Tabell’s Market Letter – October 24, 1986

– – – – – – – – – ———,c—-.,.-,–,,—- —– ——…. –… …–,.. .'– – …. —-… TABELL'S MARKET LETTER 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (6091987-2300 October 24, 1986 In spite .a twenty- on performance of the stock market for the week to described as unimpressive. The current position of the market is smack in the middle of the often referred to trading range which has confined the DJIA from March of this year between a high of 1919.71 and a low of 1755.20. Within this trading range there have been four completed short term down moves and four up moves as shown in the table to the right, together with the percentage change and the length of each move. DATE DJIA CHANGE OF DAYS Closer examination of the market during this time period using Standard & Poors group indexes as a proxy shows an interesting process developing. 0 n the back page these Standard & Poors groups are ranked by percentage change best to worst for two periods, March 26, 1986 to July 30, 1986, and July 30, 1986 to October 22, 1986. Dividing the trading range into two separate periods dramatically demonstrates the diverse behavior of these Standard & Poors groups from one period to 3/27/86 4/07/86 4/21/86 5/19/86 7/02/86 8/01186 9/04/86 9/29/86 10/17/86 1821.72 1735.51 1855.90 1758.18 1909.03 1763.64 1919.71 1755.20 1837.04 0.00 -4.73 6.94 -5.27 8.58 -7.62 8.85 -8.57 4.66 o 6 10 20 31 21 23 17 14 the next. Reviewing the March/July rankings, we are aware of the continued outstanding performance in the consumer non-durable sector as reflected by the ten best acting group. Also the ten worst acting groups for the same period, although severely depressed, provide no real surprises. What is interesting, however, is the performance of these same groups from July 30 to October 22. 1 Steel 38.1781 2 Copper 36.7979 3 Personal Loans 34.2895 4 Gold 29.9145 5 Tires & Rubber 27.7657 6 Chemicals – Div. 20.3569 7 Oil Well Equip. & Ser. 18.4407 8 Truckers 18.0932 9 Canadian Oil & Gas 17. 2505 10 Forest Products 16.9716 84 Drugs 85 Retail Stores (Drug) 86 Soft Drinks 87 Retail Specialty 88 Cosmetics 89 Resta urants 90 Entertainment 91 Beverages Brewers 92 Savings & Loan Cos. 93 Toys -6.2315 -6.8254 -7.3735 -7.4176 -7.4478 -7.8510 -8.8105 -11.0862 -17.7156 -20.0714 The list above shows the percentage change of the ten best and worst groups for this period. New to the ten best list is the natural resource sector which includes groups such as steel, copper, chemicals and forest products. Another major sector which is showing improved relative performance is energy. Groups such as Oil Well Equipment (18.4), Oil Domestic (16.5) and Oil International (13.5) are technically positioned to assume new market leadership. Just as surprising for this period is the representation of the consumer non-durable sector in the ten worst performing groups. As this letter has pointed out repeatedly in recent weeks, there is a potential top formation present from this trading range with downside objectives substantially below current levels indicated. However, something is going on within the limits of this defined trading range. It is possible that this process of rotational leadership from sector to sectorand.groupto,group,cou1d–… — -evoivewithout major damage on the downside to the general market. bringing to the fore new leadership in sectors such as natural resources, energy and transportation. It might be premature to identify this process so early, and we should not lose sight of the potential technical vulnerability in the general market, but it must be monitored closely — RJSmmr ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials 1839.57 Standard and Poors 500 239.17 Cumulative Index (October 23, 1986) 3115.69 NO statement or eJO'presSlon 01 opinion or any other mailer herein contained IS or IS 10 be deemed to be, directly or indirectly, an offer or the SoliCitation 01 an offer to buy or sell any security relerred to or mentioned The matter IS presented merety lor the convenience of the subscriber Whllewe believe the sourcesol our information 10 beretlable, we In no way represent orguaranteelhe accuracy thereof nor of the statements made herein Any action to be taken by the subscriber Should be based on hiS own Investlgahon and information Delalleld, Harvey Tabell Inc, as a corporation and Its officers or emptoyees, may now have, or may later take pOSitions or trades In respect to any seCUrities mentioned In thiS or ant future Issue, and such POSition may be different from anyvle…'s nowor heleafter expressed In thiS or any other Issue Delafield Harvey Tabell Inc, which IS registered With the SEC as arllnvestmerlt adVisor, may give adVice to ItS Irwestment adVisory and othe' customers Independently of arly statements made In thiS or In any other Issue Further information on any security mentioned herein IS available on request