.) 207.20 Cumulative Index (1/9/86) 2666.12 ROBERT J. SIMPKINS. JR. DELAFIELD. HARVEY. TABELL INC. No statement or eJl;preSSlon 01 opmloo or any other maIler herem contained IS, or IS to be deemed to be, directly or mdlrectly, an oHer or the soliCitation of an oHer to buyor sell any security referred toor mentioned The mailer IS presented merely lor the convemenceo! the subSCriber While we beheve the sources of our n!ormatlon to berehable, we In noway represent or guarantee the accuracy thereof nor 01 the statements made herein Any acllon to be taken by the subSCflber shOUld be based on hiS own Investigation and Information Delafield Harvey, Tabell Inc as a corporation and lIS ollicers or emptoyees, may now have, or may later take, pOSitions or trades m respect to any securities mentioned In thiS or any future Issue, and SUCh POSition may be dlHeren! from any views nONor hereafter eJl;pressed In Ihls or any other Issue Oelafleld, Harvey Tabel! Inc …. hlCh Is registered With the SEC as an Investment adVisor may gIVe adVice to Its Investment adViSory and other customers Independently 01 any statements made In thiS or In any other ISsue Furlher Information on any securll y mentioned herein IS available on request

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Tabell’s Market Letter – January 24, 1986

Tabell’s Market Letter – January 24, 1986

Tabell's Market Letter - January 24, 1986
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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 1- – January 24, 1986 –. L…– —;;-' r . We suggested last week that, paradoxically, it -would be constructive for the market to pull back and test its earlier lows. This. indeed, it did In this week's trading. and the apparent reasons for this weakness were interesting and deserve comment. The spur to the market decline was, of course. plunging oil prices, as it became apparent that OPEC was willing to embark on a full-scale prIce war. The prospect of dramatically lower petroleum prtcing. obviously, has implications not only for the oil industry itself, but also for the economy as a whole—witness the renewed worry this week regarding the banking system and Mexlcan debt. As far as the oil price itself is concerned, a few observations can be made. First, it is not an oversimplificatIon to say that there eXlsts, at some level, an equilibrium prIce for oil in today's economy. That price is undoubtedly lower than the 30 plus per barrel that OPEC was extorting a few years agu and, certainly, higher than the 3 or so a barrel which prevailed before the Arabs discovered the supposed virtues of oligopoly. Beyond this. it is difficult to be specific, since the sort of free market for oil which would allow rapid adjustment to the equilibrium prlce has almost never prevailed. The past decade has seen an attempt at cartel pricing. which collapsed for the classic reason—inability to maintain production discipline. OPEC cannot agree on a means to shut off the tap; therefore. this incremental volume has resulted in lower prices. The apparent current strategy is now to drive non-OPEC producers out of the market. This is theoretically possible. since Middle East crude possesses the lowest lift cost. However. since alternative production facilIties are already in place—North Sea oil derricks, for example—implementation of such a strategy would suggest that the price of oil over the next few years might remain as far below the normal equilibrium price as it was. recently, above it. We are. thus. unwilling to argue with even the most dire price projections made by some analysts. Under these conditions, one might expect the price action of oil stocks, a major market component, tofildicateirftlendffi-g—doom I afi'd7'inae-ed ,- sell-recomme11clatioffs-'-onthe—ifrdustr-.rnaVe been a conspicuou'''sr-feature for the last few weeks. Interestingly. however. oil-stock price patterns suggest that. while the stocks are not without substantive risk at the present time. they are something considerably short of potential disasters. Currently, the majority of oil issues are close to downside breakouts. which would suggest further short-term price weakness in early 1986. Support. however. eXlsts not too far under current levels, and the distribution patterns are hardly major in scope. The implication seems to be, in other words, that, as far as Oll issues are concerned I much of the anticipated product-price weakness has already been discounted in the stock market. This statement would appear to be equally true as far as some of the consequent broader lmplIcations of low-priced oil are concerned. A major factor in the recent economic environment, possibly the most salient factor as far as stock prices are concerned, has been disinflation. In terms of the overall price level, the past two years have been almost unique in recent history, with the producer price index currently below its figure of spring. 1984. A sharp short-term rise in the last quarter has caused some worries that this trend might be reversing. As lower oil prices become fully felt. further weakness in wholesale prices is highly likely to manifest itself. Also, the Fed may be given more incentive to ease monetary policy. In other words. the disinflation trend of 1984-1985, expected by many analysts to end 10 1986, now appears more likely to continue. Again I however. thls is a development which seems to have been largely discounted in the market- place. Disinflation-hedge stocks have been market leaders now for at least a year and a half, and our readers are familiar wlth our thesis that they are currently fully priced. TeChnical patterns would sug- gest. therefore, that most of this week's news concerning oil prices themselves and disinflation in general was long before efficiently reflected in the marketplace- , . – – – – – – – – – – It is important to recall, however, that eras of disinflation have been abundantly proved to have favorable implications for stock prices. This relationship was emphatically demonstrated by the bull market of the past 3! years. REgardless of short-term swings, it seems to us that lower oil prices. insofar as they contribute to mitigation of inflationary pressures, will, over the long term, produce a background favorable for common stocks. ANTHONY W. TABELL AWTlt DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrlals (12 00 p.m.) S & P Composite (1200 p.m.) Cumulative Index (1/23/86) 1520.17 204.70 2687.32 NO statement or epress!on 0\ opInion or any Olher matter herein contained Is, or IS \0 be deemed to be dlrecllyor md!rectly, an ofler or the sohc!la\lon of an oller to buyor sell any secuflly relerred 10 or mentIoned The malter !s presenled merely for the convenIence of the subSCriber Wh!le we bel!eve the sources of our IOformal!on to be rehable, we 10 no way represent or guarantee the accuracy thereof nor of Ihe statements made herem Any action to be taken by tho subscriber should be based on his own Invesllgatlon and Information Delafield, Harvey, Tabell Inc, as a corporalion and ItS ofllCfOlrs or employees may now have, or may later take, poslt!ons or trades In respect to any secunt!es mentioned m this or any future Issue, and such pOSition may be dtlfeent from anyv!ews now or herealter ewpressod In thiS or any other Issue Delafield, Harvey Tabel! Inc whlch!s registered With the SEC as an Investment adVisor, may give advice tOlts Investment adVISOry and other cuslomers Independent!v of any statements made In thiS or In any other Issue Further Informat!onon any security mentioned herein IS available on reQuest

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Tabell’s Market Letter – January 31, 1986

Tabell’s Market Letter – January 31, 1986

Tabell's Market Letter - January 31, 1986
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'U'&umrEn..n..' s IiUil IR2IXUEU' n..rEU'''U'rElR2 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 January 31, 1986 — -So naturalists observe, a flea '. HathsmallerflE!l!SJhat0!l.,.himpr.l'y; – And these have smaller still to bite 'em .– —- And so proceed ad infinitum. -Jonathan Swift Like anything else, the stock market is subject to an almost infinite series of subdivisions. This was first recognized by Charles H. Dow, when, in what was almost a throwaway comment in one of his editorials, he adumbrated the basic principal of what his successors refined into the Dow theory. One of those successors conceived the analogy between the market and the tides of the seashore, noting that those tides, or long regular movements, could be subdivided into a whole series of waves and ripples. Performing this exercise on the market of the last few years may help provide some idea of where we are situated at the moment. As far as the great tidal movement of tl\estock market is concerned, we have two easily identifiable benchmarks. The first is August 12, 1982 — Dow Jones Industrials, 776.92. The second is January 7, 1986, just over three weeks ago, with the Dow at 1565.71. It is the very extent of this move, more than a double, and its length, almost three and a half years, that constitutes a source of concern to many analysts, including, as readers of this letter are aware, ourselves. Major market cycles in the past have seldom achieved significantly greater magnitudes in terms of either extent or persistence. While recognizing this fact, however, it is still worthwhile to engage in the process of further subdivision. The doubling of the Dow mentioned above breaks down into two obvious components. The first such was the 15-month runup between August, 1982 and November, 1983, which took the indicator up 66 percent to 1287.20. That high was not to be bettered for fifteen months, finally being exceeded in February, 1985. From November, 1983 to the following July, –t-here-oecurred-an-almost16–pevcentdecline ,to .1086 .57.-F.rol!lthatpoint.thesecondphasLoJ'- 1 the major expansion, running for a year and a half through at least this month can be said to have beg-un. Subdividing that year and a half is a bit more complex, but it can be done. There were essentially, three major rallies within the advance. The first was finished in less than a month, producing a 14 percent move to 1239.73 on August 21, 1984. A series of subsequent highs occurred but, in March. 1985. the average was still at essentially the same level. Spring of last year saw the second component lift-off, which reached 1359.54 by last July. A modest decline into September followed and as, since we are all familiar with recent history, we know, the third advance carried the index ahead another 20 percent to the peak of early this month. Finally, it is necessary to deal with the short history which has passed since January 7th. It constituted only 17 trading dayS, beginning with a three-day, 3.3 percent decline to 1513.53. There followed a four-day rally and another four days of fall, effectively testing the old lows at 1502.29. A five-day advance produced a test of the high on Wednesday of this week, with a slightly lower closing high and the January 8th intra-day peak of 1578.10 being exactly equalJed. The point which needs to be emphasized, it seems to us, is that, even if we assume the last 17 days to be part of a new process, its magnitude is, as yet, not at all clear. To take the most bullish case, it may, simply, be the first consolidation of the most recent advancing phase, which began on September 20th. If this is true, it should be over with shortly and new, and significant, new highs should ensue before too long. It could, however, be that we are seeing the start of a corrective process for either of the two larger-magnitude swings mentioned above, the one from July, 1984 or the major bull market from August, 1982. If either of these last two alternatives is to be considered, more evidence will have to develop. As we have noted, market breadth posted a new high along with the averages earlier this month and has not shown significant deterioration since. -The Dow-Jones Transportation Avorage, as of Wednesday, had moved almost 7 percent above its early January high, suggesting a major uptrend still intact. The Utility average, which had been lagging, showed improved action in this week's trading. Furthermore, there has been some evidence of emerging new leadership, notably in basic-industry and technology stocks. Both these areas possess the potential to provide impetus for a further advance. Our most recent subdivision, in other words, is first of all, only three weeks old, and has secondly featured market action which can hardly be said to be that bad. It has, so far therefore, given no indication that a serious corrective process is under way. AWTjrh ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrial (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (1/30/86) 1570.87 209.66 2224.51 NO statement or epresslon of Opinion or any other matter herem contained IS. or IS to be deemed 10 be, directly or IJldlfectly, an 01lel ollhe solicltatlOlI ot an ofler 10 buyor sell any secunty lelened toor mentioned The mattellS presented merely for the convenience 01 the subSCriber While we believe the sources of our tnformatlOn to be rei table, we In no way represent or guarantee the accuracy Iht!reof nor of the slatements made hemin Any acllon to be laken by the subSCliber should be based on his own Investigation aild tnformatlon Delaheld, Harvey, Tabel! Inc, as a corporation and tts o!ttcers 01 employees, may now have, or may later take poSlllons or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such pOStlton may be dlHerent from any views nower hereafter erpressed In thiS or any other Issue Delafield, Harvey, Tabell Inc which IS registered With the SEC as an Investment adVisor, may give adVice tOils investment adVISOry and other customers Independently 01 any slatements made In thiS or In any other Issue Further Informallon on any security mentioned herein IS aallabte on request

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Tabell’s Market Letter – February 07, 1986

Tabell’s Market Letter – February 07, 1986

Tabell's Market Letter - February 07, 1986
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'1TJ.iU.1!l1E D.. D.. ' S J.iU.1Rl&E'1T D..1E'1T'U'lElRl 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 February 7, 1986 Readers of this letter are, by this time, well aware of our general feeling regarding the current stock market. We recognize, along with most of the rest of the financial community, that the Dow -…. ——- ,has doubledover 3-l/2 years- and –that-the -cuJ!-I!ent..,cycle J Ht .1east .,in terms–9f conventional interpretation . has reacheds mature-phase. Despite this, 'we have recommended a continuedpositive attitude toward common stocks, pointing out that the sort of deterioration which the conventional wisdom would expect at this stage has simply not materialized. We will try, this week, to illustrate this point graphically using the point-and-figure charts which we regard as the most useful historical summary of price action. The chart at left above, an historical artifact, is a shining example of the sort of pattern which is conspicious by its absence today. On a 5-point-unit basis J it traces the history of Xerox in the early 1970's, with the last posting being in November, 1973. No chart expertise is required to see —-thatthe .. distributiona1p-attern…between–150–and—lO.!..is–m-assivehe-stocktof- course,–was …at-46—a—-year later and below 28 at its 1982 low. Many stocks today—Borden is an exarnple–appear fully exploited, but what is totally absent, as its chart shows, is any sort of distributional top. Such a formation would require time. (The Xerox top took over a year to build). Furthermore, a typical occurrence in recent markets has been for potential distributional patterns to turn into continuation bases. PillSbury, during late 1985, formed a pattern which could have been interpreted as a triple top. The recent upside breakout casts doubt on this and now suggests a further extension of the upside move. Rather than massive top formations, a large number of stocks today possess patterns something like that of Alcoa, shown at left. Its major feature is a recent upside breakout from a massive accumulation base between 30 and 39, suggesting that the stock could be in the early stages of an important upward move. This sort of formation is typical of a large number of basic-industry stocks. Top formations are currently, it must be admitted, not totally absent, but where they exist, 8S in the energy sector. the patterns are similar to that of Amoco at right. The stock did, indeed, form a top at 70-60 and the downside objective is 48. However, It has already declined from 70 to a low of 53 1/8 and is approaching an area of strong support from its 1982-1983 trading suggesting that the bulk of downside action has already been seen. The fact that most individual patterns today can be typified by one of the four latter examples rather than by the sort of pattern Xerox and so many other stocks exhibited 15 years ago suggests that no serious market weakness is imminent until distributional patterns build further. Dow-Jones Industrials (1200 p.m.) 1592.43 S & P Composite (1200 p.m.) 209.33 Cumulative Index (2/6/86) 2764.16 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWTke No statement or epresslon 01 opinIon or any other mailer herem contaIned IS or IS to be deemed to be, directly or Indirectly, an offer or the soliCitation 01 an offer 10 buy or sell any security referred 10 or mentioned The mailer IS presented merely for the convenience of the subscriber While we believe the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereof nor 0/ Ihe statements made herem Any action to be laken by the subscnber should be based on hiS own Invesllgatlon and Information Oela/leld, Harvey, Tabell Inc, as a corporation and Its ofheers or employees, may now have, or may later take, poSitions or trades In respect to any securities menlloned In thiS or any future Issue, and such pOSition may be different from any views now or hereaHer expressed In thiS or any other Issue Delafield Harvey label! Inc which IS registered With the SEC as an IOvestmen\ adVisor, may give advice to Its mvestment adVISOry and other customers mdependently of any statements made mlhlS or In any other Issue Further information on any security mentioned herein IS available on reQuest i

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Tabell’s Market Letter – February 14, 1986

Tabell’s Market Letter – February 14, 1986

Tabell's Market Letter - February 14, 1986
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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 February 14, 1986 It is not difficult to detect, in the writings of many of our colleagues these days, a certain note of disbelief. This note stems from the perception that the market ought, at this 1-,. stage .of the.,.game,to.go ,down, -or, .atthe.vel'-y least ,–stop–going -up . It haso-been -pointed- outr– – . for example, that- the four years, 1982-1985, have all been rising ones and that, at no time in recent history, has the market advanced five years in a row. , We must confess that we are sympathetic to this point of view, having ourselves repeatedly made the same point in more complicated form, usually drawing on references to the repetitive pattern of the four-year cycle. Cycle theory tells us unequivocably that there ought to be a bear market of some proportions some time during 1986. The market, however, being perverse, has refused, in the first month-and-a-half of the new year, to give any indication of wanting to do what all experience tells us it ought to be doing. There does exist, however, an example of five consecutive advancing years. They are the years 1924-1928. They fall within a period which, interestingly enough, causes some difficulty for students of the four-year cycle, and we intend to open, here, a rather large can of worms by suggesting that a look at the 1920's may perhaps, in the 1980's, be relevant. On August 24, 1921, the Dow closed at 63.90. This was a recognizable bear-market low. The interpretive problem is that no comparably obvious low occurred for more than eight years, until November, 1929. Cycle theory tells us that two cycles should have been completed during that period, but making the division is difficult. Our own solution has been to recognize a bear market as having occurred between March and October of 1923. However, of this, more later. From that August, 1921 low, the Dow rose 64.91 over the next nineteen months reaching 105.38 in March of 1923. Fifteen of the nineteen months in question saw new highs scored. Between August 12, 1982 and November 29, 1983, interestingly enough, the average rose from 776.92 to 1287.20, a 65.68 rise with new highs being posted in thirteen of the 1 fifteenmonthsiny.olyed. '- There followed, in both cases, a hiatus. In the -1920's, sixteen-months passed before a new high was seen. The low was reached in October, 1923, 18.62 below the March peak. Following November, 1983, a new peak was not achieved until January, 1985, a gap of thirteen months. At the July, 1984 low, the Dow had posted a 15.59 decline. Since it is recent history, we are well aware that the average has now moved up over 50 from that July low, with eleven of the fourteen months since January, 1985 having seen new peaks. This has caused a certain amount of incredulity. There may have existed a comparable degree of incredulity following the first new high in August of 1924. However, the market continued to advance for eighteen months, to February, 1926, achieving an 86.76 rise in the process. It is worth noting that a comparable advance from the July, 1984 low would take the Dow over 2000. February, 1926, however, was, as we know, by no means the end. Nothing more than, by the standards of the day, a modest irregularity characterized 1926 and early 1927. The culmination was a thirty-month rise which brought the Dow to two and a half times its early-1926 peak, with new highs occurring in twenty-four of the thirty months. The aftermath to that, of course, is well known. We draw attention to the uncanny stock market resemblance between the post-1921 and post-1982 periods for a reason. The stock market, after all, moves in response to its environment and there exist, in our view—and in the view of a number of qualified observers— a number of similarities between the economic environment of the 1920's and 1980's. We intend, in future issues of this letter, to elaborate on some of them. There also exist significant differences in the two environments, and they will be worth examining. No attempt will be made here even to remotely suggest the inevitability of, a 1927-29 type of final blowoff and a similar consequent collapse. History exists, however, to teach lessons, and it is certainly worth making the effort to ascertain what current lessons, if any, the decade of the 1920's may provide. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL lNC. Dow Jones Industrials (1200 p.m.) S & P Composite (12 00 p.m.) Cumulative Index (2/13/86) 1647.82 209.33 2815.10 AWT it NO s!alemem or erpresslon of Opinion or any other matter herem contamed IS, or IS 10 be deemed 10 be, dlrectty or Indirectly. an offer Of Ihesohcltatlon of an cfter \0 buy or sell any secunly referred toor mentioned The matter IS presented merely for lhe convenience 01 the subsCriber While we believe the sources of our Intormallon to be reliable, we In noway represent or guarantee the accuracy thereal nor of the statements made herein Anv action to be talen by the subSCriber shoutd 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, POSitions or trades In respect to any secufllies mentioned In this or any lulure Issue, and such POSition may be dl1!erem from any views nowOl hereafter epressed In thiS or any other Issue Delafield, Harvey, Tabell Inc, which IS registered With the SECas an InYestment adVisor, may give adYlceto ItS rnvestment adYlsory and other customers mdependently 01 any statements made m thiS or In any other Issue Furthellnformatlon on any seculliy mentioned herein IS available on reQuest

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Tabell’s Market Letter – February 21, 1986

Tabell’s Market Letter – February 21, 1986

Tabell's Market Letter - February 21, 1986
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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 – February 21, 1986 We devoted this space last week to a discussion of the uncanny similarity between the stock market's behavior over the past 3t years and its action during the early 1920's. We pointed out that the 19-month period August, 1921-Marcll, 1923 and the 15 months between August, 1982 and '-Novel11oer, '9.83 S1lW almost-;dentical5'TIses'in -the Dow-Jonesindustrial Average,.–eEach-ef-thesc ….,……..-1 rises was followed by an interval 16 months in 1923-1924 and 13 months inI983-1984, during which no new high was scored, the 1923 experience involving an 18.6 decline and the 1983-1984 instance producing a 15.6 drop. In both cases, these intervening mild corrections were followed by sur- prising and steady rises to new all-time,peaks. By February, 1926, an 87 rise from the October, 1923 low had been posted. As of this week, the Dow had advanced 55 from its bottom of July, 1984. We thus have two benchmark dates—August 24, 1921 and August 12, 1982,–61 years, almost to the day, apart. These dates were followed by long periods of market behavior exhibiting a sur- prising degree of similarity. What is also interesting is the similarity of the general economic environment on those two dates. An observer looking backward in 1921 would, as in 1982, have observed a quarter-century of rampant inflation having reached or just reaching its peak. He would also have seen an historic peak in interest rates scored a few months before. The following years, both in the 1920's and 1980's, would see interest rates drop sharply from those historic highs. In 1921, the Wholesale Price Index had peaked a year before, after rising 233 from 1896 to 1920. Between 1955 and 1981, the same Index had advanced 234. Consumer prices, likewise, rose in both periods, although it must be noted that the rise in the CPI in the years preceding 1982 was twice as great as that in the early part of this century. Despite the fact that the current inflation has been more severe, the price rises leading up to 1920 were probably just as alarming, having accelerated sharply in the latter stages of their advance. The seven years 1913-1920, before, during and after World War I, saw a doubling of consumer prices, something the recent economy has failed to duplicate in so short a time. In both eras, the stock market's rise was accompanied by a noticeable lessening of inflationary pressures, although that dimunition is a great deal more abrupt in the earlier period. Average consumer-price levels in 1921 were 10 lower than 1920, and the Wholesale Price Index declined an -1-I …asilt.uounding3J.Thereensued eigears..Qf..generally. stable to, decreasing prices.–1ntJle–p.r,-,en,-,t 1 case, we are aware, of course, that price inflation has continued after 1982, but at -i consTderably more moderate rate. However, by 1985, the Producer Price Index actually showed a mild year-to- year decline, a trend which is likely to continue in 1986. The levels of interest rates in 1920 and in 1981 were very different, but the historic patterns, although differing in extent, were quite similar. Long-term Government bond yields averaged 5.32 in 1920, and Treasury Bills returned 5.42. The corresponding figures in 1981 were 12.87 and 14.08. In both cases, however, interest rates were at cyclical peaks. After falling steadily from the Civil War to 1900, long rates had almost doubled between the turn of the century and 1921. They then fell steadily through the late 1940's, and the rise through 1981 constituted the peak of a 35-year cycle. The rising stock markets that occurred in both instances were accompanied by sharply falling interest rates. Between 1920 and 1926, yields on long Governments dropped by 40, and Treasury Bill yields were almost cut in half between 1920 and 1924. Currently, long bond yields have dropped some 30 from their 1981 average, and T-Bill yields are just about half of what they averaged five years ago. In addition to the behavior of inflation and interest rates, other similarities between the two economic environments can be noted. The bull market that started in 1982 has been characterized as a flight of capital from real assets to financial assets, as these assets, both stocks and bonds, began to offer superior returns in a relatively non-inflationary environment, and tangibles which, in the 1970's, had not only kept pace with inflation but left it far behind, became obviously fully priced. The Florida land boom, the lunatic fringe of the real-estate market during the 1920's, began its collapse in 1925, four years into the bull market in stocks and bonds. Not dissimilarly, vacant office buildings are a current feature of many American cities, and the trauma produced by the current adjustment of farmland prices to reality is well known. This has all been taking place, as it did sixty years ago, as the stock and bond markets moved steadily upward. It-is necessary to repeat at this point Qur-caveat of;last week,;-,.- We have been engaged;-here, — in historical analysis, not In prediction. If we are to pursue our historical analogy all the way, we find ourselves currently at a point in time analogous to late 1925 or early 1926. There is nothing in the analogy to suggest that the unique events of 1926-1929 will be duplicated or that their after- math, the Great Depression of the 1930's, will be reproduced. We intend, however. to explore those years further in forthcoming letters and to suggest future pitfalls which the 1920s' experience sug- gests may lay ahead, pitfalls which—it is to be hoped, fortified by historical experience—we may avoid. AWT It Dow-Jones Industrial Average (1200 p.m.) 1686.35 S & P Composite (1200 p.m.) 209.33 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Cumulative Index (2/20/86) 2844.09 No statemenl Of Cllpresslon ot opinion or any other mailer herein contamed Is or IS to be deemed 10 be directly or mdlrectly, an oller or the soliCitation 01 an offer 10 buy or sell any secunty referred toor mentioned The matter IS presented merely for the convenlenceot Ihesubscrlber While we believe the sourcesol our mformahon to be reliable, we In no way represent or guarantee the accuracy thereat nor of the statements made herem Any action to be taken by the subscriber should be based on hiS own investigation and Information Oelafleld, Harvey, Tabelt Inc, as a corporation and Its officers or employees may now have, or may later ta1e, poslhons or trades In respect to any seculIUes mentioned In Ihls or any Iulure Issue, and such pOSition may be dllferent from any I'lews now or herealter e1pressed m thiS or any other Issue Detafletd Harvey Tabetl Inc which IS reglslered With the SEC as an ml'estment adVisor, may gll'e adl'lce 10 Its rnl'estmenl Bdl'lsory and other customers mdependently 01 any statements made In thtS or m any other Issue Further Information on any secUf!ty mentioned herein Is available on request

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Tabell’s Market Letter – February 28, 1986

Tabell’s Market Letter – February 28, 1986

Tabell's Market Letter - February 28, 1986
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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 February 28, 1986 Our past two letters have focused on what we think are amazing parallels between the econo- mic and stock market environments of the early-middle 1920's and 1980's. We noted that, between . August-,-1921and February, 1926, the-Dow'iTones IndustrialAverage-rose-154,ifrom'63;90 to -162.31 The present market, since August, 1982. has, so far, moved ahead 118 from its low of 776.92. Both markets featured relatively mild but fairly lengthy mid-course interruptions, in 1923-1924 and 1983-1984. Both took place during similar economic environments in which the most conspicuous features were stable price levels following long periods of accelerating inflation and interest rates declining sharply from historic peaks. The post-1986 course of the stock market remains, of course, unknown, while its post-1926 behaviour is, unhappily, a matter of historical record. That record is all too well known, but we should like to devote this issue to examining some aspects of it as a preamble to future dIScussion of what today's similarity to the mid-twenties might be telling us. To begin with, the Dow had, as we noted above, by its February, 1926 high, advanced a bit more than it has to date. An exact duplication of 1921-1926 today would see the index around 2000, a figure, it should be noted, a great deal less spectacular than it seems, involving only an 18 advance from current levels. Following the February, 1926 high, 14 months of what can be described as mild consolidation ensued. The market suffered a sharp pullback in February-March but recovered nicely over the spring and summer, testing and slightly exceeding the February high in August-September. This test was followed by sideways to downward action through the spring of 1927. It is interesting that, based on the extent of the advance so far and the market's overall technical position, a similar scenario for 1986 is not at all implausable. The upside breakout was scored in April, 1927, and it is from this point that the start of the final chapter may be dated. There followed 29 months of advance with no gap of longer than a month between new highs. The Dow ultimately moved to almost two-and-a half tIme its February, 1926 high. An equivilent advance in the late 1980's would have the Dow somewhere between 4000 and 5000 toward the end of the decade. The culmination of all this was, of course, 1929. 1929. We have pronounced what must be considered the ultimate nasty word to those of us -Concern'ldw!thoOfimmctallmirkets. Theyear-;orCourse, poss-es'sescI,,-ep syiiibruicsig'nificance, yetf,-'-I as our readers know, we disagree rather strenuously with the mythology that its mention evokes in the minds of many investors. That mythology suggests that, at some point in 1929, probably on black Thursday, October 24th, a curtain was drawn over the past and all aspects of lIfe in America were immediately and instantaneously transformed, never to be the same again. Our own view is that the stock-market debacle, which lasted for ten weeks, is one phenomenon, a market collapse which certainly differs from a host of others in magnitude but not necessarily in nature. The thirteen years of depression which followed are, in reality, what evoke the shudders which mention of the year 1929 induce today. It is worth rememberingthat, when the Dow, after a 50 drop, reached 198.69 on November 13, 1929, it was still significantly above the high of the 1921-1926 advance we have been discussing. Furthermore, it recovered strongly from that point and, by April, 1930, had regained half of the spectacular loss. It is what happened after that, not the ten weeks of fireworks, that produced the lasting trauma. Between April, 1930 and 1932, the average sunk from just under 300 to 41. This sickening collapse took place, not with spectacular levels of trading, but with ever-decreasing volume, volume which, by the time the process ended two years later, was averaging a half million s hares a day. To the extent the financial world ended, it ended not, as the popular myth would have us believe in 1929 with a bang, but in 1932 with a whimper. What was worse, this dismal performance was eminently justified. As we all know, by 1933 GNP had been cut in half, unemployment was 25 percent, and corporate profits were negatIve. There was, moreover, after 10 years, little improvement. The second major cataclysm of the twentieth century, World War II, was required finally to usher in a new economic era. Our objection to the conventional symbolIsm of 1929, then, is the linkage between the short stock-market collapse of that year and the depression which characterized the 1930's. lI'e are certainly not claiming that the two events were unrelated, and there do indeed exist coimections between the manifestations of the more unattractive aspects of mass behavior of the late 1927-1929 financial markets and the disastrous decade which followed. The point is that it is the decade, not the ten weeks, that left the scars which are, even today, not entIrely healed. It is that experience which, with improved economic knowledge and tools, it is to be hoped the U. S. economy can avoid. ANTHONY W. T ABELL AWT jrh DELAFIELD, HARVEY, TAB ELL IN C. Dow-Jones Industrial Average (12 00 p. m. ) 1706.87 S & P Composite (1200 p.m.) 225.68 Cumulative Index (2/27J86) 2913.14 NO statement or cpre5Slon of opInion or any other matter herein contained IS or IS 10 be deemed to be, directly or Indirectly, an offer or the solicitation of an offer to buy or sell any security referred 10 or mentioned Themaller IS presented merely lor the convenience 01 the subscriber While we believe the sources of our information 10 be reliable, wem no way represent or guarantee the accuracy thereof nor althe statements made herem Any action to be taken by the subSCriber should be based on his own investigation and mlormatlon Delafield, Harvey, labell Inc, as a corporation and Its ollicers or employees, may now have, or may later take poSitions o' trades m respect 10 any securities mentioned In thiS or any future Issue, and such pOSItion may be dll1erent from any views now or herea!ter expressed In thiS or any other Issue Delafield Harvey Tabell Inc which IS registered With the SEC as an Investment adVisor, may gIVe adVice to .ts Investment adVISOry and other customers Independently 01 any statements made In this or In any other Issue Further information on any secunty men\loned herem IS available on request

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Tabell’s Market Letter – March 07, 1986

Tabell’s Market Letter – March 07, 1986

Tabell's Market Letter - March 07, 1986
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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 March 7, 1986 Disinflation is now a household word, the interest-sensitive sector is where the action is, long-term interest rates are quoted in single digit figures and lower crude oil prices are all – – – .,t.o,.oveieawseyd-.b1yt…h.e–i.m- Te…s..t-m.e'n-t-.;comm.. un….i..ty-.as cons.t..r..–ucti;ve-forthe…stock-maI;ket.-.It,almost -see-ms,.,..I While the Dow Jones Industrial Average spent most of the week trading just under its recent all-time high of 1713.99, some fairly interesting market action has been taking place in the NASDAQ OTC Industrial Average which posted a new 52 week high yesterday at 358.66. The general subject of aTC issues is a rather interesting one at this stage. The chart below pre- sents a 12-plus year history of the Dow as compared to the OTC Industrial Index. The upper line is the DJIA, the center line is the NASDAQ Index, and the lower line is the relative strength ratio, the NASDAQ Index divided by the DJIA. J ('I' jBOO. \ ' !'Y\700 250 NVj'rj rV-A,D(OV .,\,,IE1'S '.1.NJD'U.\Sf,\;'L;1,,V,\;,'oE\\I1..tI! \ I.,,'\..(\.J V .. 200 '50 r \;\j( ' \OTe llioy'jTP. AL /v V J.,-/,v, lit (J (VI' \'\'-.; I / …… .1 ——1 00 .LL—…….—l To briefly review the last few years, the NASDAQ Industrials has moved from 177.70 at the August 1982 low to a high of 408.40 in June 1983, a 129.83 advance as opposed to a 65.68 com- parable rise in the DJIA. The OTC Average then corrected itself 38.76 in July 1984 verses a correction over a similiar time period of 15.59 in the Dow. Although very dramatic, both of these moves in the aTC Index are not surprising, as we know a characteristic of the aTC Average is its historical tendency to rise and fall more sharply than the Dow, i.e. a higher beta. A glance at the chart above will show that this has been true in most major swings. However much of the superior relative action of the OTC stocks stem from their behavior bewteen 1976 and 1980, which constituted an exception to this rule. During that time OTC issues moved moderately upward during a downward and then flat market in the DJIA. Since then until the July 1984 low the action has been normal. However, recent strength in the OTC market relative to the Dow has been poor. True, the aTC Index has risen 43.41 from the July 1984 low, but this compares with a 57.75 increase in the DJIA. The OTC Index is still trading 12.22 below its June 1983 high While the DJIA continues to flirt with new highs, over 400 points above its November 1983 pre- vious high. .. As we had superior relative performance in the 1976-1980 period in the OTC sector, while the DJIA was moving down, since July 1984 we are seeing the OTC /DJIA ratio under-perform as the DJIA continues to move up. Monitoring this ratio may give us a clue to the ability of the general market to sustain its upward movement. Dow-Jones Industrials (12 00 p. m.) 1691. 68 S & P Composite (1200 p.m.) 225.67 Cumulative Index (3/6/86) 2955.56 ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TAB ELL INC. No statement or epresslon of oPinion or any other matter herem contamed Is, ()( IS to be deemed to be, directly or Indirectly an offer Of the sollcrtatlon of an offer to buyor sell any security referred toor mentioned The matter IS presented merely for tM convemenco 01 the subSCriber While we believe the sources of our Inlormatlon to be reliable, we In no way represent or guarantee the accuracy thoreo! nor of Ihe slalomenls made herem Any action to be laken bylhe SubSCflbor should be based on hiS own mvesllgatlon and mlormatlon DelafJeld, Harvey, Tabell Inc, as a corporation and Its officers or employees may now have, or may laler talle poSitions or trades In respect to any seCUrities mentioned In thfs or any future Issue, and such pOSItion may be dlHerent from any vlev's nowor hereafter epf(lssed In thiS or any other Issue Delafield Harvey Tabelf Inc …. hlch IS registered With the SEC as an Investment adVisor, may give adVice tOltS mvestment adVISor, and other customers mdependcnlly of anv statemenls made In this or In any other Issue Further mformatlon on any security mentioned herem Is available on request

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Tabell’s Market Letter – March 14, 1986

Tabell’s Market Letter – March 14, 1986

Tabell's Market Letter - March 14, 1986
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r- 4J;II' 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 March 14. 1986 There was yet another impressIve rally in the stock market thIS week as the Dow Jones Industrial Average closed at a record high of 1753.71 after posting a 43.10 point advance on Tuesday, the second biggest one-day gain on record, In very heavy trading. As impressive as thIS single day advance in low-.– …,.,….ptehreDenJtIA-ohis,diatyiasavnoatncuenpnaesd-beenetne'-de-,twteheedned,e-xfopurretseseend–i'n-ffrtfeferimasloiot-fep'selflrcceenthtaegeA. iiFiuosrt.Liegx-aSmf ple -thOiLs'fh2e.-5,-3-,;.-.,…,,-,,,,,.,,,-,..,, Standard &; Poor's 500-stock index also closed at record highs wIth the NASDAQ OTe Industrial Average posting a new 52-week hIgh but, as dIscussed last week, still tradmg below its June 1983 hIgh The arbItrage traders gave stocks a bIg push thIS week by bidding up the popular Standard & Poor's stock-mdex futures to record highs exaggerating the usual spreads between these future contracts and the underlYIng stock Indexes. These hIgh premiums In turn triggered the selling of these future contracts and the bUYIng of the related stocks. But what continues to fuel the stock market IS the expectation of lower long-term mterest rates. Thirty-year Treasurys are now at a ten-year low currently selling below eIght percent. Tills has not gone unnoticed in the Investment bankIng commumty as corporations lined up and sold billIons of dollars of new debt instruments this week. CUMULRTIVE NYSE PREFERRED STOCK BERDTH lNDEX DJIA DRILY CLOSE CUMULATlVE NYSE COMMON STOCK BERDTH INDEX PlCTTED Ttm.01 13 IgaS ' JAN as JAN 86 The strength of thIS interest sensitive sector in the stock market can be dramatIcally shown by examming a traditional technical tool–market breadth–m a slightly different manner. As this letter has pomted out, market breadth measurements continue to confirm the new highs in the averages. The NYSE for some SIxty years have recorded the advances, dechnes and unchanged of all Issues traded. More recently breadth fIgures have become available for common stocks only. This new series constructed as a breadth Index (advances-declmes diVIded by total issues traded) IS shown m the low- er third of the chart above. As expected thIS common stock only mdex behaves similarly to the tradI- tional total issues breadth Index. By subtractIng common stock issues from .total Issues traded we are also able to develop a preferred stock breadth mdex. Thls interest-sensltive mdex IS shown above in the upper third of the chart. Both of these breadth indexes are compared to the DJIA In the mIddle of the chart from pre-1982 low to date. It IS interestIng to point out that the common stock breadth Index spent most of the second half of 1983 declining while the DJIA went on to a new hIgh in November 1983. ThIS divergence was fol- lowed by a correctIon of 15.39 In the DJIA lasting untIl July 1984. The preferred stock breadth Index durmg this period, however. went to a new high reflectmg the ongoing strength In the mterest- senSItive sector during tlus declme. From the July 1984 low to date the DJIA has advanced without major interruption 61.40. During this period the strength of the common stock breadth index has been consistently ImproVIng, confirming each new hIgh in the averages WIth a new hlgh m breadth. What is most remarkable however. IS the relatIve performance of the preferred stock breadth mdex. Clearly reflecting the tremendous relative strength m the Interest-sensItIve sector of the market, this unique index should be monitored closely to reflect any loss of momentum WhICh, In turn. mIght be a precursor to a loss of momentum In the general market. Dow-Jones Industrials (1200 p.m.) S & P Composite (12 00 p.m.) Cumulative Index (1200 p.m.) 1769.52 234.53 3046.38 ROBERT J. SIMPKINS. JR. DELAFIELD. HARVEY. TABELL INC. No Statement or epresslofl of opinion or any other matter herein contained IS or IS 10 be deemed to be dlreclly or Indirect lv, an offer or the soUcltal1on of an oHer to buy or sell any secutlly referred to 01 mentioned The matter IS prosented merely for the convemence of the subscriber While we believe the sources of oUllniormallon 10 be retmbte, we In no way represent or guarant!!t! Ihe accuracy thereof nor 01 the statements made herein Any acllon to be taken by the subscllber should be based on hiS own investigation and mformat,on Delafield, Harvey, Tabelt InC, as a corporation and lIS officers or employees, may now have, or may latel take, poSitions or trades In respect to any socurities men\loned In thiS or any future Issue, and such position may be dltloront Irom anyvlOws now or hCloaf1or epressed In thiS or any other Issue Delafield Harvey, Tabelt Inc, which is registered With the SECas an Inestment advlsor.maY9lve advlcOlo 115 Invostment adVisory and other customers Independently of any statements made In thiS or III any other Issue Further Information on anv seculity mentioned herein IS available on request

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