Viewing Month: April 1987

Tabell’s Market Letter – April 10, 1987

Tabell’s Market Letter – April 10, 1987

Tabell's Market Letter - April 10, 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 April 10, 1987 -.–.-Rn !lo'!-9en!.-!.oy-.J.!t e!ntstircl.!.3JL.–,mA.ag5 t02-e om 9l't …….. of Blue-Monday record, with the 30 Dow Jones stocks collectively opening 92 points below their ' previous close and the final figure for the Dow down more than 57 points. Three days of mild recovery followed, and then last Friday, after early weakness, exploded with an almost-70-point advance. Continued strength on Monday of this week produced a first-ever close above 2400, but this penetration held for only one day as the index backed off to 2339 yesterday. Much of this action qualIfies, by historic standards, as unusual volatIlity. Intra-day volalllity is a subject we first examined at the end of January after the first phase of the extraordinary 1987 rIse. We hypothesized, that, at the very least, an acceptable proxy for market volatility was the spread between the Dow's intra-day high and intra-day low expressed as a percentage of the close. Inspection seemed to indicate that anything above 3 for this statistic fell into the exceptional category. This threshold was exceeded on both January 22 and January 23, with the latter date setting a post-1974 record at 7.2. More recently, the March 30 dechne, the April 3 rise, and the April 7 drop also qualified as unusually volatile days. Investigation indicated that such volatility had an almost uncanny forecasting record for as long as six months ahead. The chart below shows the Dow on a weekly basis from mid-1974 to date, with the vertical lines at the bottom showing the highest weekly figure attamed by the high-low sprelld. It is apparent at a glance that such action has tended to precede upward markets. There have been, in the period shown, 120 days when the high-low difference was greater than 3 of the close. On III of those occassions the Dow was up 125 trading days (approximately six months) later. The occurrence of high intra-day volatility, -therefore, foreshadowed an upward market 92.5- of the time. By contrast, examination of all 3106 trading days since 1974 reveals that over the following six months the DJIA rose only 63.6 of the time. The likelihood of the association between volatility and market rises being a chance phenomenon would be analogous to the chance of drawing a sample of 120 marbles from a jar and finding that 111 of them were white when the jar was known to contain only 1977 white marbles and 1129 black ones. For statistic freaks the chi-square for this statistic is 43.17, suggesting that the probability of a chance occurrence is a great deal under 1 in 2000. We confess that we have no rationale for this relationship despite the impressive statistical record. That record, however, suggests that the volatility displayed early this week indicates higher prices over the next six months. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC, AWTBH Dow .Jones Industrials (12 00 pm) 2338.21 S & P 500 (1200 pm) 293.53 Cumulative Index (419187) 3756.77 NO Slalemenl or e.quesSlOn of Opinion or anyolher malter hemin contained IS or IS 10 be deemed to be directly or indirectly an offer or the soliCitation of an offer 10 buy or sell any security referred to or mentioned The matter 15 presenled merely for the convenience of the Subscllber While we beheve the sources of our Informahon to be reliable y'eln no way represent or guarantee the accuracy thereof nor of the statements made herein Any action to be taken by the subscriber should be based on hiS own Inveshgallon and information Delafield Harvey TabeH Inc as a corporahon and Its olhcers or employees may now have or may (ater lake, pOSlhons or trades In respect to any seculltles mentioned In thiS or any future Issue, and SUCh pOSlhon may be different from any views now or helealter epressed In thiS or any other Issue Delafield Harvey, TabeH Inc whiCh IS registered With the SECas an Investment adVisor may give adVice 10 ItS Inveslment adVisory and othe' customers Independently of any statemenls made In !hl'l or In any other Issue Further informatIOn on any SeCufI\y menlloned herem IS available on request

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Tabell’s Market Letter – April 16, 1987

Tabell’s Market Letter – April 16, 1987

Tabell's Market Letter - April 16, 1987
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11&\ ISUELL S Ia1lI 1RlEII LEIIII1E1Rl 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 April 16, 1987 -.- – Last .week!s. mar.ket saw .w.hat-was,-at-leasta-tempor-ar-y,-end-to-what-had. been-t-he-most . serious correctionof 1987 -so' far -It' culminated with a decline of over 50 points on Monday followed by a Tuesday, intra-day low of 2213.64 before a rally in the final half hour trimmed the day's loss. The Monday decline, it was widely noted, was the fourth greatest point decline in history. History, in this case, is not that long a period, since the three daily downswings which surpassed Monday all have occurred within the last nine months. Regular readers of this piece are already aware of the bee in our bonnet in regard to the practice of reporting declines in points, a practice which tends to make routine market action seem more significant than it is. Quite obviously, with the Dow well over 2000, swings in both directions will continue to set records for amplitude in Dow points. The proper way to compare today's market changes with previous ones is to express such changes as percentages or, if one wants to be esoteric, logarithms. Even using the proper tools, however, the drop through last Tuesday was, by historical standards, exceptional. The Dow moved from a close of 2405.54 on April 6 to a Tuesday close of 2252.98. This is a drop of 6.34. Declines of 6 or greater are, obviously, fairly common occurrences, but what sets the latest case off from its predecessors is the fact that it was compressed into six trading days. A drop of such magnitude, in so short a time, is a somewhat rarer beast. Measuring short-term declines of different lengths is not an onerous task. It requires simply that the move be measured in terms of compounded percentage per day. This percentage, in the present instance, works out to a daily fall of 1.08. Declines of -6verlcom pounded QVeronetwo, or even tnree-day perloo'''sC–a-r''e',-'''a'''s'-''o'''n''eo—I–1 would suppose, fairly regular market occurrences. However, cases where such a drop is extended to six days and beyond are relatively few. In the entire Post-World-War-IJ period there have occurred only 80 such declines, this over 41 years or 10,584 trading days. (During the 1920s and 1930s, it is well known, markets were much more volatile. Thus, in only 20 years between 1926 to 1945, 230 declines of greater than 1 compounded daily occurred.) What is interesting about the steep declines of the post-1945 period is the strong bias in favor of their taking place at or around important market bottoms. Our letter of last week noted the extraordinary correlation between intra-day volatility, measured by the spread between intra-day high and low, and subsequent market strength. The occurrence of steep declines apparently shows the same sort of bias. The eighty post-1945 cases mentioned above were followed by a higher market six months later 70 out of 80 times. Just as was the case with last week's study this figure posesses a considerable statistical significance. To cite a few examples, the last two short-term drops which exceeded the present one occurred in September, 1986 around 1767 on the Dow. 125 trading days later, the average had advanced to 2258. Prior to last September, similar events were seen, in July, 1986, and December, 1982, the latter preceding the second upward leg in the bull market which had begun the previous August. It is interesting to note that, in the recent market climate, volatility has tended to occur around intermediate-term bottoms, major bottoms generally arising .0uLof a. ' period of exhaustion as in August, 1982 and July, 1984. The latest case of a series of 1-daily-compounded declines at a major bottom took place in the latter half of 1974, all, obviously, resulting in higher figures six months later, since the market bottomed in December of that year. The research we have done over the past two weeks points clearly, we think, to highly volatile markets being the precursor of higher prices. We have no reason to feel this will not be true in the present instance. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. AWTebh Dow Jones Industrials 2275.99 S 8 P 500 Cumulative Index (4/15/87) 288.02 3626.19 No statement or epresslon of opinion or any other malter herem contamed IS, or IS 10 be deemed to be dlrec1lyor indirectly, an oller or the soliCitation of an olter 10 buy or sell any secullty referred to or mentioned The malter IS presented merely for the convenience of the SubSCriber While we beheyethe sourcesot our informatiOn to be reliable, we in no way represent or guarantee the accuracy thereof nor Of the statements made herein Any action to be taken by the subSCriber Should be based on hiS own InveS1!gallon and Intorma\!on Delafletd Harvey, Tabetl Inc as a corporal Ion and Its olltcers or employet'ls may now have, or may later take positions or trades In respect to any SCCUfilies mentioned rn thiS or any future ISSue, and such position may be d,l/emnl from any Ylews now or heleaftor expressed In thiS or any other Issue Dela/leld, Harvey Tabelt Inc, y'hlch IS registered With the SEC as an Investmenl adVisor, ma give adVice tOltS InYestment adVisory and othe' customers Indepelldently 01 any statements made In thl; or In any other Issue Furlher information 011 any securtly mentioned herem IS available on request

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Tabell’s Market Letter – April 24, 1987

Tabell’s Market Letter – April 24, 1987

Tabell's Market Letter - April 24, 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 April 24, 1987 – – – . – – – '' — l -.—-., -' ..-.,….,,- …..-.. At a time'when the DowJones Industrial-Average can rise 66 points'in a single day and then give up most of that gain 24 hours later, enough tall trees are sprouting to make for a reasonable difficulty in seeing the forest. At such a time, it can be helpful to take a step back and take as long a view as possible. Thus, it is probably worthWhile, at the moment, to make some observations regarding the market's very-long-term secular trend. With the Dow recently having sold at the 2400 level, it is easy to forget that average's long flirtation with the much lower level of 1000. It first closed near that figure in February, 1966, when the 1962-1966 bull market topped out at 995.15. The next major bull market ended on December 3, 1968 at 985.21, and the subsequent major advance, 1970-73, reached 1051.70 in January of the latter year. The bull market which ended in September, 1976 topped out at 1014.79 and that of February 1978-April 1981 peaked at 1024.05. The 1000-ceiling was not decisively breached until the Dow reached 1287.20 in November, 1983 before undergoing an intermediate-term correction, which, as technical theory tells us it should have, bottomed just above the 1000 level in July, 1984. What we have described above, of course, is the last secular trend, a trend which, as the repeated tops in the 950-1050 range show, was essentially a flat one. That flat trend lasted for some 18 years. Its predecessor was an uptrend which, between 1949 and the mid-60s, showed a 9-a-year annual rise. As far as we are aware, we were among the first to suggest that this sharp rise was probably over, first mentioning this possbility I – – I – – – . m;'.d.r anuar.y ,191-l. -T.hus, ofcourse,waS-oalmost,.f.iv.eyea.r-s.o.af-terthe-datewhich,-bb.y —–II-I hindsight, we know to have been the flat, secular trend's beginning. It is now almost axiomatic that the 1966-83 trading range has been replaced by a new upward trend. The point to be made, however, is that, even with four to five years of experience under our belt, we know very little about that trend's characteristics. One which can be noted is that corrections within this uptrend generally have tended to be relatively mild. If we take 1974 as the current trend's beginning, the first correction phase, that of 1976-1978, while producing a decline of 26 in the Dow, actually saw most secondary issues continuing to rise. The 1981-1982 decline, while measuring 24 in the DJIA, also saw large numbers of rising issues. The drop which ended in July, 1984, recent enough so that most of us remember it, produced only a 16 decline for the average. The next corrective phase occurred in the latter nine months of last year. These three quarters produced nothing more than a consolidation which repeatedly topped around 1800-1900 and never moved much below the mid-1700s. One of the characteristics of the new secular trend appears, therefore, to be the phenomenon of different, and possibly milder, corrections. Vicious declines such as 1970 and 1974 are, so far, conspicuous by their absence. We are aware that this constitutes a seductively dangerous form of new-era thinking, and we offer it, thus, only as an observation. We offered another such observation, noting that it, also, did not constitute a prediction, in a series of letters early last year covering the similarities between the current market and that of 1921-1929. Although we make no claim to have originated that comparison, we find that parts of it have been regularly repeated by an army of commentators over the last twelve months. Indeed it may be necessary to back off from this earlier observation specifically because it is becoming too popular. By contrast, a forecast of continuing relatively mild corrections, would be today, we think, a truly contrary opinion. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTbh Dow Jones Industrials (12 00) 2260.51 S & P 500 (1200) 284.35 Cumulative Index (4/23/87) 3671. 06 No statement or cpfeSS\on 01 opinion or any olher matter herem contamed IS or IS 10 be deemed 10 be direct Iv or indirectly an ofter or Ihc soliCitation at an oller \0 buy or sel! any security referred 10 or mentioned The mattf!r IS presented merely lor thc convenience of Ihc subSCriber While we believe Ihe sources of our information 10 be reliable we In no way represent or guarantee the accuracy theroof nor of the statements made herein Any acllon to be tafen bv the subscrlbar should be based on hiS own Investlgallon and information Delafield HaNey, Tabell Inc, as a corporal Ion and Its ottlcers or employees may now hHve or may later take poSitions or Irades In respect to any securities mentioned In this or any future Issue and such pOSition may be different from any views nowor hCleafler epressed In this or any other Issue Delafield HaNey Tabell Inc which is registered wllh the SEC as an Investment advisor, may gIVe adVice to Its Investment adVisory and othe' customers mdependenHy of any statements made m thl'; or in any other Issue Fuflher mformatlon on any security mentioned herem IS available on reQuest

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