Tabell’s Market Letter – June 12, 1987

,————— 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 June 12. 1987 , We focusedour attention lstw!lek on the trading range between, oughly, 2200 and 2350 whicliliaa;by -and rarge; 'cofltain-ed -the- Dow–since' its'1hltilil ftill–ff -from its' all-time- high — '—- – , of 2405.54 on April 6. This week's action once again underscored the importance of that trading range. Technically, a breakout from the range for most averages did occur at mid-day on Wednesday. However, immediately following that breakout, one of the last-hour gyrations which have cone to typify today's market took place, with a 50-point decline and a 20-point rally leaving the average just about unchanged only slightly above the 2350 level. Assuming the breakout is real, likely, in light of today's early strength, higher objectives for most averages are clearly readable although these objectives are not all that great in percentage terms. In the case of the Dow, upside targets center around the 2490-2540 range, and similar objectives exist for broad-based indicators, such as the S & P 500, S & P 400, and NYSE Composite. NO. OF AVERAGE EXTENT OF DECLINE nATE' OP' fllGH S'rdCKS fiECLINE I\) 10-20 20-30 30-40 4050 5'0 Before 5/19/86 168 46.1 0 1 17 52 44 54 5/19/86 – 7/31/86 159 40.4 1 1 46 48 21 42 8/1/86 – 9/28/86 107 29.9 0 5 68 22 57 9/29/86 – 12/30/86 46 30.7 10 6 19 15 42 12/31/86 – 4/26/87 501 21.7 16 215 207 49 86 4/27/87 – DATE 292 9.9 162 107 17 4 11 TOTAL 1273 25.6 179 335 374 190 83 112 Last wee.k's letter centered on the poor action of market breadth and the low nu'm'b'e'r-cof -I daily new highs which have characterizeo the recent sideways move. The tables located above and below, if the figures do not leave the reader totally numb, are worth wading through. since they examine the last 14 months in some depth and provide a little more encouragement than macro-indicators based on breadth and new highs. The first column of the table above shows the number of stocks posting new highs during four of the minor upswings of 1986 and for two periods during 1987. The second column shows the average decline for each group of stocks, to its subsequent low and the numbers of stocks which dropped by various amounts. We think it moderately encouraging that 793 stocks or just about two-thirds of the total, have posted new highs at some point during 1987. Indeed as the table's last line shows, 292 issues have actually out-performed the market. reaching new highs after the Dow had started to turn down. The subsequent decline for these issues is rather small and, for the bulk of them, weli under 30 percent. NO. OF AVERAGE EXT E NT OF RECOVERY DATE OF' HIGH STOCKS RECOVERY 20 20-40 4tl60 608\) 80-10\) Before 5/19/86 168 36.4 51 43 43 24 5/19/86 – 7/31/86 159 25.2 51 46 32 24 8/1/86 – 9/28/86 107 28.8 33 52 14 5 9/29/86 – 12/30/86 46 39.3 11 16 7 9 12/31/86 – 4/26/87 501 39.8 87 185 132 75 4/27/87 – DATE 292 39.6 74 81 66 52 TOTAL 1273 37.8 307 423 294 189 7 6 3 3 22 19 60 The above table focuses on the recovery following each stock's low which had taken place through Wedensday's close. t is hardly surprising that the extent of recovery for the stocks that peaked in 1987 has been substantial, since, as we noted above, these issues never declined by all that much. What is interesting is the above-average recovery shown by those stocks which peaked well over a year ago, before May, 1986. On the average, they have recovered 36.4 of their loss, and 44 of them have posted retracements greater than 40 of their declines. Persistence of this sort of trend would suggest a pattern of rotating leadership which might sustain the current bull market for some time. ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL NC. AWTebh Dow Jones ndustrials 02 00) 2377.27 S & P 500 0200) 300.80 Cumulative Index (6/10/87) 3771.29 No statement or expression of opInion or any other matter herein contained IS or IS to be deemed to be, dlrectty or indirectly, an oHer or the soliCitation of an offer to buyor sell any security relelred to or mentioned The matter IS presented merely for the convenience of the subscriber While we oelleve the sources of 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 investigation and Information Delafield, Harvey, Tabel! Inc, as a corporation and ItS olflcers or employees may now have, or may laler take, positions or trades In respect to any securities mentioned In thiS or any future Issue, and such pOSItion may be different from any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey labell Inc, which IS registered With the SEC as an Investment adVisor, may gIVe advICe 10 ItS Investment adVISOry and other customers Independently of any statements made In thiS orin anyolher Issue Further Informallon on any security mentioned herein Is available on reQuest