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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