Tabell’s Market Letter – May 01, 1987

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIA TlON OF SECURITIES OEALERS. INC (609) 987-2300 . May 1. 1987 It remains to be seen whether the adage about April showers and May flowers will hold true I—.-cfor…..the …stock…..market–in4-B8-7T- Thelatest eI!ain-on… the… ma.r-ket's,..pa-I!sde… tGOk- theform-of-a7….-27– —-; decline over 14 trading daysr. following that one bright shining moment when the Dow closed above 24M on April 6. Thursday's market strength suggested that the decline might, for the time being, be over, although a test of the lows in the low-2200 area cannot be ruled out. The most readable downside targets for the Dow were in the 2170-2090 range. and the upper part of this range was approached intra-day last week. The next major problem facing the technician will be determining whether April's action constitutes a correction in an ongoing bull market or the begInning of a top formation. Central to this will be an analysis of the next rally. As part of this process. we will be looking at indicators such as these shown below. DOH JONES INDUSTRIAL AVERAGE BRERDTH Market breadth produced a bullish confirmation when. after reaching a new low on the last day of 1986. it recovered to a new bull-market high above its earlier April peak. The only wornsome feature is the mild divergence between March 26 and April 3 and the steep decline which has since occurred. We would be disappointed, for example. to see the breadth index move below its bottom of last December. something it could do with a few sharply declining days. Eventually. for the bull market again to be confirmed. it will have to move ahead to a new high. As far as new highs and lows are concerned. the lO-day average in January broke 8 short-term trend line and achieved a level above its August peak. Subsequent action, however. produced a decline below the zero level. a reading which. while not immediately bearish;; is generally associated with the later stages of a bull market. Ability to move above its January high. where a couple of days saw more than 200 new highs being achieved. would also indicate an ongoing uptrend. May-June action, traditionally, is a time of testing. If the averages can spend the next two months re-basing and commence a rally. with internal strength in the indicators shown above, continuation of the bull market will become a probability. ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL INC. AWTbh Dow Jones Industrial (1200) 2298.29 S & P 500 (1200) 289.59 Cumulative Index (4130187) 3662.91 No stalemCfll or expression of OPiniOn or any other matter herem contamed IS, or IS to be deemed to be, directly or indirectly, an offer or the SOlicitation of an oller to buy or sell any security referred toor mentioned The mattellS presented merely for the convenience of the subscriber While we believe the sources of our mformatlon to be reliable, we In no way represent 01 guarantC'E! the accuracy thereof nor 01 the statements made herem Any aCllon to be taken by the subscllber Should be based on his own Investigation and mlormallon Delafield, Harvey, Tabell Inc, as a COfpora1l0n and ItS ofllcers or employees may now have or may later lake poslhons or trades In respect 10 any seculilies mentioned In thiS or any future Issue, and such position may be d,ltercnt from any views now or heH!afler e.pressed In thiS 01 any other Issue Delafield Harvey, Tabelf Inc, which IS registered With the SEC as an Investment adVisor, mayQlve adlce to ItS Investment adVISOry and other CUSlomerS Independently of any statements made In thiS or In any other Issue Further In/ormation on any security mentioned herein IS available on request