Viewing Month: June 1986

Tabell’s Market Letter – June 06, 1986

Tabell’s Market Letter – June 06, 1986

Tabell's Market Letter - June 06, 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) 9872300 June 6, 1986 eadersof this letter (9L-SOme of themat least)h!lvJ'(LeJec.tejt.Jn rcenLissues,al1o–1lppar-,,I. , ent note of pessimisisni regarding the market outlook' Thiseffect -is not necessarily intended. The writing of stock-market commentary is an exercise in which we have been engaged for a while now t and we have become familiar with the expectations of a portion of such commentary's readership. Those expectations require the writer to be either unqualifiedly bullish or bearish, lest he be accused of the occupational sin of hedging. Unfortunately, much of the time the stock market itself does not foster the adaptation of an opinion at one or the other extreme of the bull-bear scale. About half the time, perhaps, equities are providing the sort of exceptional returns that they, almost alone among financial assets, can generate, or, alternatively, the market is inflicting on its participants large and painful losses. The other fifty percent of the time it becomes a much less exciting affair where, with hard work and careful selection, decent, if not spectacular, returns can be achieved. What we have been trying to do, of late, is to suggest the possibility that we may now be in transition to such a period. We are asserting, in other words, that the stock market, on an intermediate-term basis, may be overbought. This is a common phrase among technicians which also tends to engender misunderstanding. It is, first of all, not a pejorative term. Indeed, as we shall see, the ability of the market to reach a short-term overbought condition is often indicative of an above-average long-term momentum. What overbought, when used by technicians, tends to mean is that a class of indicators known as oscillators are at the extreme high end of their historical range. Let us take, as an example, one such indicator we have used for many years. It is constructed simply by taking the totals of weekly advances and weekly declines for the past twenty-five weeks and subtracting the latter from the former. For consistency over time, the result is conveniently expressed as a percentage of issues traded .. I;'u ',,0 … UO' u,, ' ….., H lneo level it has attained since World War II. The plurality of advancing stocks over declImng ones for the past twenty-five weeks was 12,793, or 22.82 of issues traded. Approximately 16 is normally considered an overbought condition. However, what must be emphasized is that it is not the attaining of an overbought condition by itself that signals the presence of market risk. It is the attainment of such a condition, followed by a fairly protracted decline, usually almost to the level where the twenty-five week advance-decline differential is close to zero. Furthermore, even when such a signal proves to be correct, the result may not necessarily be a bear market, but, rather, an intermediate-term cor- rection or even a simple consolidation. The most recent case may perhaps be instructive. In January-February of 1983, the twenty-five week oscillator reached a positIOn roughly comparable to the one in which it found itself two months ago. Ten months later it had reached negative territory. This, interestingly enough, was a month before the high reached by the Dow in November, 1983, which in turn led to the eightmonth, sixteen-percent decline into July, 1984. On the other hand, there have been many cases where a correction, properly forecast, has not amounted to much at all. Six months into the 1949 bull market a similar condition was registered. This produced nothing more than a short decline coincident with the outbreak of the Korean War, after which the market marched merrily on to new highs within a few weeks. Now, as noted above, this particular indicator reached its high only a couple of months ago. We can make some guess as to its future action. Since it is based on a twenty-five week period, we know those weeks which will be being subtracted from the totals for the next few months come from the period December, 1985 – March, 1986, and they are almost uniformly good ones. We may thus infer a strong likelihood that this oscillator, absent unusual market strength, will trend down for the next few months. However, along with other indicators we have been referring to in this space, its lead time is significant, and it is certainly not, at this stage, forecasting immediate lower prices. Even should it begin to do so as time goes on, other indicators will be required to assess how much lower, if at all, these prices ought to be. At the moment the oscillator is doing no more than suggesting that a somewhat more normal stock market era may, in the past few months, have arrived 6 AWTv\1 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL, INC. Dow-Jones Industrials (1200 noon) 1880.52 S. & P. 500 (1200 noon) 245.97 Cumulative Index (6/5/86) 3184.45 NO statemcnt or epresslOn of opl11l0n or any other maner herein contained IS or IS to be deemed to be dlrectlv or Indirectly, an offer or the soliCitation of an offer to buy or sell any secullty referred toor mentioned The mailer IS presented merely fOI the convemence of the subSCliber While we believe Ihe sources of our Iflformatlon to be reliable we In noway represent or guarantee the accuracy thereat nOI 01 the statements made herem Any action to be taken by the subSCliber should be based on hiS own mvestlgatlon and II1tormatlon Delafield, Harvey, Tabelt Inc, asa corporation and liS oHlcers or employees may now have or may later take pOSlllons or trades Ifl respect to any seculltles mentioned m this or any future Issue, and such poSition may be different from any views now or heleafter 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 liS II1vestmenl adVISOry and other customllrs mdependen\!y 01 any statements mode m thiS or In any other Issue Further Information on any security mentioned herein IS available on request

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Tabell’s Market Letter – June 13, 1986

Tabell’s Market Letter – June 13, 1986

Tabell's Market Letter - June 13, 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 June 13, 1986 A moderately interesting market week started out with one of those ho-hum all-time record!! declines. in which the 45.75 points shed by the Dow did indeed represent the largest such figure in its history. 1 – ….. The press—stories -on-these-!ecur-ring- non,eventare.–JNe-must..admit.– improving .hey -do -8t1'-e88;; that the,- record being set is in terms of points, and eVen go on to state that. in percentage terms. there have been many larger declines (363 since 1926 to be exact). About all that the Monday decline did. from an analytical standpoint, was to provide the third of a series of benchmark highs going back to the end of March. The theme of this letter for the past few weeks. it will be recalled, has been the changing character of the market. With some two and one-half months of experience now behind us, it becomes possible, it seems to us, to place a precise date on the beginning of that Change. That date, we think, is March 27th. On that particular day. prior to the Good Friday holIday. just about every average one could name posted a new bull-market high. A couple went on to post modest new peaks the following week. but all moved, during the post-Easter week. into a noticeable short-term retreat. which, uniformly bottomed on Monday, April 7th. It is from that point forward that the divergence between various indicators began to manifest itself. In general. a rally began from the April 7th low. with various averages reaching their peak in the two-plus weeks between April 17th and April 29th. The ensuing declines saw some mdicators bottom in mid-May and some in the early part of the month. Finally, the recent advance, in which the closing DJIA peaked last Friday, established. as we have noted. yet another benchmark. The table below shows the relevant figures for eight major averages and both our daily and weekly breadth indices. Intra-day figures have been used where available. The descrepancies are of some interest. MARCH HIGH APR. LOW APR. HIGH MAY LOW DJIA (lID) 3127 1849.74 417 1712.52 4117 1870.16 5/19 1769.84 S & P 500 (lID) 3127 240.11 417 226.30 4122 245.47 5116 232.26 DJIA (liD) 3131 842.98 417 765.46 4122 830.35 5116 765.58 DJUA (IID) 411 195.27 417 182.55 4121 193.42 5121 179.71 NYSE FIN.(CL) 3127 157,74 417 149.8L 4121 159.45 5119 146.95 – -0'l'1 IND—CCL)lT3I7590 -rl7369–50 '-41 2539-9–90 5/1 – 388.20 ASE (110) 3127 270.08 417 262,74 4129 275.97 511 267.93 VAL LINE CMP.(CL)3127 242.28 417 233.24 4121 246,20 5119 237.39 DLY BREADTH 3127 1144.40 417 1137.56 4121 1148.54 5119 1138.54 WKLY BREADTH 3127 1215.25 414 1211.09 4118 1220.33 5116 1214.16 JUNE HIGH 6112 CLOSE 5/30 1898.22 1838.13 5130 249.19 241. 49 5128 819.80 779.38 5130 190.96 185.06 5129 157.98 148.67 6/6 407.90 404.00 612 282.97 279.94 5/30 246,79 241.75 5/29 1145.90 1138.47 5130 1219.05 ——- The Dow and the S & P, of course, are following a continuing pattern of higher highs and higher lows. In general the action of the Dow has been more dynamic. Indeed it continued on to post a new closing peak, although not an intra-day one, on Friday before the 45-point drop. The Transport and Utility indicators show precisely the opposite pattern. Each of the three highs has been notably lower than the one preceding it, as have the two short-term lows. (On an intra-day basis, the April and May Transport lows were almost equal, but the May closing bottom was lower). The Financial index shows an intermediate pattern. continuing to a new peak in April but then falling off to a new low and failing to equal its old high. Paradoxically, it is the Over-the-Counter Index. the ASE Index and the Value Line Composite which have shown the best action. All three indices show a consistent uptrend pattern, and found themselves, at recent peaks, considerably above their late-March highs. In general, they all bottomed in early May rather than mid-month and, at last night's close, found themselves closer to their highs than did the other averages. This newly-emergent leadership from the speculative sector has some interesting implications. It could, of course, be dismissed as the typical froth which emerges at the tail-end of a bull-market. We have had, on the other hand. as recently as 1976-78. the phenomenon of a blue-chIp bear-market in which secondary stocks failed to participate. A similar environment might repeat itself today. The worst acting series, of course, have been our daily and weekly breadth indices. Although they continued to reach new peaks in April. they failed to equal those peaks In June. and the daily breadth index this week moved below its May low and is close to its April bottom. The weekly breadth indicator will also probably show a new low when figures are available, thus. along with the daily index. setting ,. up at least a potential breadth divergence. We admitted last week that we were guilty. at least to some degree. of the sin of hedging. but it is hard to see how a mixed picture such as that outlined in the table above can yet yield a definitive conclusion. Continued deterioration in major sectors such as the transportation. utility and financial areas. would have to engender a certain degree of bearishness. However with both the blue-chip and the Over-the-Counter areas acting well, it is hard to see immediate weakness emerging. That pattern change, which we now can date from the end of March. will have to clarify itself further before a radical change in market direction can be predicted. AWTvf1 Dow-Jones Industrials (1200 noon) 1869.35 S. & P. 500 (1200 noon) 244.49 Cumulative Index (6/12186) 3147.36 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL, INC. No statement or eypresslon of opinion or any other matter herOin contained IS or IS 10 be deemod to be, directly or indirectly, an oller or the solicUatlon of an oHer to buy Of sell any security relerred to or mentioned The matter IS presented merely for the convenience 01 the subscftber While we believe the sources 01 our enformatlon to be reliable, we en no way represent Of guarantee the accuracy lhereot nor 01 the statements made herein Any aclton to be taken by the subscnber should be based on his own rnvestlgatlon and rnlorrnatlon Delafield, Harvey, Tabell tnc, as a corporation and ItS officers or employees, may now have, or may laler take, poslllons or trades In respect to any securrtlos mentIoned In thiS or any future Issue, and such position may be dllterent 110m any views nowor hewafter efpressed in thIS or any other Issue Delafield Harvey Tabell Inc which Is regIstered With the SEC as an Investment adVisor, mayglYe advIce to ItS investment adVisory and other customers Independentty of any statements made In thiS or In anv other Issue Further Information on any security mentioned herem IS avallabfe on request

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Tabell’s Market Letter – June 20, 1986

Tabell’s Market Letter – June 20, 1986

Tabell's Market Letter - June 20, 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 June 20. 1986 It is now almost sixteen years since this letter adapted the practice of submitting final copy to the — ,- priQJ,er at nponQnAric!ay Jbu …publls1!.ipgfJ!tlO1.tl5.nmylg9e'Lth -',ut!!-..of..lading 9uillg the !in'…,.,..,.–I hours ofLthe week. This has caused fewer embarrassing moments than might be expected. However,- the – recent advent of the triple witching hour renders any comment on the short-term course of the market in this issue totally superfluous. We will. therefore. resort to what some wag once called the last refuge of the technician, and talk about fundamentals. What stImulates this discussion is a headlme which appeared a week ago in the business section of the New York Times. explaining a thirty-six point rally in the Dow on the previous day. The headline read Weak Economic Data Spur Bonds and Stocks. It is not our Intention to criticize that particular head. Indeed, to the extent that daily stock market swings can be ascribed to particular events. it. and its following story, are probably perfectly true. It is, however, necessary to note that a Rip-Van- Winkle financial analyst, returnmg after a sleep of less than a decade, would have been certain that it was a mIsprint. There was indeed a time, when, at least according to the conventional wisdom, stocks were supposed to go down on weak economic data rather than put on exceptionally strong rallies. The Times story definitively explained the rationale. It noted that Interest rates fell early in the day after the Government reported that industrial production declined by sIx-tenths of a percentage point in May. The larger-than-expected dechne. combined with recent reports of sluggish retail sales and declining manufacturing employment, was enough to revive speculation that the Federal Reserve might try to stimulate the economy by easing monetary policy and encouragIng lower interest rates. This is, of course, an excellent distillation of the current, as opposed to the old-fashioned, conventional wisdom. The stock market. we are told, has become the handmaiden of the bond market, and lower interest rates are the sole requirement for leading the market higher. Such lower rates, in the Wall Street view at least, are the product of efforts on the part of the gnomes of Liberty Street to stImulate, or at least not to restrain, the economy. Thus a drop in industrial production suddenly becomes bullish for the stock market. Taking this logic to its reductIo ad absurdum, of course, means that what the country really needs is a major depression which would prompty produce 2 bond rates and a Dow of 5.000. The poinHs-t'Whe–tdit4ma…and4h,,o&r-llstockmakeLtheociesmuBt.atsomepoint.cometo'–'—I conflIct. They are reasonably close in our VIew, at the moment. to doing so. Let us hypothesize for a moment that continued economic weakness were to produce yields on AAA Industrials of 8 verses the current level of around 9 114 . The current ratio of the triple-A yield to the Dow yield is roughly .37. Thus. theoretically. an eight-percent trlple-A might support a DJIA yield of 2.96. which would equate roughly to a Dow of 2180 at current dividend rates. This is all very well, but it is at this stage that we begin to run afoul of tradition. For the twelve months ended March, the DJIA turned in earnings of 96.43. This brings the price/earnings ratio at current levels uncomfortably close to the twenty level. The Dow has previously sold above that level for only four quarters In 1961-1962. historically the peak of a major upward cycle for pI e ratios. The Dow's yield, moreover, currently finds itself at around the 3 1/2 level. The so-called yield ceiling which tends to come into play somewhere around 3 to 3 112 on the Dow can be better documented historically than can the stock market's relationship with the bond market. DJIA yields at around that level accompanied market tops in 1973, 1968. and 1961 to name just a few instances. Meanwhile the stock market's supposed relationship with the bond market can be historIcally documented just about as far back as the last couple of market swings. The great take-off from August, 1982, was of course accompanied by falling bond yields, and a turnup in yields between mid-1983 and mid-1984 did indeed produce a fairly Important downswing. It IS, however, diffIcult to carry this relationship very far back in time. It can be argued, of course, that, with bonds currently yielding so much more than stocks, equities should today be a great deal more sensitive to competition from senior securities. However, in one sense, all financial history since 1949 can be viewed as a swing from stocks prOViding a yield 2.75 times as great as bonds to a stock-bond yield ratio of around .31 today. Our own view, for what it is worth, is that the conflict will ultimately be resolved by a renaissance of the traditional view. We would, in other words, regard an economic environment in Which stock earnings were able to increase by the 30-40 not so long ago envisioned by analysts for the major averages as being a more bullISh one than a period of earnmgs dechne and concomitant lower interest rates. The ultimate syntheSIS of the two stock marketviews will be-interesting. – '.. … AWTvfl Dow-Jones Industrials 02 00 noon) 1859.30 S P. 500 (1200 noon) 244.34 Cumulative Index (6/19/86) 3155.67 ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL. INC. No statement or e)!prCS510n of opmlon or any other mattcr herem contained IS, or Is to be deemed to be, directly or Indirectly. an otfer or the sohCltahon of an of/or to buy or sell any security referred to or mentioned The maher Is presented merety tor the convenIence 01 thesubscflber While we beheve the sources ot our Information to be rehable, we In no way represent or guarantee the accuracy thereof nor of the statemenls made herein Any action to be taken by Ihe subscrlbel should be based on hiS own Investigation and mformatlon Delafield, Harvey, Tabell Inc, as a corporation and liS officers Of employees, may now hMe, or may laler lahe, pOSitIOns or trades In respect to any securities mentioned In thiS or any future Issue, and such position may be dlHarenl from any views nOWOf hereaf1er expressed In this 01 any other Issue Oelafleld Harvey, Tabell Inc whiCh IS registered wllh the SECas an Investment adVisor may give adVice 10 Its InVestmenl adVisory and olher customers Independently of any statements made III this Of m any other Issue Further Information on any secunty mentioned herem IS available on reQuesl

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Tabell’s Market Letter – June 27, 1986

Tabell’s Market Letter – June 27, 1986

Tabell's Market Letter - June 27, 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 OEALERS. INC (609) 987-2300 June 27, 1986 The season has arrived for discussion of the Summer rally and republication of the table below. – -.,..duly-rec.mpute-''c!yr-8sneWfigtlres – . ' b e-c….o….m… e a v ail a b l e . -. …..- – which One Month Periods (1926-1985) Two Month Periods (1926-1985) End-Month Advances Declines Average Change Advances Declines Average Change January 38 22 1.05 February 30 30 -0.22 March 33 27 -0.04 April 34 26 1.21 May 29 31 -0.85 June 31 29 0.91 July 37 23 1.70 August 38 22 1.53 September 23 37 -1.30 October 32 28 -0.30 November 37 23 0.83 December 44 16 1.24 39 21 2.29 34 26 0.84 28 32 -0.34 37 23 1. 24 34 26 0.56 27 33 0.03 37 23 2.57 40 20 3.38 35 25 0.20 28 32 -1.56 36 24 0.57 43 17 2.10 TOTAL 406 314 0.48 418 302 0.99 The 60 years since 1926 have comprised a total of 720 months. Of those months. 406. or 56. produced advances. The normal expectation for any single month for the GO-year period, therefore, would be that approximately 34 months would show a rise and some 26 months. a decline. As can be seen, the record for both July and August, the latter month especIally, is somewhat better than this. It is on the basis of these numbers that many analysts have remarked the tendancy toward a rally in the Summer months. s we have pointed out in the past, however. July and August do not constitute the- most statisticallysignificant periods In the table. The most unusual record shown is that of September which occured as a rising month in only 23 of the 60 years, a phenomenon widely at variance with the overall history. Likewise, the year-end rally, as shown by the fact that a rising December has occured in 44 of 60 months. is a considerably more likely occurence than an advance in July or August. Nonetheless, although the significance may be marginal. the July-August period does demonstrate an advancing propensity. This propensity becomes even more significant when one looks at two-month periods. The two months together have produced a rise in 40 of 60 years, and the average change for that two-month period is 3.38. a number almost 3 112 times as great as the average for the 720 periods under study. Interestingly, however, summer behavior since the current bull market began has been somewhat at variance with past history. three of the four Julys since 1982 having been down months. The reason for this is that each of the past four summers can be identified with fairly important market turning points. This is somewhat unusual, based on pre-1982 behavior, which generally saw important turns occuring in the Spring or Fall. The past four years, however, started with one of history's most important bottoms in August. 1982. The initial phase of the ensuing rally was topping during the Summer of 1983. and the 1983-1984 intermediate-term correction bottomed in mid-summer (July 24th) of the following year. Last summer saw a flat consolidation phase preceding the latest upward swing. which. it will be recalled, began at the end of September. It will thus be interesting to see whether summer, 1986 produces the traditional rally or a continua- tion of the recent tendency for stocks to exhibit some sort of reversal behavior. AWTvfi – ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL. INC. Dow-Jones Industrials (12 00 noon) 1885.12 S. & P. 500 (1200 noon) 249.18 Cumulative Index (6/26/86) 3176.79 –,.., NO statement or epresslon Of OpiniOn or any other mailer herem contamed Is or IS 10 be deemed 10 be directly or mdllectly, an oller or Ihe soliCitation of an offer 10 buy or sell any secunty referred to or mentloned The malter IS presented merely for the convemence of the subscriber White we believe the sources of our information to be rehable, we in no way represent or guarantee the accuracy thereof nor of the statements made herem Any action to be taken by the subSCflbershould be based on hiS own invesllgatlon and information Oelafleld, Harvey, labell Inc, as a corporafion and ItS officers or employees may now have, or may later take, POSitions or !fadeS In respecl to any socunlles mentioned In fhls or any future Issue and such position may be dlfterent from any views now or hcrcalter e..pressed in thIS or any otherlssuc Delafield Harvev label! Inc which Is registered With the SEC as an Invesfmenl adVisor may give advice to ItS Invesfment adVISory and other customers Independently of any statements made In lhls or In any olher Issue Further information on any security mentioned herein IS available on request 0

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