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 September 5, 1986 – InQ'38-poiirt-;llil y on ThursdaY, the rull\. rocketed''t()a newalCtiine'liiglf-TMstren-gth7—– — however, was unimpressive, much of it being obviously program-related, and with a miniscule 116 new highs being posted. Although it certainly does not constitute the conclusive reason for skepticism, the strength also took place at the beginning of September, the only month of the year with a pronounced downward statistical tendency. The following table summarizes the 1076 monthly changes that have taken place in the DowJones Industrial Average since it was first calculated in 1897. It shows, from left to right, the mean percentage change for each month over the past 90 years, the standard deviation (a measure of the dispersion of individual values around that mean), and the number of months in which the Dow was up or down. As the final total shows, the mean of all percentage changes was a bit over one half of one percent, and, over the 90 years, the Dow has posted 611 up months and 465 down months. Month Mean January February March April May June July August Sepember October November December 0.98 -0.39 0.73 0.87 -0.37 0.59 1.37 1.79 1.24 0.06 0.78 1.33 Total 0.54 Std. Dev. 4.50 4.11 5.44 6.82 5.85 5.60 5.70 5.94 6.09 5.54 5.87 4.25 5.59 Months Up Months Down Z-Coeff. 57 33 0.75 42 48 1.59 53 37 0.32 49 41 0.55 44 46 1.56 46 44 0.08 55 35 1.40 61 29 2.12 37 52 3.oi – 49 40 0.81 54 35 0.40 64 25 1.33 611 465 Chi-Square 1.57 3.75 0.16 0.20 2.29 1.18 0.69 4.43 8.39 0.11 0.55 8.30 The final two columns represent bits of arcana of interest only to statisticians. The two statistics, z-score and Chi-Square, are standard tests of statistical significance. Both attempt to measure the probability of attaining by chance a subset of given characteristics from 8 larger set of values whose properties are known, in this case the 1076 known values of monthly percent changes in the Dow. The z-test relates to mean and the Chi-Square to fixed attributes, in this case, direction — up or down. In the case of September, we have a record of 89 months with a mean change of -1.24. In 37 Septembers, the Dow was up for the month, and in 52 it was down. The z-test tells us that the chances of choosing a sample of 89 with a mean of -1.24 by pure chance from the 1076 months are considerably less than 1 in 200, and the ChiSquare figure shows the same thing with respect to choosing a sample with 37 up- and 52downmonths. The table quite clearly shows that, in terms of mean, September shows the highest degree of statistical SIgnificance of any month under study and slightly surpasses December in terms of direction. A couple of interesting sidelights are, perhaps, worthy of note. Part of the downward bias in September stems from its including two of the worst declines of the 1929-1932 period, September, 1931, the second worst (after October, 1929) month in stock-market history, and September, 1930. -However, interestingly enough the tendency towards a weak September has become especially pronounced since the start of the current secular bull market in 1974. The Dow today is well over three times its level at the low of that year. Yet, since 1974, 10 out of 12 Septembers have been downward months. This seasonal pattern, therefore, provides another reason to suspect the current rally may not persist too long. AWTvfI Dow Jones Industrials 1909.59 S & P 500 251.82 Cumulative Index (September 4, 1986) 3201.29 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL, INC. NO statement or expreSSion 01 OPinion 01 any other maller herein contamed IS or IS to be deemed to be dlreclfy Of Indirectly an oller Of the soliCitation of an otler to buy or sell any secunty referred to or mentioned The matter 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 otthe statements made herein Any action to be taken by the subSCriber Should be based on hiS own investigation and Informal Ion Oelafleld Harvey. Tabell Inc. as a corporation and I\S officers or employees may now hAve or may later lae poSitions or trades In respect to any secuflhes mentioned In thiS or any tuture Issue and such POSition may be dltferen\ from any views nawor hereafter cpreSsed In thiS or any other Issue Oelafleld Harvey Tabell Inc which IS registered With the SEC as an Investment adVisor may give adVice to I\S mvestment adVISOry and other customers Independenllv of any 51 atemenls made In thiS or rn any other rssue FUrlher Information on any securrty mentioned herein 19 available on request

———– – ————— T aIBIELL S aIil1iI R IET LIETTIER 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC (609) 987-2300 September 12, 1986 Thursday's and Friday's trading was, certainly, the stuff of newspaper headlines, with the Dow Gown (fit worst; -as or thiswnlin-gy some1.5UPoinf8-i1VthEfrWb cfayS – -This-extraorClin'Qry–; …….—-.,—,,,,, program-related weakness may stimulate some thought about what sort of Pandora's Box has been opened by futures trading. However, from a conventional technical point of view. all the market did was to traverse a well-established trading range. We first drew attention to this pattern in mid-May. and were able. by mid-June, to date its beginning as March 27th. Most of our letters during that time and afterward have devoted themselves to commenting on this pattern as it has unfolded. The pattern in question, in terms of the Dow-Jones Industrial Average at least, consists of a trading range with a moderate upward bias. That range, so far, has four obvious peaks—on March 27th at 1821.72, on April 21st at 1855.90, on July 2nd at 1909.03 and, most recently, on September 4th at 1919.71. The intervening three bottoms also were each at modestly higher levels—on April 7th at 1735.51, on May 19th at 1758.18 and on August 1st at 1763.64. It is interpretation of the trading that occurred during this period that is, it seems to us, crucial for formulating a market forecast. Either this range constitutes a broad distributional top, by now implying a cycle bear market, or it is simply a broad consolidation preparing for the resumption of the upswing that stalled out in late March. If it is, indeed, a top, the implications, while they may appear somewhat horrifying on the surface, are actually rather conventional, suggesting at the moment downside objectives somewhere in the 1540-1440 range. Though declines of a 400-500 point magnitude seem horrifying on the surface, they are, in percentage terms, no more than historically normal bear-market declines of the sort the market has been able to survive routinely in the past. It is to be stressed that, while it is time to begin thinking in terms of such figures as those above, it is not yet proper to offer them up as a forecast. Before a top can be definitely identified as such, a downside breakout must take place, and, even after Thursday's experience, we are not that close to such a breakout. Furthermore. in this particular case, even determining the exact breakout 1 -I-Point.J.sdifficu1t,dJe 10 'he .thre ascending highs mentioned–Ab-olla-.ehav.e,thereforelexpendedai fair amount of space in recent issues examining the internal nature of the market since last March, trying to formulate clues 8S to whether it constitutes distribution or consohdation. There are a number of arguments in favor of the distribution interpretation, the most important being the narrowing of leadership that has progressively taken place since late spring. Our readers are already aware of the breadth divergence that began with the April high and which now. with Thursday's 1,695 declining stocks, will be even more difficult to erase. We have pointed out also the divergence in the Transportation Index and the decreasing number of new highs. Secondary stocks have now apparently joined the downside parade. WIth the AMEX and OTC indices peaking in June-July. Trading of late summer has now produced an additional factor. Significant tops in individual issues. largely absent until recently, have now begun to emerge in many of the consumer stocks which have fueled the latest two years of the bull market. Such tops had already emerged, and been noted by us among financial issues. They are now beginning to appear in the fOOd. soft-drink, drug and consumer-products areas. The emergence of distribution among these market leaders must be taken as a strong argument in favor of interpreting the general market pattern as a top also. The one thIng that could mitigate any declIne would be rotation to new leadership. and there is indeed some evidence in favor of this taking place. The patterns for energy stocks. for example, are almost entirely different than the pattern for the general market. Most such issues have broken out of—or are close to breaking out of—major bases which go back many years. Like strength has begun to appear in other commodity-related groups such as forest products and metals. It is difficult to Justify this strength on a fundamental basis. (Most analysts, ourselves included. question the prospect for higher oil prices or a resumption of inflation.) The technical strength in many such Inflation-hedge issues, however is an unquestionable fact of hfe and must. in fact, be taken into account. It is, with no downside breakout and a short-term oversold condition, still too early to offer a definitive forecast. It is not. however, too early to suggest that a shift in portfolio strategy should be taking place. That strategy should, it seems to us, involve renewed representation In some of the commodity-related Issues which have been underperforming the market over the past few years. It should also, in view of the risk of the lower price levels, suggested above, involve beginning of the assumption of a defensive posture. Further evidence, once the shock of this week's gyrations is out of the way. will, we hope, serve to clarify the nature of the trading pattern that we have observed over summer, 1986. AWTlt Dow Jones Industrials S & P 500 Cumulative Index (September 11, 1986) 1791. 20 231. 07 3042.47 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. No statement or e,presslon 01 OPinion or aflY other malter herein contained IS or IS to be deemed to be directly or indirectly, afl offer or lhe soliCitation of an offer 10 buyor sell any security ret erred toor mentioned The malll'r IS presenled merely lor the convenience of IhesubSCliber While we believe the sources of our Information to be reliable we In noway represent or guarantee the accuracy thereof nor of the slatemenlS mdde herein Any action to be taken by the subscriber should be based on his own Invesllgatlon and Information Delaflltd, Harvey, Tabell Inc, as a corporation and liS officers or employees may now have, or may later take pOSitions or trades In respect to any securities mentioned In thiS or any luture Issue, and such POSition may be dlffcrent from any VICWS now or hmealter epressed In thiS or any other Issue Delaheld Harvey Tabell Inc which IS registered With the SEC as an Inestment adVisor may give adVice to Its Investment adVisory and other customers mdependrmlty of anv statements made In Ihls or In any other Issue Further mformatlon on any secuflty mentioned herein IS available on request

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 September 19, I QS6 With a week having passed since the 120-point, two-day decline of last Thursday and –'I'''''II-''i''Fs'r-'i;iddrariy''f,f'iciutlt steoe-mmasKea-p-p–rcoonp'rCriaettee to try -p-ronoll ntcoemcoennstisd, ers-itis nimsplicamtri ons in a readers ba-irte…m.aorweadrepth.areIt-,,;—— reqUlred to go to press at noon on Friday, and the ultimate outcome of the latest triple witching hour is unknown as we write this. Nonetheless, let us try to gain some general perspective on last week's extraordinary events. One of the words that last week's market repeatedly evoked was volatility. We were first prompted to study market volatility under conditions almost exactly the opposite of the present, back in December 1982 when the market was erupting on the upside rather than falling through the floor. We pointed out then that it was necessarv to distinguish between volatility and trend. (A market that goes up ten points each day for a long period is strong but not volatile; one which alternates 20-point rises with 10-point declines achieves the same result with considerably more volatility). We pointed out that the standard deviation, simply a statistical measure of variability, was probably the best gauge of market volatility. Accordingly, we calculated and charted the standard deviation of daily changes for each month from 1926 to the time of publication. This week, we extended that approach, calculating the standard deviation of hourly changes in the DJIA for each week since 1974. The 1982 study led to the conclusion that recent trading had not been particularly volatile on an historical basis, although, August 1982 had been. Further investigation prompted by the latter fact suggested that extreme variabilitv in a given month was generally consistent with market bottoms. The same held true for the weekly study we completed this week. We republished this work in May of this year in an effort to examine whether or not program trading had any effect on market volatilitv. Our conclusion at that time,I wmcn surpriseam-any, was-that it did not, and this remained true in'June also- It appears, however, that September will eventually go down in historv as one of the more volatile months since the 1940's. It will not set a record, to be sure, but it will be up there in a league with August 1982, May 1970, etc. Our weekly study showed the same thing for the week ended September 12th. Volatility was nowhere near a record, but equalled many weeks during late 1974, plus November 1978 and March 1980, all periods of notable downside climaxes. It is for this reason that the determination of whether we can blame last week's wide swings, to a considerable extent at least, on futures-related selling programs becomes important. If such is the case, then the comparison of last week's trading with past major bottoms becomes irrelevant. Much of the answer will be provided this afternoon. If triple witching hour proves to be a non-event or shows moderate strength, it will suggest that much of last Thursday's and Friday's gyrations can be blamed on the unwinding of outstanding buy programs. We are, frankly, unwilling to place too much Significance from the wide swings for September as a month and the week of September 8-12. For one thing, they came a week after the market had made a new high, not after protracted declines as in the instances mentioned above. Furthermore, as we pointed 011t last week, although it did so in only a few days, the Dow last week simply traversed the familiar trading range which has confined it ever since early spring. The deterioration that has manifested itself during the course of that trading range has been the constant subject of this letter throughout the summer. Certainly, last week's action, which constituted nothing more than a pause in the downtrend, is insufficient to reverse that deterioration. The most bullish factor that can be noted, it seems to us, is that the pause came where it did, in the mid-1700s, a level comparable to three prior lows for the DJIA. If this test of the lows is successful, it, along with the climatic action of last week, may become part of a chain of evidence that last summer's trading was consolIdation, rather than the distributional top we believe it to be. We would prefer, however, to await further such evidence from the standpoint of a defensive position. AWTjt Dow Jones Industrial Average 1768.70 S & P 500 232.02 Cumulative Index (September 18, 1986) 3014.99 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. NO statement 01 epresslon 01 oplOlOn or any other mailer herem conlillned IS or IS to be deemed to be directly Of Indirectly an oHer or the sohcrtatlon 01 an oller to buy or sell any security referred oor mentIOned The maller IS plOscnted merely lor the convemenceof the subSCriber While we behave the sources of our mformallon to be reliable we In no way represent or guarantee the accuracy theroo! nor 01 the slatcmQnts made herem Any aelion to be laken by the Subscllher should be based on hIS own Inveshgallon and mformatlon Delafield Harvey, labell tnc, as a corporatron and lIS olllcCIS or employees, may now have or may later take positions or trades In respect toany seCUrities mentioned In thiS or any future Issue, and such POSition may be different flom any views now or helIJafter e)ressedln thiS or any other Issue Detllletd Hlrvey label! tnc which IS registered With the SEC as an Investment adVisor, may give adVice to Its Inyestment adVisory and other customers Independently of any statements made In thiS Olin any other Issue Further mlormatlon on any security mentioned herein IS available on request

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, PRI NCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9872300 September 26, 1986 — —- – -Tlleaction.of the- market over-the–past two'vieelSwas ,remiriiscenCof-apUr'-clidrilnnighfer'- –. who has just taken an 8-count and managed to get to his feet and finish the round. The performance IS satisfactory, but affords one little confIdence as regards the future. In the concluding paragraph of last week's letter, we noted that the most bullish factor up to that time had been that the Dow had managed to hold the lows of the trading range which had contained it Close Intra-Day Low since last Spring. In previous letters, we have voiced the opinion that interpretation of that trading range is AprIl 7 1735.51 1712.52 crucial. It consists either of a distributional top or May 19 consolidation in preparation for an advance. The table July 29-30 1758.18 1766.87 1746.53 1741.56 at the right gives the successive lows which have defined Sept. 12 1758.72 1733.55 the range in April, May, July and September, plus two Sept. 19 1762.65 1747.61 subsequent September figures, which have, so far, Sept. 25 1768.56 1753.80 contributed to a succesful test. While the April 7th low is a bit lower than the following ones, they tend to show an identical pattern, with the closing figures centering around 1760 and the intra-day lows around 1740. As noted above, though, recent action, although it can be said to constitute a successful test, has hardly been impressive. Following the volume selloff ending on September 12th, the Dow moved ahead some 20 points on two successive days on which there occurred more declining stocks than advancing ones. It slid backward to the September 19th retest noted in the table, and then put on its 30-point advance of this Monday, Which, however, saw sub-par breadth and the lowest volume of the month. Two more modest rises followed, after which the average gave up the whole thing in yesterday's 35-point drop. We have couched the above discussion in terms of the.1l-o convenienc.-tWecouldlw-y'e just as well used the S&P 500-. – lndee-d, its pattern is fess encouraging than the Dow, since, on September 12th, it managed to reach both closing and, If anything, intra-days lows sIgnIficantly below its May and July figures. Breadth action, meanwhile, remains abysmal, with daily breadth havmg moved to new lows on September 19th. And yet the market hangs in there. We have noted before that practically the sole bullish element that can be cited in action over the summer has been its ability to exhibit rotation of leadership, with new advancing groups emerging to take up the slack as former leaders fall by the wayside. At tImes, it seems, this rotation proceeds at an almost incredibly rapid pace. In order to observe this, it is necessary to look no further than the action of the other two Dow Jones Averages, the Transports and Utilitites. Bouyed by a strong bond market, Utility action over the summer astounded most analysts, as successive new peaks were posted, culminating in an all-time high at 219.15 at the end of August. In just nine days, as of September 12th, the staid old indicator then managed to drop 9.3 on a closing basis, a fall worse than that of the Industrials. Suddenly, 'the most probable pattern for the Utilities appears to be a head-and-shoulders top, in which a decline to 196 would indicate still lower levels. In contrast, the action of the Transports has been driving Dow-theory buffs crazy throughout the summer. Its peak was on March 27th at 828.39, and each of the successive market upswings has produced a lower high. By early August, the Average was down almost 15 and appeared headed lower. However, in just a couple of months, while Industrial action was bad and getting worse, the Transports moved to a four-month hIgh this Tuesday. This high, moreover, looks suspiciously like an upside breakout from a base formation that could take the Transportation Average above its March peaks. If the reader gathers from the above that the market is one of. cross-currents, .he.is correct. Our basic view, however, remains as expressed in recent letters. We think that the market pattern presents signifIcant downside risk, and we would prefer to await evidence of further strengthening before adapting anything other than a defensive position. AWTmmr ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials 1770.25 S & P 500 232.26 Cumulative Index (September 25, 1986) 3043.79 NO statement or epresslon 01 opmlon or any other matter herem contamed IS or IS to be deemed to be, directly Of mdlrectly, an offer or the soliCitation of an olfer to buyor sell any security relerred to Of menlloned The mattor IS presented merely lor the convenience of the subSCriber While we believe the sources olour mlormatlon tobe reliable we In no way represent or guarantee the accuracy thereof nor 01 the Statements made herem Any action to be laken by the subscriber should be based on his own Investigation and mformatlon Delafield, Harvey, label! Inc, as a corporation and its officers or employees may now have or may later lake posllions or trades In respect to any secunlles mentioned In thiS or any future Issue, and such position may be dilierent from e.ny views nowor heleaiter epressed In thiS or any other Issue Delaheld Harvey, Tabell Inc which IS registered with the SEC as an Investment adVisor, may give advice to Its Investment adVISOry and othc customers Independently 01 any statements made In thiS or In any other Issue Fur1her Inlormatlonon any security mentioned herein IS available on reQuest