Tabell’s Market Letter – July 17, 1987

. , .- – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – — 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and interest-sensitive sectors of the market which lead the early advance of the upswing They have gradually been replaced by the cyclical sector of the market.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. 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