Viewing Month: November 1986

Tabell’s Market Letter – November 07, 1986

Tabell’s Market Letter – November 07, 1986

Tabell's Market Letter - November 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 – November 7, 1986 1.Ucal)noJ.!.!k,g!lins!ljd!ha!ther!L..ha,,takelk-PJace.-somgimprovementnmar..ketactionovel'e-,,,I the'past fortnigh,t . .The Dow, it will be recalled, reached-its latest closing low'on . September 29th at 755.20, in line with historical expectations of a weak September. It firmed during the early part of October and, over the past couple of weeks, has moved ahead sharply, reaching, so far, a closing high of 1899.04 on Wednesday. The market has accomplished all this, moreover, on improving breadth and volume. Since October 21st, there have been only two trading days when declining stocks exceeded rising ones. Moreover, most advancing days have been accompanied by sharply increased volume. On October 30th, for example, along with a 26-point upmove, trading reached the 194-million-share level. For all of this, though, we are unable to detect sufficient improvement to suggest a revised portfolio strategy. Despite recent strength, market action still fits within the same dreary pattern that has prevailed since late March. To review it once more, this pattern has consisted of highs for the Dow at 1821 on March 27th, 1855 on April 21st, 1909 on July 2nd and 1919 on September 4th. Despite the fact that each one of these upthrusts constituted a modest new peak, they all produced the same aftermath, a decline to the mid–1750's. Given this history, it would be hardly surprising if the current move produced another new DJIA peak by a small amount. It is difficult, however, to read more optimistic projections at this time. We recently updated a study which we have been carrying out from time to time since it first appeared in this space in early July. Basically, that study consists of examinirig the price action of 1300 NYSE-listed issues and tabulating the date on which each stock made its high for the period March to date, the amount by which it subsequently declined and the percentage of that decline afterward recovered. The results this time around, using prices through Tuesday's close, tended to be similar to past versions wltic.LhaY..e.-.shownanL..– I ever narrowing upside leadership – For example, despite the average's latest upthrust to the vicinity of new peaks, only 180 of 1301 issues attained their highs during the October-November period. 440 stocks, a third of the issues under study, scored their highs back in March and April and have not achieved new peaks since. These 440 issues have declined, on average, some 37. By and large, moreover, they have achieved little in the way of recovery. The average percentage of lost ground regained is ahout n percent, anl the bulk of the issues in question have retraced less than half of their downswin gs. It is interesting to note iust what sort of leadership characterized the recent new peaks for the averages. Current leadership has been somewhat of a mixed hag, with the only identifiable industrial group showing above-average strength in recent days being PaperlForest products. Earlier, the end of October saw strength in Airlines, accounting for the above-average performance of the Transportation Average Rnd some financial issues, particularly Brokerage Houses anl Savings and Loans. The previous peak, in early September, saw the zenith for Energy issues, with most of the major international oils making highs early that month. What is important to note about these stocks' action since that time, we think, is that, although by and large they have not attained new peaks, they have been able to recover a major portion of the ground lost, in most cases 50-80. Going back still further, the July peak, at which 397 of our 101 issues made their highs, constituted, so far at least, the last hurrah for the disinflation-hedge stocks which had been market leaders for two years. Action of these issues since that time has been interesting. Most of the Food, Drug and Tobacco issues, as examples, moved lower by some -20-follo-wini(tneir-Julypeak-;- arid their technical patterns-show sorii'eevidencethatre'basing – – is taking place. In most cases, however, these bases, which have had only a short time to form, indicate nothing more than a test of the July highs. If this test, for consumer-products companies, is unsuccessful, it will, we think, mark the ultimate abdication of leadership by these stocks. On the other hand, penetration of September highs by energy stocks would suggest a new maior upside leg for this important segment. ANTHONY W. TABELL AWTlt DELAFIELD, HARVEY, TABELL INC;. Dow Jones Industrial Average (1200 noon) S & P 500 (1200 noon) Cumulative Index (1116/86) 1ROO.48 24.5 3211.64 No statement or epreSSlon 01 opinion or any othor mal1er herem conlatned 15, or IS \0 be deemed to be dlreclly or indirectly, an offer or the soliCitation of an o!for to buy or sell any security referred toar mentIOned The mailer IS presented melcly for the con,enlence 01 the subSCriber While we believe the sources 01 our mfarmaiion 10 be reliable we In no way represent or guaranteo Ihe accuracy \he1801 nOf 01 1M statements made heH,ln (.'01'1 aC\on 10 be \a1nlrl b'l 1M subscnber should be based on hiS o'l(n mvesllga\lm and InlormallOn Delafield, Harvey, Tabell Inc, as a corporal Ion and lis ollicers Of employees, may now have or may laler lake, positions or Hades In respect to any secunlles menlloned In lhlS Of any luture Issue, and such pOSition may be dlflerent from any vu.'ws now or helealler expressed In Ihls or anyolher Issue Delafield Harvey labell Inc which IS registered With lhe SECas an Investment adVisor, may give adVice to Its Investment adVISOry and othe' cusl0mers Independenlly 01 any stalements made In Ihls or In any other Issue Further fnformaUon on any secunty mentioned herein IS available on reQuesl

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Tabell’s Market Letter – November 14, 1986

Tabell’s Market Letter – November 14, 1986

Tabell's Market Letter - November 14, 1986
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— -.——.—— …. -, TABELL'S MARKET LETTER i I i ! — ,i – 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 November 14, 1986 We have regularly commented in this space on what seems to us the amazing amount of – effortdevotedby-thefinancia.communi-tyto.fl'ecasHngo,the,outlook-for-the-economywith-the— . intent to say something meaningful about the stock market. We' say 'we'are amazed' at this effort sinc there exists abundant evidence to suggest that it is essentially futile. The unspoken assumption behind much of Wall Street's economic forecasting is that changes in the economy are a major cause of changes in share prices. If this were the case, trends in economic activity would lead changes in stock-market indices, whereas the true relationship is exactly the other way around. Indeed, the Standard and Poor's 500 is used by the National Bu'reau of Economic Research as a component of its index of leading economic indicators. The thrust of this letter, then, will be an attempt to reverse the usual process. We will try to review the stock market scenario as it has unfolded over the past few months, give our interpretation of that scenario and try to ascertain whether there -is implicit therein an economic forecast. The essential elements of the market outlook at this point can, we think, be divided into two parts. The first part is the outlook for the market as a whole, which, our readers are aware, we see as ranging from neutral to bearish. The second part is a shift in relative price action, irrespective of the general market direction, away from the leadership of the past two years and in the direction of cyclical, capital-goods, manufacturing companies. -The less-than-sanguine overall market outlook is based, in our view, on the trading range which has contained the popular market indices since March. The best-case interpretation of this trading range is as a loss of momentum which is likely to remain in effect for some time, The worst-case interpretation of the range, of course, is as a major-cycle top. If it is true that the market leads the economy, this sort of action would seem, at first glance, to be suggesting some sort of economic slowdown. However, let us 1–I—–rrecaU ,-the-change.-in-s1ockmal'kelbehavjor d. tes-back…to-,earLy–SptinK….JLliLq.uitp-possible -J that this weakness was, in fact, leading the slowed rate of economic growth which emerged in the most recent quarter. Moreover, when we look at the apparent shift in stock-market leadership, an interesting story emerges. Among those groups showing recently improved relative action, are such industries as aluminium, automobiles, chemicals, coppers, forest products, oil, paper and steel. Indeed, the best technical action at the moment is being shown almost uniformly by the most cyclical of market sectors, the basic industries of smokestack America. These industries, moreover, appear to be wresting leadership from the disinflation-hedge, interest-sensitive areas. If our interpretation is the correct one, the stock market is, then, telling a rather interesting story. It is suggesting, first of all, the likelihood of an economic expansion a good deal more vigorous then conventional wisdom would have tiS believe. How else to explain the improving price action of cyclical stocks in the face of essentially disappointing recent earnings It is, furthermore, suggesting that that expansion may well be strong enough to exert an upward pressure on interest rates. Thus, the recent weakness in interest-sensitive stocks and the apparent loss of momentum in the bond market which is, like the equity market, close to its high, but essentially at the same general level as last Spring. What the market also seems to be anticipating is, if not the resumption of mild inflation, at least the temporary cessation of deflationary pressures which have accompanied the bull market since 1984. This would appear to be confirmed by the essential flattening of the downtrend in most commodity prices over the past few months. Vigorous ,expansion, higher interest rates, and.modestly renewedinflation.,in,other words, seem to be implicit in the story being told by recent stock price action. It would be interesting to see if, in this case, the stock market proves as accurate an economic forecaster as it has been in the past. ANTHONY W. TAB ELL AWTcg DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrial Average (12 00 Noon) 1867.27 S & P 500 (12 00 Noon) 243.37 Cumulative Index (11113/86) 3196.52 NO statement or expression of opinion or any other maHer herein contamed 15. or IS 10 be deemed to be dlreClty or Indirectly, an offer or the soliCitation of an offer to buyor sell any security referred to or mentioned The maum IS presented merely forthe convenience 01 the subSCriber While we belieyethe sourcesot our information to be reliable we In no way represent or guarantee the accuracy thereof nor oi the statements made herein Any action to be taken by lhe subscnber should be base! on hiS own Invest!gallon and information Delafield, Harvey, Tabell Inc, as a corporation and Its otllcers or employees, may now haye, or may later take POSitions or trades In respect to any securities menlloned In thiS or any luture ISSue, and such POSition may be dlflerent from any Ylews now or herealler expressed In thiS or any other Issue Delafield, Harvey Tabell Inc, which is registered With the SEC as an Inyestment adYlsor, may glye adYlce to Its Investment adVisory and othe' customers Independenlly of any statements made In thiS or In ;Iny other Issue Further Inlormal/on on any security mentioned herem IS ayallable on request

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Tabell’s Market Letter – November 21, 1986

Tabell’s Market Letter – November 21, 1986

Tabell's Market Letter - November 21, 1986
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T (BHELL'S r.lJiIR n ( l E T LIETTIER 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9872300 November 21, 1986 – , —–J t-ism ..rkets-like,thisthatmak.l! .oneglad-(hbe .a..technician…,-,…,–,..,., Our non-technically-oriented colleagues we're forced this week, into' authorship'-of' portentous comments on the true, hidden, inner meaning of l'affaire Boesky. We will undoubtedly express our own thoughts thereon at some stage. Meanwhile, all we are required to do is talk about what the market did. Which, really, was not very much. On Friday, before the Boesky news broke, the Dow closed at 1873.59, off slightly from a high of 1899.04 ten days earlier. It dropped only a modest 13 points on Monday and was down by only a couple of points more at 11 o'clock Tuesday morning. The deluge then ensued. The day's trading wound up posting a 43-point decline on volume of over 185 million shares. However, prices firmed on Wednesday, and a sharp rally on Thursday regained almost all of the ground lost. The Tuesday debacle caused all manner of comment, some of that comment calling it the fourth greatest decline in history. Actually, it was not even the fourth worst decline this year. In true percentage terms (2.33), the Tuesday drop had been exceeded 69 times in the post-war period and 358 times since 1926. There was, we think, enough headline material last week without overrating what was not a particularly unusual phenomenon. All this took place within the context of the trading range, which, we are forced to remind our readers once more, constitutes, in our view, the one truly significant feature of 1986 market activity so far. The early November high, just under 1900, was the fifth identifiable high that has occurred. The entire drop, actually the smallest one this year, simply brought the average back to the lower part of that range. The ultimate breakout from this trading range, something that was not close to occuring this week, will, we think, be I.–,the major facJor in determining the direction,o! the market for 1987. Within this limited context there were'both bullish and bearish' features. IroniCalI.-yC,—–1 one of the more bullish was the huge amount of downside volume, almost 92 of the total, on Tuesday's break. Such volume has in the past, on not a few occasions, indicated the sort of climax normally associated with long-intermediate-term bottoms. Since downside volume is a component of the short-term trading index, this figure reached 4.09 on Tuesday, the fourth highest level it has attained in over 20 years. One-day levels this high have, indeed, in the past been associated with important lows, although, it must be noted, with some lead time. On a subjective basis, moreover, there is, we think, some optimism to be derived from the market's reaction to what has to be termed a media event. Basically, with the single exception of Tuesday afternoon, the market seems to us to have aquitted itself fairly well in the face of an avalanche of bearish news. There was, however, little of a climactic nature to be seen in either breadth or volume indicators. The familiar 10-day advance-decline oscillator had reached -3000 by Wednesday's close, whereas a level well under -5000 would be required to identify a normal short-term oversold condition. Poor breadth action has caused most breadth indices to pull back to a test of their September lows and yet further away from the new highs which would constitute a bullish confirmation. Total volume on Tuesday was only 1.26 times its 25-day moving average and would have to reach 1.5 times that figure before it could be construed bullishly. After all the fuss and feathers then, we are left with a market that, technically, is behaving just about the same as it has been doing all year, confining itself to a narrow trading range with ongoing signs of underlying deterioration. Future market action may require modifying this analysis, but no such modification was called for by what happened this'week;–' – – – ' , – ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWTmmr Dow Jones Industrial Average S & P 500 Cumulative Inde (11/20/86) 1871.48 242.92 3155.79 NO statement or c(presslon Of opiniOn or any other mailer herem contamed IS, or IS to be deemed to be, directly or indirectly, an oller or the soliCitation at an offer to buyer sell any secunly reterred IOOf mentioned The matter IS presented merely lor the Convenience 01 the subSCriber While we beheve the sources of our information to be reliable we In no way represent or guarantee the accuracy lhereol nor of the statements made herein Any action to be taken bv the subSCriber Should 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 laler take, positions or !rades In respect to any securities men!loned In thiS or any fu!ure Issue, and such pOSl\lon may be dillerenl from any views now or herealler expressed In thiS or any o!her Issue Delafield Harvey Tabell Inc whlch.S registered With the SEC as an investment adVisor, mayglVc adVice 10 Its Investment adVISOry and olhe' customers Independently 01 any statemen,ls made In thiS or In anj other Issue Furlher mformallon on any security mentioned herein rs available on request

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Tabell’s Market Letter – November 28, 1986

Tabell’s Market Letter – November 28, 1986

Tabell's Market Letter - November 28, 1986
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD. PRINCETON. NEW JERSEY 06540 MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC (609) 987-2300 November 28, 1986 –'-W-nbted-Iastl\re-ek-rhat–tt -waB-possible;oead–some'fairlypositive-impHeations-rf-()!–the… marketfrom its response to the breaking of the Boesky scandal over the previous weekend After it had broken sharply on November 18th, the market firmed and ended the week on a strong upside note. the feature of which was a 33-pOlnt rise last Friday with better than 200 million shares changing hands. The fact that this sort of action can be interpreted positively draws upon the hypothesis that the market's response to news is often more important than the news itself. In the tone of much of the reportage on the Boesky case a week ago was the strong implication that the market, having reached its current level with the aid of such chicanery. should certainly come apart in the wake of the revelations being made. In other words, if the preconditions for a weaker market existed in the supply-demand picture two weeks ago. the insider-trading disclosures. not to mention the furor over the Iranian arms sale. gave it every excuse to move lower. Instead, the news was shrugged off, and the market approached new highS. We also noted last week, though, that it became necessary to move away from subiective interpretation of the market strength and to try to quantify that strength. It is at this point that one runs into trouble. For example, at Tuesday's close, within 7 DJIA-points of an all-bme high. just 22 NYSE-listed common issues were able to post new 52-week peaks. This list consisted largely of blue chips plus a few takeover issues. The commonly-heard analysis of last week's market was that it was a flight into quality. This analysis is probably correct. but the historical 'implications fire hardly bullish. Such a flight normally tends to take place somewhere near the tail end of a market upswing, when investors feel pressured to invest in equities but are unwilling to assume the risk perceived to eXIst in vp-nturmg into secondary stocks. During the entlre Mse. it was the Dow, consisting as it does of thirty blue-chip issues. which outperformed almost every alternative market measure. Indeed, the broader the Index chosen for measurement, the worse the market's behavior looked. The table below shows the high and low —-oof-thea-dingrarrgh-has-cxist-ed…sinee-Ma-reh fer fou-I–rep-resen-tative-indicB.tor-s–.- he-thir.d ….. – – column shows the Tuesday close. and the final column indicates the ratio of that closing price's distance from the low to the entire range. This measurement. obviously, can range from zero for an index close to its low, to 100 for one selling at its high. DJIA S & P 500 Value Line Breadth HIGH 1919.71 (9/4) 253.83 (9/4) 246.79 (5/30) 1005.78 (4/21) LOW 1735.51 (4/7) 228.63 (4/7) 218.79 (9/16) 978.91 (9/29) 11/25 CLOSE 1912.12 248.17 230.25 986.62 RECOVERY 96.04 77.54 40.93 28.69 The figures. of course, suggest how narrow the recent advance has been. The Dow. as noted. was selling almost at its all-time high. The broader, but shll blue-chip-dominated S & P 500, however, was barely in the upper quartile of its April-September range. The Value Line Composite, s broad and unweighted index, had recovered just 41 of the ground lost, and our daily breadth index had shown hardly any recovery at all. It is also worth noting that the latter two indices moved to new lows in September, whereas the popular averages posted their six-month lows back in April. We also tried to ascertain this week how much recovery han occured in a universe of 1'300 NYSE-listed issues. On average. the stocks in this group were selling below the midpoint between their recent highs and lows, unhke the averages. which were selling in the upper part of a similar range. The median recovery for these stocks was also in the area of 50. further suggesting that the latest advance has been led by an ever-decreasing number of issues. All of this, moreover. does nothing more than lend suhstance to what becomes an obvious conclusion from the inspectlon of individual chart patterns. SIgnifIcant numbers of individual issues remain in -ongoing downtrends with'slmost no recovery posted on the current -rally. Others appear to have patterns which suggest nothing more than a test of previous highs. Only a few stocks, notably in cyclical industries. where improved relative action is fairly recent. show contmued positive patterns. It is not meant here to suggest that. with the momentum shown over the past two weeks, the averages cannot move on to new highs by a relatively small percentage. However. as our readers are aware. thIS letter has been less than optimistic about the market outlook based. In large part. on poor breadth action. This action has continued through the recent rally and would have to post improvement before we would be willing to forecast significantly higher levels. AWTmjs Dow Jones Industrials S & P 500 Cumulative Index (November 26, 1986) 1911.98 248.33 3181. 70 ANTHONY IV. TABELL DELAFIELD, HARVEY, TADELL INC. No statement or eYpresslon of opInion Of tiny other matter herem contamed is or IS to be deemed to be directly or mdlreclly, an oller or the soliCitation of an offer to buyor set! any secunty referred toor mentioned The mailer IS presented merely lor the convenience of thesubscnber White we be!1eve the sources of our information to be reliable we In no way represent or guarantee the accuracy thereof nor 01 the statements made herein Any action to be taken by the subscriber should be based on hiS own mvestlgatlon and information Delafield, Harvey, Tabell Inc, as a corporation and Its of/lcers or employees, may now have, or may later lake, positions or trades In respect to any secufltles mentioned In this or any future Issue, and such poslhon may be dltlerent from any Jews now or hereafter etpressed In thiS or any other Issue Delafield Harvey, Tabell Inc, which IS regIStered With the SECas an Investmenl adVisor, may give adVice to ItS Investment adVISory and othe' customers Independently of any statements made In thiS or In any other Issue Further Information on any secuflty mentioned herein IS available on roqucst

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