Viewing Month: July 1987

Tabell’s Market Letter – July 02, 1987

Tabell’s Market Letter – July 02, 1987

Tabell's Market Letter - July 02, 1987
View Text Version (OCR)

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 July 2. 1987 Despite the lackluster performance in the Dow Jones Industrml Average since posting a record hIgh percent88t weeJ;-!.ti,e DoW-iWliich -clolled-oub1986-ak1895.95, . h.sdded, 522-.,48-points.in-thefirst-half .of -,no'—f,, year—a 27.6 -gain. Ashlmpressive as these performance figures are, 'most recently the rIse' clearly has been due to a concentratIon of leadership in the high-grade, high capitalized equity sector. While this flight to quaUt y has fueled the recent advance in the Dow, some diverse market action has been taking place for some time in the NASDAQ aTC Industrial Average. Currently. tradmg 3.29 percent below Its thirteen week-old April 3 high of 465.20. a general review of the performance of the OT C stocks is an interesting and instructive exercise. The chart below presents an approximate five-year history of the DJIA and the NASDAQ Index. This is followed by a relative strength ratio. the NASDAQ Index dIvided by the DJIA and a OTC Breadth Index consisting of advancing lssues minus declinmg issues divided by total issues traded. 00 .!300 210) 1900 t700 I' SOD 1311' 4SO 400 1100 gIlD INDUSTRIRL RVERAGE 700 SOD 150 100 OTC INDU5TI;!IRL OJJR SO To briefly review these last five years, the NASDAQ Industrials has moved from 177.70 at the August. 1982 low to a high of 408.40 m June. 1983. a 129.83 percent advance as opposed to a 65.68 percent comparable rise in the DJIA. The OTC Average then corrected itself 38.76 percent in July. 1984 versus a correctIon over a similar time period of 15.59 percent in the Dow. Although very dramatic, both of these moves in the OTC Index are not surprising. for as we know a characteristic of the OTe Average has been its historical tendency to rise and fall more sharply than the Dow, i.e. a higher beta. A glance at the chart above confirms this normal market action until the July. 1984 low. Since that time, however, the continued strength in the OTC Index relative to the DJIA has been poor. It is true the OTC Index has risen 86.01 percent from the July. 1984 low but this compares with a 125.58 percent increase 10 the DJIA. What is equally concerning IS the behavior of OTC breadth. In April of this year. the OTC Index recorded a new high which was not confirmed by a new high in breadth. In fact, this dIvergence continues to be magnified. as breadth further deteriorates. while the OTC Index trades slightly below its old high. Although not shown on the above chart; it is important to note that NYSE breadth earlier this year confirmed new highs in the DJIA substantiating the continued bull market. Acknowledging that we are still in a mature. ongoing bull market should not prevent us from examining series such as those dIscussed above. It would be difficult for the market to continue to move ahead should OTC breadth continue to show weakness coupled with the OTC/DJIA ratio under-performing the Dow. Monitoring these series may give us a clue as to the ability of the general market to sustain its upward movement. ROBERT J. SIMPKINS. JR. DELAFIELD. HARVEY. TABELL RJSebh Dow Jones IdustrialS (1200) 2428.41 S & P 500 (1200) 304.78 Cumulative Index (7/1/87) 3816.22 No statement or eypreSSlon 01 opinion or any other matter hem.)ln contained IS or!s to be deemed to be directly Of indirectly, an offer or the solicitation of an offer to buy or self any secunty re!erred to or menltoned The matter IS presented merely for the convenience of the subscl1ber While we belreve the sources of our rnformallon to be reliable we In no way represent or guaramee the accuracy thereof nor of the statements made herein Any aCllon to be taken by 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 later take, posllions or trades In respect 10 any secUrities mentioned In thiS or any future Issue, and such position may be dlfferentlrom any Views now or hereaher expressed In thiS or any other Issue Oelafleld Harvey, Tabell fnc ,WhiCh IS r'lISlered With the SEC as an IIlvestment adVisor, may give advice 10 Its InYestment adVisory and other customers Independently of any statemenlS made In Ihls or In any other ISSue Furlher Information on any Secuflty mentioned herein IS available on fCQuest

Download PDF

Tabell’s Market Letter – July 10, 1987

Tabell’s Market Letter – July 10, 1987

Tabell's Market Letter - July 10, 1987
View Text Version (OCR)

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 July 10, 1987 The second half of what began, eVen by Wall Street standards, as an impressive year, continued as tll J!!.!!rJ'1Lm–!'Y!'d ahea!.JgaiiL!'!,CQr(nngJtewhighsin….theDow J onesl ndustriaLA verageon .Wednesday Lof -this week;-closingat-.a-recor-d 246f.97. – .- – – – — – As has been pointed out in this letter earlier in the year, this behavior is not uncharacteristic of recent, past market action. As 1986 ended, we had seen two earlier upside explosions emerge out of the blue, the first in August, 1982 and the second in July, 1984. The third case, it can be argued, started on September 29, 1986, following a 8.57 percent correction in the DJIA. It is possible to compare this recent market action to date against those two previous benchmarks. This, we attempt to do in the updated chart below which depicts the first 250 trading days of the two previous rallies along with the first 195 trading days in the current market. In order to facilitate the comparison, the 1982 and 1984 series have been adjusted so that their starting level is equivalent to the September 29, 1986 close of 1755.20. Below, the DJIA chart and the action of our daily breadth index in the three periods is depicted on a similar basis. – 'lASt q!l(, 12 198J(-G-) SASE JJU' 24 198,j(–1 SASE SE 29 19BGI- ) aw JONES lNDUSTRIQL AVERRGE 9REAOTH INDEX The most obvious generalization regarding the current market is that it falls just about halfway between 1982 and 1984 in terms of percentage advance. The two previous cases began with sharp upside explosions and then flattened, whereas the current market has produced a slow and steady rise in the Dow, so that by mid-February, it had advanced, on a comparitive basis, even more than in 1984. What differentiates 1982 from the two subsequent cases is the sharp second leg, which started in October of that year. This, as the chart shows, took the indicator the the equivalent of 2800 before it finally flattened and began moving sideways. It is the lateral movement in the second half of their lifespan which makes the two previous advances relevant from a forecasting point of view. If past experience is followed by the Dow, it could remain In a trading range centered around current levels through Labor Day. We can expect, therefore. a dimunition of action on the upside but on the other hand based on the past experience, there should occur little in the way of a significant correction. The only cloud on the horizon is the comparatively poor action of breadth for the most recent series. Clearly, this current weakness in breadth must improve in order to sustain the market advance. . It must be noted that before the two previous upswings had run their course, they each moved the DJIA up 65.68 percent in 329 trading days in 1982, and 76.68 percent in 534 trading days in 1984, versus 40.38 percent in 195 trading days currently to date. If this precedent is followed, the current upswing could carry the DJIA over the 3000 level some time in the first half of 1988. ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL INC. RJSebh Dow Jones Industrials (1200) 2449.62 S & P 500 (1200) 307.28 Cumulative Index (7/9/87) 3886.12 No statement or e (presSion of opmlon or any other malter herein contameO IS, or IS 10 be deemed 10 be, directly or mdlreclty, an oller or the sollcilation at an otter to buyor sell any security reterred 1001 menlloned The mailer IS presenled merety forlhe convenience of Ihe subscriber While we betleve Ihe sources at our mformaHon to be rellabte wem no way represenl or guaranlee Ihe accuracy thereof nor 01 the statements made herem Any action to be taken bv the SUbscliber should be based on hiS own mvesllgallon and mformatlon Delafield, Harvey, Tabelt Inc as a Corporal Ion and lIs officers or employees may now have, or may later take pOSlllons or trades m res peel to any secunlles mentioned In Ihls Ot any future Issue, and such position may be d.llerenll/om any views now or helealter expressed mlhlS or any olher Issue Delafield Harvey labell Inc whiCh IS reglslered With the SECas an Investment advisor may give adVice 101\S mvestmenl adVisory and olher customers Independently 01 any statements made In thiS 01 In any olher Issue FUrther mlormallon on any secuflty mentIOned herein IS available on request

Download PDF

Tabell’s Market Letter – July 17, 1987

Tabell’s Market Letter – July 17, 1987

Tabell's Market Letter - July 17, 1987 page 1
Tabell's Market Letter - July 17, 1987 page 2
View Text Version (OCR)

. , .- – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – — I 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) 9872300 – July 17, 1987 – .e–TheJ!,o)'l–! 01)es g.!Jr.t/l.1 N.era gpo'!t edy.eL.!i.gl!i,a!'w2ecordighh ur.sda,closin g-at—I..,,.. 2496.97 'up OVer 500 -pointsin six months and as of this' writing has broken the 2500-level. – As this market action continues positive, an examination of the current position of the stock market is instructive from a longer term perspective. Last week we inspected the start of this upswing, identified as November 29, 1986, and suggested, when compared to the two previous upswings, starting in August, 1982 and July, 1984, that there was still room on the upside for this current market given an improvement in breadth. The chart on the right shows the percentage swings of greater than 5 percent in the DJIA from September 29, 1986 to date, DATE DJIA CHANGE OF DAYS together with the length of each swing. As can be seen from the chart, the market rose 37.05 percent uninterrupted until April 4, 1987. Closer examination of the market since the April high to date, using the Standard & Poor's group indexes as a proxy shows an interesting, ongoing process, which gives us a clue for the continued 9/29/86 4/06/87 4/27/87 5/06/87 5/20/87 7/16/87 1755.20 2405.54 2230.54 2342.19 2215.87 2496.97 0.00 37.05 -7.27 5.01 -5.39 12.69 o 131 14 7 10 39 strength in the market. On the back page, these Standard & Poor's groups are ranked by percentage change, best to worst, for two periods, September 24, 1986 to April 8, 1987, and April 8, 1987 to July 15, 1987. Dividing the September, 1986/July, 1987 market into two separate periods demonstrates the continued rotational leadership from one period to the next period that has been taking place. What has happened to the consumer non-durables and interest-sensitive sectors of the market which lead the early advance of the upswing They have gradually been replaced by the cyclical sector of the market. Also, the worst-acting groups for the same period provide no real surprises – ,- –reflectin gthedemiseof1heinterestsensifiveectur;- '. WtrilL1s-imffi'Itrurr-ri1oWever,–.,…. is the performance of these Standard & Poor's groups from April 4, 1987 to present. RANK GROUP 04/08/87 to 07/15/87 PERCENTAGE CHANGE RANK GROUP 04/08/87 to 07/15/87 PERCENTAGE CHANGE 1 Offshore Drilling 48.0401 2 Aluminum 30.8699 3 Steel 27.9876 4 Steel (Excluding USX) 26.6124 5 Cosmetics 19.5619 6 Textile Products 18.5727 7 Gaming Companies 18.2734 8 Metals Miscellaneous 18.0240 9 Oil Well Equip and Ser 17.7577 10 Machine Tools 17.1330 86 Savings & Loan Companies -7.0405 87 Electronics (Defense) -8.8388 88 Building Materials -9.0596 89 Paper -9.5490 90 Transportation-Misc. -9.6886 91 Manufactured Housing -13.6755 92 Brokerage -14.6480 93 Forest Products -15.6135 94 Home Building -16.9276 95 Health Care-Misc. -22.5693 The list above shows the percentage change of the ten best and worst groups for this period. Strongly represented in the best groups include the offshore drilling, aluminum, and steel stocks. These groups continue to perform well but at a diminishing rate compared to the earlier period reviewed. The ten worst-performing groups show a concentration in building materials, paper, manufactured housing, forest products, and home bUilding. The short amount of time neces,sary forchanges. in ranking canbest be shown by the action of the forest products group, which went from seventh place (55.69) in the first time period to nintey-third (-15.61) in the current time period. As this letter has pointed out in the past, within the framework of this ongoing bull market, the process of rotational leadership from sector to sector and group to group has been able to continue to bring into focus new leadership in groups such as energy, natural resources, and transportation. The positive performance of these groups have made it possible for the market to continue to move ahead in spite of a number of other groups showing poor, relative strength. RJSebh ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (1200 p.m.) 2512.75 S & P 500 (1200 p.m.) 313.49 Cumulative Index (7/16/87) 3950.99 No statement or eypreslon of opinion Of any other matter herem contalr'lCO IS or IS to be deemed to be, dlrec11y or mdlrectly. an oller or the SOliCitation of an oller 10 buy or sell any security referred toor mentioned The matter IS presented merely for the conyenlence of thesubscnber While we bellevelhe sources 01 our Inlormahon 10 be reliable, weln no way represent or guarantee the aCcuracy thereol nor 01 the statemonts made herem Any action to be taken by the subSCriber should be based on hiS own mvestlgatlon and Intormatlon Delafield, Harvey, Tabell Inc, as a corporation and Its offiCers or employees may now have or may lateltae, pOSitions 01 trades In respect to any securities mentioned In thiS 01 any future Issue, and such position may be dilierent from any views now or helealter expressed m thiS or any othellssue Delafield Harvey Tabell Inc which IS registered with the SECas an Inestment adVisor, may give adVice 10 Its mvestment adVISOry and othe' customers mdependently 01 any statements made In thiS or In any other Issue Further mformahonon any secunty menlloned herein IS available on reQuest RANK. (,.;oup 1 TIR'S r. JBE L OFF-SHORt; JRIllIN 3 CANADIAN JIL GAS ,4 tClUUING GeN. MorOKS EeCTRONIS()EMICONOUCTO tXClUIJING 1.8. 1 FlJRcSr PROUCrS , TXTILE POOUCTj , POlLUTIJN CONTROL 10 COMMUNICATION eUIP/MfR) ,11 C..JNTAINtR PAPR GAMIN COPANIES 13 GOl) h !)rtOS 1 ELECTRONIC MAJOR OS. 16 OIL WELL EQUIPMENT AHD SE 11 ReTAIL StCILTY 18 CHMICALS 19 a It' INTE 5RA TEO- OoJMc! TIC ZO COMPUTER SERVICES Zl AUTOMJall Z2 ENTRTAINENT Z3 PAPER Z' DkUI,, ZS TEXTILE APARl MFR. Z6 HEALTH CAE-M!)C Z1 CSMHICS za MANUFACTUEO nOUSINJ Z9 TRANSP.-MUC. 30 OIL CUMPOSITE 31 BROADCAST MOIA 3l CHEMICALS-DIV .. 33 PUaLISHIN (NWSPPEKS) 34 SOAPS 3 HEALTH CARE-DIVERSIFIED 3. bNERAl MRCHNOISE CHAINS 31 HAROWARE ;. TOOL S 38 BEVeRAGES DISTILLERS 39 HOUSftlOlO F (. A '0 lEISURE T1M, 41 Bc.VERAGC BREwES .2 OIL INTEGRAHO HHERNATlil 43 R2TAIL STORES COMPOSITE HOTel/MOT El '5 STEEL (XlUOING USX) ..'6 BLDG MATERIALS. 4T RETAIL STaRtS DEPARTMENT – 48 AUTO PARTS-OR;. EUIPMENT MeTALS MISCELLANEOUS 50 RESTAURANTS ElECTRDNICS-iNSTRMENTATIJ 52 RAILROAQS 53 CONTAINeR METAL t GLASS 5. FOGUS 55 SOFT ORIN,S 5. ELECTRICAL EQUIPMENT 51 MACrlINERY-OIVRIlEu MEDiCAl PRODUCTS SUPPllE 59 STEEL 60 s.&.p soo 61 NATURAL G4S 62 AUTO PART S-AFTfR ARKET .'63 TObACCO ALUMINUM 05 PUoLI5HIN; bb CUMPUTER; BUS. EJUIP. 67 CONLOMERTES 6B All FREl;iT 69 AUTa TRUCS (. PRTS 70 RETAIL ST)RcS(ORUG) 71 HCINE TJOlS 12 FOOD CHAI' 73 BROKERAGE FrRS 14 AROSPACEOEFcN5E 75 MISCELlANEOS(HIG TELH) .-'''''-''-' .–;—-'-'l.60..-….AIRT–'lANS.-O-Rr 11 &AVrNGS LOAN COPANlfS 1 HQM UILJING 7 HOSPITAL ANAEMENT CCMPAN 8 J C UAL 1 ELcCTRONIC5(OFNSE) 82. MULTI-liN INSURANC 83 rNVESTMNT COPANIE 84 PkOPlY-ASU4LITY INsuRAN e MAJuR RuIONAl dANKS &0 TRUCf\.5R.i 87 P2RCAL OdN a MONY CNTER jANS d9 HtAlTH LRc-CJMPG51TE 90 TELePHONE (IIIEW) Sl1 llFI iN)UUNCE 9, INVTMNr DS.SNJ fUNO '1j fLECTRIC OMPNIEi 4 RL eSTATe IVESTMNT TRU 9) TJj s.P 24 1916 AR 3 19jj7 TO AP 8 1a1 TJ JUL 15 1ij1 PtRCENTbf ECNTf C1Ajj(,t Cha.NI.1'. 1'.4tH9 8.1C9S 11 .. .518 10.31i)4 48.U'ul -4.012.1 6.1112 14.201.1 53.61J3 S5.J46 1.7213 5.844 ,.6912 -15.61J5 SO.513 4).4623 lS.S7Ll b.lJ3 41.5161 3.3lj 45.lU25 4'J.77'd7 43.471 4j …H65 3.1041 18.21'34 10 .. 369) 1.673 42.7544 1.21i1l 42.6293 11.7577 42.4358 3.94j 42.3454 3.l41S .4l.00lJ7 – – 7.-106-4 4).5601 -3.S11 4).3512 1.874-d 40 … 0251 10.4258 3.llj2 -9.54'3J 38.2283 6.5,1l0 31.45'J6 31.1522 5.1;13 -ZZ.5&93 36.9684 19.561 36.6423 -13.6155 3. 3ZuB -9.6d8'5 35.4359 8.5596 35.3558 35.3457 35.2637 12.8150 6.1ijl 5.4707 35.0504 6.456' 34.7541 -1.5414 34.4115 33.039 6.1714 9.1!45 33.15H Z.65a 32.8839 j2.5645 -5.1291 13.8u61 32.0691 -0.1111 31.0411 30.860Z 30.071 9.3130 b.915 -1.4440 30.06Sl 26.61l4 23.6356 -9.0596 23.5868 21.13;,5 5.8511 –10. 24-11t- 27.93),9 18.0240 Zl.n14 -3.1690 11.5389 ll.S193 9.1839 10.7004 Zl.3808 9.1105 21.25.B 3.05Z3 16.4li28 20.4634 2.9404 5.62.22 26.34b4 12.7414 Z6.0175 0.1513 Z5.846' 21.9816 25.8034 4.4211 2 … 992 O.7j37 lj.o941 3.3881 23.1100 Zl.3955 1.9001 lO.S69i Z2.1Z56 5.6,86 Z2.0105 21.2418 lJ.7547 10.8551 5.694'1 5.4d61 1J.5856 18.6114 10.6633 9.0192 11.9915 17.1330 14.9623 1.601 15.5521 -14.0480 13.8734 -2.9931 13.1564 14.9961 1-1. as.44…,. 13 .-7.1-83 ,..,,-,,-. —–..,.–I 11.0618 -1.0405 11.5462 -16.9216 11.3943 10.1939 8.8115 -2.29l1 9.19ao 7.5588 -8.83d8 -2.4.Hl 6.0235 1.00.3\) 5.34'11 -1.3d15 4.'31 2.Z243 1.821d -0.6,,36 J.d3J2 -3.0163 o.lU26 0.0000 1.7011 Z.31j -0.1l955 -Z.3j76 -I.4!i25 -1..4351 -3.5055 -4.110l -).10B8 -Z.4139 -).8296 -0.6757 -3 .,10 -0.101.!

Download PDF

Tabell’s Market Letter – July 24, 1987

Tabell’s Market Letter – July 24, 1987

Tabell's Market Letter - July 24, 1987
View Text Version (OCR)

,——————————————————————————————– TABELL'S MARKET LETTER 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (60919872300 July 24, 1987 —..- — -T-hree-year.s-agG-toda-y,–J-ul.y- -24,-1984,-t-he -.Stock-….-ma.J!-ketembarked'-on-a-remarkable-advance-,- , that has taken'the Dow 'J ones I ndustrial Average from a low of 1086.57 to 'a record high of 2510.04 in 753 trading days. The unprecedented characteristIc of this 131.01 percent advance, the index has more than doubled in price without suffering at least a 10 percent correction during the period, is limited only by the sixty plus years of daily stock market history we have available in our computerized data base. In spite of the constructive performance of the DJIA, recent action of market breadth has been less than positive. The ,major problem facing the market technician is to determine whether this deteriorating breadth is the precursor to a correction in an ongoing bull market or is in fact the beginning of a top formation. The chart below depicts the market action of the Dow Jones Industrial Average from the January I, 1986 to date together with our daily breadth index, the middle line on the chart, and a ten-day average of new highs and new lows at the bottom of the chart. 10 oqr RVERAGE OF N-W HJ GHS-NEW LOWS Earlier this year, 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. The DJIA corrected from its April, 1987 high 7.88 percent and breadth also corrected holding above its previous December, 1986 low. As we can see, from the May, 1987 low the DJIA has continued to post record highs, while breadth action has been poor. In order for the bull market to again be confirmed, breadth will have to move ahead to a new high – a formidable task. As far as new highs and lows are concerned, the ten-day average in January, 1987 moved to a level above its previous peak, confirming the uptrend. Subsequent action of this indicator produced declines below the zero line and a less than impressive performance relative to the stock markeL Although performance since May has been improving. in order to indicate an ongoing uptrend, the new high minus new low index must move above its January, 1987 high. If the stock market is to continue its advance it becomes clear that the internal strength in the market, as measured by indicators such as market breadth and new highs-new lows, must improve in order to sustain the advance. We only have to look to the March-December, 1986 perIOd above to see that this, in fact, has occured in the past. i.e. deteriorating breadth and the ten-day average moving below the zero line followed by a 500-point advance. However, major market declines do not historically emerge overnight. They tend rather to be preceded by a lengthy process of deterioration. We know a divergence conditon exists in this maturing bull market. As the market continues to post new highs, constant inspection of these market indicators is essential. ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL INC. RJS ebh Dow Jones Industrials (1200) 2476.24 S & P 500 (1200) 308.49 Cumulative Index (7123187) 3915.83 No statement or expression of oplmon or any olher matter herelfl contalnad IS, or IS to be deemed to be, directly or Ifldlreclly, an offer or the sohcltatlon 01 an oUer to buy Of sell any security referred 10 or mentioned The matter IS presented merety tor the convemence of the subSCriber While we believe the sources of our Information to be reliable, we In no way represent or guarantee the aCCllracy thereof nor 01 the statements made herem Any action \0 be taken by the subSCriber should be based on hiS own Investigation and mformatlon Delafield, Harvey Tabell Inc, as a corporation and Its oHlcers or employees, may now have, or may later take, positions or trades m respect to any SeCllrltlcs mentioned In thiS or any future Issue and such position may be dillerenlirom any views now or heleafter expressed m thiS or any other ISSlle Delalleld Harvey, Tabell Inc whiCh IS registered wl1h the SEC as an Investment adVisor, may give advice (0 ItS Investment adVISory and other customers Independently of any statements made m thiS or In anv other Issue Further Iflforma!lon on any seclIrlty mentIOned herem IS available on request

Download PDF

Tabell’s Market Letter – July 31, 1987

Tabell’s Market Letter – July 31, 1987

Tabell's Market Letter - July 31, 1987
View Text Version (OCR)

.- .- -. —-.– –I TABELL'S \ MARKET LETTER I .J 600 ALEXANDER ROAD. PRINCETON. NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE. INC , MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 July 31, 1987 The job of the technician, reduced to its simplest form, is to observe market action ,–f-,–;-,s,nd a ttemp,t-to'Sler-ta.inwhether,an-y.'w.Gr7signif-ica ntinfOl'm ation—Ja nbederiv,ed,f,,om- -..,…..,,'i analysis of that 'action- hi many instances, months may go by without the market's – -., providing any important new information. In other cases, trading patterns occuring within a time-frame measured in hours may be highly significant for determination of the market's future course. This latter phenonmenon poses a risk as far as vacations are concerned. We have, on occasion, noted that we have often been caught taking a holiday precisely when the stock market does something important. (We were away from the office at the time of the take-off rally in mid-August, 1982.) We therefore tend to treat vacations with some trepidation. However, during the most recent four weeks, on safari in Kenya, in which we remained entirely without knowledge of the market's course, we returned to discover almost nothing surprising in the market action which had taken place in our absence. It may be of interest to review the comments of the four market letters we wrote in June, not to suggest the correctness or incorrectness of the forecast presented, but to show how the concerns expressed in those letters remain with us today. On June 5, we noted the significance of the lateral trading range between 2200 and 2350 which, at that point, had contained the DJIA since February, suggesting that the eventual penetration of that range, in whatever direction, could produce a move of some significance. We went on to analyze the rather insipid breadth action that had characterized the market since March, noting that, while the averages had remained in a trading range, breadth indicators continued in downtrends. Subsequent breadth action, as our colleague, Bob Simpkins, pointed out last week, has not improved despite the continued acheivement of new highs by the averag,es'''I I- — – A weeK laler, on June 12, the breakout having take'll place on the upside, we suggested targets in the 2490 – 2540 range. The latter objective was reached, and slightly exceeded, in yesterday's trading. In the same letter, we engaged in some rather boring number-crunching which produced some evidence of rotating leadership, suggesting that issues which had reached their highs early in the current advance were, in many cases, now showing improved relative action. This sort of pattern has continued over the past month, and there is now some suggestion that still more hitherto-laggard groups—Oil Service and Airlines for example—could begin to provide the market with some upside leadership. The next June letter was our usual late-spring disquisition on those seasonal patterns which emerge in the analysis of sixty years of market action. Thus, the strength exhibited during July was unsurprising in light of the summer rally tendency. It is of current interest to note that August also tends to be an up month, but that the strongest seasonal pattern we have been able to isolate is that of a downside bias for September. Finally on June 26, the market just having posted a new peak, we suggested, that, even if that peak were to turn out to be an important top, markets in the past had tended, at least, to test previous highs before turning downward. As we now know, the June 25 high was not the ultimate peak, since we went on to post eight additional daily new highs for the Dow during July. However, the same principal applies. A bull market remains by definition in effect as of yesterday's close. Additional evidence of deterioration must accumulate before one can assume that this bull market is likely to have peaked. The areas of interest to the analyst, therefore, remain the same as they were a month ago. On the negative side, the advance seems to be narrowing as indicated by the poor breadth action. There remains, on the other hand, some suggestion of rotating leadership which, despite that action, might be able to support an upswing for some time. We continue, therefore, to look for the same sorts of evidence, positive or negative, that we were seeking a month ago. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC AWTebh Dow Jones Industrials (1200) 2571.27 S & P 500 (1200) 318.74 Cumulative Index (7/30/87) 3989.97 No statement or eJ(preSSlon of opinion or any other maUer herem contamed IS, Of IS to be deemed to be directly or InOlreclly. an offer Of the soliCitation 01 an oller to buyor sell any security referred loor mentioned The matter IS presented merely lor the convenience of the subSCriber While we believe the sources of our Inlormatlon to be reliable, we In no way represent Or guarantee the accuracy thereot nor 01 the statements made herein Any action to be taken by the subscriber should be based on his own Investigation and Inlormatlon Oelalletd, Harvey, labell Inc, as a corporation and itS ollicers or employees may now have, or may later tak.e poslltons or trades 10 respect to any securlhes mentioned In thiS or any future Issue, and such posItion may be different hom any views now or helealter expressed In thiS or any other Issue Delatleld Harvey Tabelt Inc which IS registered With the SEC as an Investment adviSOr, may give adVice to Its Investment adVISOry and othe' customers Independently 01 any statementS made In thiS or In any other Issue Further Information on any security mentioned herein IS available on request

Download PDF