Viewing Month: February 1987

Tabell’s Market Letter – February 06, 1987

Tabell’s Market Letter – February 06, 1987

Tabell's Market Letter - February 06, 1987
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– – —– v IBUSB.B.'5 IRlC;;IEV B.IEVVIEIRl 600 ALEXANDER ROAD, PRI NCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 – February 6. 1987 I –,- .P.!E.ary seems to be trying to start with the same vigor that January did. as the pieces —- – – – confirming- ….. o.n uptrendcl-niajorproporUonscontinuet -fall-into pla(!lr-!,he-'advance'from the– ! 1986 year-end is now 16.1 which, among other things, extends the year-end rally to well above the 10 threshold which has tended in the past, to foreshadow upward markets. Additionally. as of yesterday's close. our Daily Breadth Index posted a new high. confirming the uptrend and suggesting that it will be of some duration, since breadth peaks can lead market peaks by 8S much 88 two years. A few weeks ago. as the advance was getting under way, someone asked us if we were suprised by the sudden strength, and We answered no. We were then asked whether we had predicted it, and the only honest answer to that was also negative. The reason for this apparent paradox is that 1987. along with its predecessors. 1982 and 1984. has taken the shape of what we have called new-style market bottom. In the past, a characteristic of major lows was generally a selling climax, in which most of the action took place on the downside followed by 8 short vo1ume reversal. 1987 constitutes the third occurrence of a bottom preceded by dull. rather than precipitous. downside action suddenly and unexpectedly interrupted by 8 sharp upward thrust. Such reversals are. by their very nature. difficult to predict in advance. The key is to recognize the emerging uptrend at an early stage, rather than pin-pointing the actual bottom. It is worthwhile to compare the action of this year so far with the early stages of its two predecessors. As noted, the Dow is now up 16.1 after 24 trading days. By this measure, it falls. so far. a bit short of the 27-day 20.3 advance. which initiated the upswing of August, 1982. However, it betters the 14.1 advance over 20 days which began the upswing in July. 1984. With our breadth index reaching a new high, only 24 trading days after posting an eight-month low. it is not surprising that advance-decline figures should be exhibiting the same sort of reversal dynamics which characterized the past two upswings. Again the current 1–,I-,maueLfa11aabLof1982w.hich.on.As1U-produced 1564 advancing stocks—a record 81 of all issues traded. Early August, 1984, saw three consecutive days where more than 68 of all stocks changing hands advanced. The first two days of the present rally showed similar reversal characteristics. On January 2, and January 5, 77.3 and 79.9 of issues traded were advancing stocks. Volume in the year so far is also comparable to what occurred at the start of the two previous major upswings. Our normal standard for measuring a volume reversal has been the occurrence of a day on which daily volume exceeds 150 of its own 25-day moving average. This threshold was bettered in 1982 when. on August 18. 132 million shares or 230 of the last 25 days' average volume were traded. The 1984 low saw, on August 3, the first 200 million-share day in market history. this level being 258 of the 25-day average. The first 300-million-share day two weeks ago was not quite as impressive but still belongs in the same ballpark as the other two. Volume reached 172 of its 25-day average. We have been trying, of course. to make the point that 1987 market action to date compares favorably to that following August 12. 1982. and July 24. 1984. If one accepts this thesis. a comparison of the aftermaths of those two lows should be relevant. 1982. after its initial upswing. produced a 4.1. 7-day downtrend. followed by another 13.3 advance. No meaningful reversal occurred before the Dow had posted a high of 1065 on November 3. 58 trading days after the low at 776. A comparable advance today. would produce 2600 on the Dow before the end of this month. In 1984. the market paused for a good while following the initial upswing. remaining in a narrow trading range for some 94 trading days. If this pattern were followed in the present instance, the Dow would drift sideways, but hold above, roughly. 2050 until early April. before moving ahead once more. Finally. it is necessary to remind ourselves of the full extent of the 1982-83 and 1984-86 advances. It is difficult to pick out the high in the most recent case, since most of 1986 consisted of' asideways trading -range. At the earliest high scored. at the–end -of- March of last year. the average had advanced 67.7 from its 1984 low. At its peak at the end of November, 1983. the Dow was up 75. Comparable action would call for the average to be in the 3200-3300 range before the current upswing terminates. This is not to be interpreted as a forecast. as any number of developments could change the outlook at any time. It is simply intended as a demonstration of what the strength of 1987 so far has the potential to produce. ANTHONY W. TAB ELL DELAFIELD. HARYEY. TAB ELL INC. AWTbh Dow Jones Industrial S & P 500 Cumulative Index (215187) 2200.50 281.07 3592.68 NO statement or expression of opinion or any other matter herein contamed Is or IS 10 be deemed to be directly or mdlrectly, an offer or the soliCitation of an oller to buy orsetl any security referred toor montloned The matter IS presented merely iorthe convenience of the subSCriber While we beheve the sources of our mformatlon tobe reliable we in no way represent or guarantee the accuracy thereof nor of the statements made herem Any actIOn to be taken by the subsctlber should be based on hiS own Investigation and information Detafleld, Harvey, Tabell Inc, as a corporation and Its officers or employees, may now havo, or may tater take, positions or trades m respect to any securltlos mentioned In thiS or any future Issue, and such position may be dl1iel(lnt from any views nowor hereafter epressed m this or any other Issue Delafield, Harvey, Tabel! Inc, which IS registered With the SEC as an Invest mont adVisor, may give adVice lolls Investment adVisory and olhe' customers mdependently of any statements made In thiS Of m any other Issue Further Information on any security men\!oned herem IS available on request ,-/

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Tabell’s Market Letter – February 13, 1987

Tabell’s Market Letter – February 13, 1987

Tabell's Market Letter - February 13, 1987
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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 February 13, 1987 We hope we have made it abundantly clear in our last few letters that We regard the early-1987 . strengtll. aSA! h8r;binger.ofur.ther–str-eng.th……to-come.—W-e feel'tha t–8 full y-investedposition;is–the'- -0 only proper one, given that anticipated strength. Having affirmed this, we feel free to issue a few caveats. It must be noted, first of all, that the Dow is up some 183 over four-and-a-half years. In that period, there have been only two noticeable corrections, a 17 drop in the DJIA in 1983-84 and the trading range which confined the market in the first nine months of 1986.. It is hardly surprising, therefore, that a few fully exploited areas present themselves. The point-and-figure chart above, at left, a one-point chart of American Brands, is purposely chosen 8S an example of the most common chart pattern existing today. The base between 41 and 49 clearly indicates an objective in the mid 70's, and it has just pulled back into strong support. Fundamentally, the stock is expected to earn 4.75 this year. making the pIe ratio a conservative 10. However, the chart pattern is one which technicians call a continuation pattern, one that is formed by a pause in a continuing uptrend. Such a pattern must be contrasted with the sort of major base which starts an important move. Such a base attern is shown b Chevron at right. above. The stock reBched .alow of.. 24jnearly1 1982. and has spent the entire period since that time forming a broad base. Therefore. despite apparent fundamental weakness, the pattern must be considered particularly strong in comparison to the continuation-type pattern which now characterizes the majority of stocks. Another type of pattern not too uncommon today is the one in which evidence of exploitation has reached an extreme phase, typified by the two-point-unit chart of Merck above, at left. Although the potential top ia small, the stock has tripled since 1984 and recently sold at almost 30 times trailing 12-months earnings. Although a sharp earnings increase is projected for 1987. the technical pattern suggests that the stock is fully priced. One of the weaker sort of chart patterns now extant is shown by IBM, above at right, one of the most widely' held of all issues; The-stock moved to a two-year'low late last year, ana the-base f6rmed— since is miniscule. Any further upside action would be severly hampered by the overhead supply between 150 and 160, and the stock would have to be considered a sale on strength to that area. These four different patterns are shown to suggest that, while the general market outlook continues to be good, selectivity, typical of the late stages of major upside moves, is beginning to emerge. Similarly. it is late enough in terms of the major cycle that minimizing downside risk should become an important goal in the stock-selection process. For this reason, portfolios should be weighted in favor of those stocks just corning off long-term bases rather than others which appear more fully exploited. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWTbh Dow Jones Industrials (12 00) 2169.29 S & P 500 (1200) 275.25 Cumulative Index (12/17/87) 3596.11 No statement or expression of opinion or any other maHer herein contained IS or IS to be deemed to be dlrecllyor Indirectly, an offer or the Solicitation of an offer to buy or sell any secunty referred toor mentIOned The maHer IS presented merely for the convenience of the subscriber While we believe the sources of our information to be reliable, wetn no way represent or guarantee the accuracy thereof nor of the Stat6ments made herem Any action to be !alten by the subSCriber should be based on hiS own investigation and InformatIOn Delafield, Harvey, Tabell Inc, as a corporal Ion and liS ollicers or employees, may now have, or may fater take, pOSitionS or trades In respect to any securities mentioned In thiS or any future Issue and such pOSition may be dlfleren\ from any views nowor hereafter expressed In thiS or any other Issue Delafield Harvey Tabell Inc which IS registered With the SEC as an Investment adVISor, may glveadvlcelo ItS InVestment adVISOry and olhe' customers IndependenUy of any statements made In thiS or m any other Issue Further Information on any security menhoned herein IS aVlIlable on reQuest

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Tabell’s Market Letter – February 20, 1987

Tabell’s Market Letter – February 20, 1987

Tabell's Market Letter - February 20, 1987
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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) 967-2300 February 20, 1987 The Dow started out the week with what has, by now, become the routine, all-time record – – – – –(m-easu.rtlin- ppi)'7i!-taeking -on–54-points -to-cloBetforthe first-'-time,–..above .Ahe-…2200 … level. After some mid-week profit taking,- the advance continued on Thursday. -Breadth -and volume were not all that they could have been. but there was little in the week's action to suggest anything more than a temporary respite in the ongoing pattern of strength. George J. W. Goodman, in one of his priceless pieces on the zany atmosphere of the late 1960s, quoted a money manager who described falling in love as being like coming off the base. It was an apt hyperbole. There is nothing quite so exciting to the technician, expecially if he is addicted to point-and-figure charts, than the prospect of a stock's moving out of a multi-year accumulation pattern. This was, indirectly, the subject of our letter last week when we suggested that one of the few noticeable signs of weakness in the current technical picture was the relatively small number of stocks just now moving off long-term base formations. That this should be the case is hardly surprising given the fact that the major averages have moved up some 180 since 1982. We did, however, cite energy issues as an example of a group of stocks that had, essentially, sat out the four-year bull market and have been just recently, moving out of long-term base formations. Selectively, another group of similar patterns may be found among the secondary and tertiary issues traded in the over-the-counter market. The hypothesis of a shift in leadership to OT C issues has at least some piausability Evidence exists, for example, that the individual investor, the normal buyer of such issues. has remained sceptical regarding the bull market to date and still has available a fair amount of investible cash. It can also be documented that the NASDAQ Industrial Index has been out of phase with the Dow for more than ten years, presenting, therefore, an alternative for those who feel that the blue-chip sector may, after a 4 li2-year advance, be fairly thoroughly exploited. 1–t—–NAS;CDA-';QEIvinddenucsetro'fitha7e1'-p,lansdetx dismalrelative first attained performance of OTC issues a high above 400 more than is 3 easy to come by. 172 years ago, in The June, 1983. At that time the Dow was under 1250. It took the OT C index three years to match that high in June of last year, at which point the DJIA was approaching 1900. Finally, in the past two weeks, the OTC average has posted a third new high, with the Dow, of course, now above the 2200 level. This lack of synchronization between the over-the-counter and listed areas can be traced all the way back to 1976. In the fall of that year, the Dow peaked at 1014 and fell steadily lower to reach 742 in February, 1978. This performance was regarded by most analysts as a major bear market, but it was, interestingly, the first such market in history during which secondary issues, instead of falling more sharply than the Dow, actually advanced. The NASDAQ index was 195.40 when the Dow made its high and was over 109 a month prior to the blue-chip low, in February, 1978. This astounding relative performance was a harbinger of the next 5 years. By April, 1981, the NASDAQ index had reached 275, a 400 improvement from its 1974 lows, vis-a-vis only a 75 rise in the Dow. Through June of 1983, as noted above, the OTC average had extended its advance above 400, behaving, in the process, at least as well as the major market indices. In June of 1983,as suggested above, the dive began in earnest. The Dow continued to a new high of 1287 in late November, by which time the NASDAQ index had barely recovered from an almost 100-point drop. As the Dow posted a relatively mild correction, to 1086 in July, 1984, the OTC indicator plumetted to 250, a low which was to be tested once more, in December, 1984, well after the Dow had started its upward path. The total decline was almost 39. Relative underperformance has continued at least through year-end 1986. At its high back in 1983, the NASDAQ index, at 408, was almost 1/3 as high as the Dow, Which was at 1241. Last year's close was 349, or 18 of the Dow, a level not seen since 1979. Only six weeks -into 1987. there exist only tentative signs of relative improvement, but they are nonetheless there. The OTC-Dow relative strength ratio has moved up some 7 1/2 recently, a rate of improvement demonstrated on only two prior occasions since the 1983 underperformance began. There are, in addition, those breakouts from multi-year bases alluded to above. We are inclined to think, in other words, that secondary issues could well be heard from before the current process is over. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. AWTbh Dow Jones Industrials (1200) 2240.16 S & P 500 (12 00) 284.95 Cumulative Index (2/19/87) 3663.00 NO statement or expresSion 01 opinion or any other mallet herein contained IS, Or IS to be deemed to be, dlrec!!y or indirectly, an offer or the soliCitation 01 an oller to buy or sell any security referred 10 or mentioned The mailer IS presented merely lor the convemence 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 01 Ihe statements made herem Any action to be taf.en by the subscrrber should be based on hiS own Invesl19a1lon and Information Oela/leld, Harvey Tabell Inc, as a corpora\lon and ItS ollicers or employees may now have or may lalerlake, positions or trades In respect to any securrtles mentioned In thiS or any future Issue, and such posilion may be dll1erent Irom any views nowor hereafter expressed m thiS or any other Issue Delafield, Harvey, Tabell Inc, whiCh IS reglslered With the SEC as an Investment adVisor, may give advice to Its /Ilycslmenl ady!sory and o/her customerS mdependenlly oj any slatemenls made In Ihls or In any Olher rssue Further Inlormatlon on any securtly rnenl10ned herein IS available on requesl

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Tabell’s Market Letter – February 27, 1987

Tabell’s Market Letter – February 27, 1987

Tabell's Market Letter - February 27, 1987
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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 February 27. 1987 — — …. –Readers who-are expectingithis -week,-a-precise forecast,of the.a.oirection .ofthe mBrket–'-Breduly. . -;;;;. warned at this point that they may toss thIS sheet into the nearest waste basket. Rather than providing answers. we intend to raise some questions — in line with the ancient adage about the right questions being necessary to obtain the right answers. We intend. moreover, once again to explore a ' …,.,. .., ,.. '.. ——,-,.-. .'''''……. -,—..'..-..-'-.-.-being the question which, current location START DATE DJIA JUN 1896 JAN 1901 NOV 1903 NOV 1907 OCT 1911 MAR 1915 DEC 1917 AUO 1921 JUl 1923 NOO 1929 JUl 1932 SEe 19J APR 1938 APR 192 NOO 1946 JUN 199 SEP 1953 DEC 1957 JUN 1962 OCT 1966 AY 1970 DEC 197 AR 1978 30.22 8. 91 32.17 12.79 55.52 60.83 74.38 67.11 86.91 238.95 54.26 92.63 111.28 95.35 169.89 167.2 264.04 35.69 561.28 807.07 700.H 616.24 757.36 regUlar readers know, has ofter been raised in this space, that of the Dow in terms of the familiar four-year-cycle pattern. HIOH DATE DJIA x LOW HIGH lOW DATE TOTAL DJIA OS OS '00 AODS, X AD, X OF OF DEC -PR-E-V—LO-W- PREV HIGH 'PR 1899 54.90 JAN 1901 18.94 62 -II JU' 1901 57.10 NOV 1903 32.47 5 15 -OJ JAN 1906 73.76 NOV 1907 12.79 54 NOO 1909 70.3 OCT 1911 55.52 24 -21 DEC 1912 64.37 MAR 1915 60.83 41 -6 NOV 1916 105.97 DEC 1917 7. 38 JJ 20 61 74 -30 OCT 1919 118.92 AUG 1921 67.t 1 H 22 so 60 -H 1923 102.75 JUL 1923 86.91 2J OJ 53 -15 SEe 1929 343.45 NOV 1929 238.95 76 74 ,OS -30 APR FE, 1930 1931 279.23 103.46 JUL 1932 SEe 1934 54.26 92.63 32 26 5 1937 186.11 AFR 1938 111.28 4J 30 17 -81 -10 10. -0 NOV 1938 119.82 1912 95.35 7 15 -36 JUN 1946 205.62 '00 1946 169.89 55 50 116 -17 JUN 1918 189.46 JUN 199 167.12 31 61 12 JAN 1913 289.77 SEe 1953 264.0 51 B4 73 JUL 1957 508.52 OEC 1957 435.69 51 93 DEC 1961 731.11 JUN 1962 561.28 6B -2J JAN 1966 983.51 OCT 1966 807.07 43 BJ -IB DEC 1968 943.75 AY 1970 700.14 43 60 17 -26 JAN 1973 999.02 DEC 1971 616.21 55 58 43 -3' 5EP 1976 990.t 9 1978 757.36 J9 21 61 APR 1981 997.75 JUl 1982 808.60 37 71 -19 IJ2 13. II. 90 13. 2J S6 17' 15' 165 B7 BB 123 .6 95 92 S6 m 81 37 lB. eo '37 92 153 I7S 135 .06 10. question AVERAGE – JUNE 1896-KAR 1978 15 29 61 72 -27 127 125 AVERAGE – NOVEKBER 1946-KARCH 1978 17 35 72 55 -20 131 l25 AVERAGE – OCTOBER 1966-KARCH 1978 46 26 57 10 -29 106 100 11II The tabulation above is a familiar one and shooJ!r ownin.terpretation9Utle-,-fouryearcycle since the DJIA was first computed in 1896. The cycle is measured from low to low, and for each successive wave the start, the high, and the low are given. using month-end closes. The remaining columns are self-explanatory and show the length of each cycle in months and the percentage amplitude of the advancing and declining phases. The first obvious comment is that the table has not been added to since its current form became obvious in late 198'2. It is obvious that a new upward cycle began in the summer of that year so that the only thing for certain we know about the next line is that its starting point will be July, 1982 with the DJIA at 808.60. The simpliest assumption. of course, is that that cycle which began in 1982 continues today. This interpretation. unfortunately, has by now become so implausable that it probably should be discarded as a possibility. It would stretch the advancing phase so far to 178 and make a high at 224 of the previous (1981) high. It would. in addition. stretch the cycle's length to fifty-four months without a declining phase even having begun. Furthermore, our readers are aware of our attitude that 1987's strength so far presages further strength. Thus such a phase is unlikely at any time in the immediate future. A way out of the dilemma is to call the downswing between November, 1983 and July. 1984 the termination of the last cycle. This cycle would then have a length of 24 months, of which 16, or 67. would have been advancing ones. The advance would measure to 58 and the declining phase to 13. The advancing phase of the next cycle. running from July 1984 to date would now be 31 months long. involving a 101 advance. The twenty-four month length would make the tenative 1982-84 cycle one of the shortest on record. That short cycle would. unfortunately. be comparable to the August, 1921-July, 1923 experience which. it will be noted, was followed by the longest cycle in the table which ran from July. 1923 through November. 1929. One could perform a further cycle breakdown by hypothesizing that the trading range of the last nine months of 1986 constituted a full-scale correction. This would yield a cycle of normal length. with the present upswing just in its infancy. We are. however, close enough to last years action to recall it vividly. and identIfying it as a major correction stretches credibility. One could perform the same exercise by calling the thirteen months from February, 1926 to March, 1927. which have much the same configuration as last year. a major correction. This we have chosen not to do. We have. in other words. achieved a paradoxical situation in which further strength is the likely expectation, but an excess of such strength is likely to increase the market's cyclical vulnerability. We expect, therefore, to be raising the question of the cycle environment again in future issues. AWTmjs Dow Jones Industrials (1200) S & P 500 (1200) Cumulative Index (2/26/87) 2228.06 2R4.31 3655.94 ANTHONY W. TAB ELL DELAFIELD. HARVEY. TAB ELL INC. NO statement or expression ot opinion or any other matter herein contained IS or IS to be deemed to be directly or Inchrectly an offer or the solrcltaUoll of an offer to buy or sell any secuflty 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 refrable, wern no way represent or guarantee the accuracy thereof nor ot the statements made herein Any action to be taken by the subscriber should be based on hiS own rnvestlgatlon and Information Delafield, Harvey, Tabeff tnc, as a corporahon and ItS officers or employees. may now have or may later take, pOSitrons or trades In respect to any securities mentioned In thiS or any fulure Issue, and such pOSition may be olfferent from any views now 01 hereafter e…pressed III thiS or any other Issue Delafield, Harvey Tabeff Inc, which IS registered With the SECas an Investment advlsol, may give adVice tOI\S Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further Inlormatlon on any security mentioned herein Is available on request

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