TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC 1609) 987 -2300 – November 6, 1987 In our last two letters, following what has come to be called the meltdownll of October 19th, anaJc;gfes. we we discussed at some length the comparison between that collapse and two prior climax bear markets. and grea-C— —- -Fall, –1929an(fSpring,196f.'–Thetwo (reefy-admIt; are not prop-r-ietary-, Ii many commentators have noted them, usually citing 1929 If they are bearish and 1962 if optimistic. We are perfectly content to see this sort of comparison being widely noted. It suggests that the technician's creed, which states that market history has something to tell us is becoming increasingly accepted. The chart below compares the first 200 days of the 1929 and 1962 markets, together wlth 197 action through yesterday. The two previous downswings are adjusted to a base of 2722.42, the August 25, 1987 high for the DJIA. The base dates used were the actual high date of the 1929 bull market and a secondary Dow high in March, 1962. – 'i(;we'..vr.t.if i \0 I.,' \ ' \ DOW JOES INDUSTRIQL RvERRGE ;(15 S!' 3 1!2el-Q-J B1I5E. MRRCH 15 19G21–) ,,,., ;-l/V/ — – \\ \0 \(\1\\y\ (\/\,,,,,1../J'-\J\.,/.\Vl,//\vj/' – \j — . – a A close examination of the chart reveals a number of similarities between the three examples. Each started with an initial decline, from 2722.42 on August 25th in the present case to 2492.82 on September 21st. Comparable declines can be singled out for the two earlier periods, a 5.46 fall in 1962 over 22 days and a much steeper 14.7 drop taking 20 days in 192Q. Each market recovered somewhat and then embarked upon its final, selling-climax plunge. As we have noted. the free falls of 1929 and 1987 were quite similar. Last month the Dow fell 34.1 over eleven days versus 34.8 over fifteen days in 1929. The 1962 drop, as the chart clearly shows. was much less severe, reaching an equivalent of only 2170. It is the aftermath of both prior declines which is of interest. Both. as the chart shows. subsequently penetrated their climax lows. The relatively constructive action of the past two weeks suggests that this may not be the case this time. but it certainly remains a possibility. However, once the secondary low was reached. action was reasonably positive, although interrupted in 1962, by the Cuban missile crisis in October. As we have said before. however. the chart to us seems to suggest that it is folly at this early stage to tie oneself to an inflexible forecast. What will be needed is continued analysis of the 1987-88 pattern which should. our chart suggests, continue to unfold without too great a variance from current prices. We should, after some time, have a clearer idea of whether that pattern is leading to something like the bull market of 1963-66 or an ongoing drop such as that which followed the April, 1930 high. ANTHONY W. TAB ELL DELAfIELD, HARVEY, TABELL INC. AWTmjs Dow Jones Industrials 01/5187) 1985.41 S & P 500 (1115187) 254.48 Cumulative Index (11/5/87) 3113.57 No statement or expressIOn 01 op!mon or any other matter hereIn contaIned IS, or IS to be deemed to be, dIrectly or IndIrectly, an offer Of the sohCltatlon 01 an offer to buy or sell any secunty relerred to or mentioned The matter IS presented merely tor the COflvemence of Ihe subSCriber WhIle we beheve the sources of our informatIon to be rehable, we In no way represent or guarantee the accuracy thereof nor of the statements made herein Any action 10 be taken by the subSCriber should be based on hiS own Investigation and information Delalleld, Harvey, Tabel! Inc, as a corporation and tls officers or employees may now have, or may later take, poSitions or trades In respect to any securities menlloned In thiS or any future Issue, and such pOSl\lon may be drtferent from any views now or hereafter expressed tn thiS or any other Issue Delaheld, Harvey, Tabellinc , which is registered wtlh the SEC as an Investment adVisor, may give adVice to ItS Investment adVISOry and other customers Ifldependently of any statements made In thiS or In any other Issue Further information on any secUrity mentioned herein IS available on request

VIEUEILIL'S IRlIEV ILIEVVIE 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC (609) 987-2300 November 13, 1987 Technical market action for the past week can. from a short-term point of view at least. be 1–'-' —regardedas constructive.—Kl-ilslowest'levels.- aroui1d1860 bnTuesaay.the'Dow haareach-ed the downside objective of a small top around the 2000-1950 area. It rebounded a number of times from that level and then moved up, postin'g a modest rally on Wednesday. and a somewhat more impressive 60-point rise in yesterday's trading. It remains unclear just where this short-term picture fits into a still vague intermediate and longer term outlook. While awaiting resolution of this dilemma. we would like to share with our readers a concern which has previously been articulated in this space. That concern is with the current budget deficit. However. unlike Just about everyone else in the world with the exception of a few lonely economists of varying stripes, we are not worried about the deficit's being too high. We fear that current efforts to reduce it may. in fact. be untimely. This suggestion. in today's climate, smacks of heresy. and we should, therefore. clarify our point of view. We are most emphatically not asserting that budget deficits are. in principle. a good thing. Nor are we asserting that recent deficits. which have been fluctuating around the 200 billion level since 1982, constitute a prudent way to manage the economy. We fully agree that U.S. Government debt, now over 2 trillion, should never have been allowed to reach its current level. We are simply asserting that, for 1988-89, it might be proper for the powers that be to spend less time on the deficit, rather than engage in what seems to be a competition to determine how closely politicians. especially those up for reelection in 1988, can equate deficit reduction with motherhood and apple pie. We have, actually, not done too badly so far by taking no overt action with regard to the deficit. It must be recalled that the deficit now the subject of bickering between the White House and Congress is a projected figure. When we look at real numbers, 'we find that the actual deficit has declined in each of the past four quarters and has. in the process, been reduced by an approximate 90-billion annual rate. We are not all that sure that continued benign neglect will not produce slJ11ilar success. Our readers know that we have. in this space, drawn parallels between market action in the late 1980's and that of the late 1920's. We were forced to drag out this comparison once again when this month's market colla,p-seescalatedintoonethat could.–.legitimately .becompared onlywiththe crash of October, 1929. However, we have always noted, in discussions of 1929, that we regard the stock-market collapse of that year as an event separate from the depression of 1930-1932. It can and has been argued that the stock market provided a trigger for that economic contraction, but, subsequent to the 1930 rally, we are convinced the market was mirroring the economy rather than the other way around. The task, then, is to avoid the mistakes of that era. However, when one reads a history of 1930-1932, the political tub-thumping sounds strangely familar. In his budget messages of 1930 and 1931, President Hoover voiced alarm regarding projected deficits At the same time, the 1932 Democratic platform was calling for a balanced budget. At the very bottom of the depression. in 1932. the Treasury Department recommended a sharp rise in the personal income tax. On the monetary, as opposed to the fiscal, front, the money supply in the early 1930's was allowed to drop some 30. an event Milton Friedman has characterized as being central to the depression. Part of the reason for this contraction, however. was the failure on the part of banks to lend the reserves that the Fed attempted to supply. Dr. Friedman has noted, as long ago as 1954, that the tools the Fed now has at its disposal are sufficient to make America depression-proof. He indicated last week that he still holds this view. If, however, the very fact of the stock-market drop causes a private spending contraction, and that contraction is accompanied by deficit reduction efforts. either increased taxes or reduced spending, we wonder whether the Fed will summon up the courage to take the drastic measures that might be required. We wonder. in other words. if monetary policy can succeed in the environment of a fiscal policy dIrectly opposed to it. The monetarist answer would be that it can. However. a great deal depends on this theoretical prediction being correct. This view is shared by disparate classes of economists. One such group consists of unreconstructed Keynesians, who believe in the primacy fiscal policy and the necessity of fiscal stimulus during a business slowdown. A diametrically-opposed group, supply-side economists, argues for the preservation of its flagship. 1988 tax reduction. Such reduction. if the Laffer curve is to be believed. could result in increased revenues rather than reduced ones. Support for this argument can be found in the deficit figures referred to above. It is not the intention of this letter to propose a particular economic point-of-view, but simply to note that there exists a reasonable case for aVOiding immediate. radical spending decreases and/or tax increases. This cautionary note, ultimately. seems to be falling unheeded on the ears of those members of Congress who will. unfortunately. decide the fiscal policies which will characterize 1988. Our concern is, at the moment, nothing more than that. It is most certainly not a prediction that 1988 fiscal action will bring about a depression or other prOblems of equal severity. It is simply something to keep in mind. given the current consensus projections of continued 1988 economic growth. ANTHONY W TABELL AWTebh DELAFIELD, HARVEY, TABELL Dow Jones Industrials (1200) 1942.80 S & P 500 (1200) 24793 Cumulative Index (11112187) 3089.80 No statement or expression of opinion or any other matler herem contained IS, or IS 10 be deemed to be, directly or Indirectly, an offer or the solicitatIon of an offer to buy or sell any secUrity referred to or menltoned The matter IS presented merely for the convenience 01 the subscriber While we beheve the sources 01 our Information to be reliable, we In no way represent or guarantee the accuracythereol nor 01 the statements made herem Any acilon to be laken by the subscriber should be based on his own Investigation and mformatlon Oelafleld Harvey, Tabelllnc, as a corporation and lis officers or employees may now have, or may later take, poSitions or trades In respect 10 any secuntles mentioned In thrs or any future Issue, and such position may be different Irom any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabellinc , whICh IS registered with the SEC as an Investment advisor, may gIVe adVice to Its Investment adVISOry and other customers mdependently of any statements made In thiS or In any other Issue Fur1her mformabon on any security mentioned herein IS available on request

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987 -2300 November 20, 1987 Long-time readers of this letter will be aware of our penchant for quoting the famous paragraph alludes-tothe'–fromtne SherlocKHormes story. Sliver -Blaze.lnwhich thegreatdetect1ve- curious ——- incident of the dog in the night time. The background for this is that a valuable horse has been stolen from a stable. Watson points out that the stable dog did nothing in the night time, and Holmes rejoins, that was the curious incident. Holmes has deduced from the dog's not barking that the culprit was one known to him. Unlike most ordinary mortals, Holmes has been able to glean useful information from the failure of an event to occur. We are fond of this quotation for reasons that go far beyond our own infatuation with the Holmes stories. There are many instances in the task of market analysis where it is necessary to observe what is not happening as well as what is happening. The present may be just such a case. The September – October collapse in equity prices bottomed, we all remember, at 1738.74 on October 19. Within two days it had regained almost 300 points to 2027.85. That has been the high so far. At today's close, 24 trading days since October 19 will have elapsed. We are entitled to ask whether or not this behavior is consistent with the hypothesis that October 19 will turn out to have been the actual low of the downswing. It is necessary to state, unfortunately, that such is not the case. The table below summarizes market behavior following fifteen dates which we know, by hindsight, to have been major stock-market lows. It includes the actual low dates of all downswings since 1929 which, in our opinion, can plausibly be identified as major cycle bottoms. The table summarizes action for the 100 trading days following each of these lows. For each 10-day bracket, it lists the number of days on which a new high was made either in the Dow Jones Industrials or in our breadth index. (The two indices are taken together, since it is a characteristic of many bottoms that breadth outperforms the Dow in the early stages.) For 1987, only the two days noted above qualify for inclusion in the table. Twenty-two trading days have elapsed since then without a new high in either indicator being posted and, absent the sudden emergence of a rather strong advance, it appears unlikely that such a high will occur during the near future. – ..-…..,. Date 1-10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 Nov 13, 1929 7 5 5 51 4 4 Jul 8, 1932 8 10 8 4 71 Mar 31, 1938 6 2 1 37 4 5 Apr 28, 1942 9 2 5 5 222 7 Oct 9. 1946 5 1 3 31 28 Jun 13, 1949 7 8 7 6 3 31 6 4 Sep 14, 1953 8 5 8 7 1 4 1 2 10 6 Oct 22, 1957 4 4 2 7 51 2 Jun 26. 1962 8 1 2 6 1 4 Oct 7, 1966 7 7 4 1 10 7 5 May 26, 1970 6 1 21 42 6 4 Dec 6, 1974 7 6 5 7 745 52 Feb 28, 1978 9 4 3 8 353 Aug 12, 1982 10 5 5 3 831 1 Jul 24, 1984 9 3 4 3 22 Oct 19, 1987 2 No subsequent high through day 24 The table shows that, in contrast to the two lonely new highs posted SUbsequent to October 19, most previous lows saw new highs being scored on a majority of the first ten days of the subsequent advance. Five has been the lowest number of advances in the first 20 days, and the average number of new highs for the fourteen 20-day spans has been eleven. In the first 30 days of past bull markets, an average of fourteen new highs have occurred with the smallest number being six. Interestingly, 1929 and 1962, the two markets with which this one has most frequently been compared, saw initial lows followed by just two days of reversal, as is the case for the October 19 low so far. The October 29. 1929 low of 230.07 was followed nine days later by the ultimate low at 198.69. The low of May 28, 1962, at 576.93, was the precursor of the June 26 low at 535.76, There is, we suppose, some solace to be gained from the fact that 24 days have now elapsed without the present market's moving to a new low but this phenomenon would, we think have to go on for some time before it could be termed significant. There is. paradoxically, a bullish note implicit in all of the above. The new lows cited above all turned out to be major ones. It is quite possible that the same will be able to be said of any new low which might be chalked up over the near term. Such an occurrence, however, following the five-week surcease of the September – October battering might produce a difficult period in which to practice investment dlscipline. ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. AWTebh Dow Jones Industrials 0200) 1902.02 S & P 500 0200) 238.15 Cumulative Index (11/19/87) 3028.86 No statement or expression of opinion Of any other matter herein contained IS, or IS to be deemed to be, directly or indirectly, an offer or the sollcrtatlon of an offer to buy or sell any security referred to or mentioned The matter IS presented merely for the convenience of the subSCriber While we beheve the sources of our InformatJon to be rehable, we In no way represent or guaramee the accuracy thereof nor of the statements made herern Any action 10 be laken by the subscriber should be based on hiS own investigation and Information Delafield, Harvey, Tabellinc ,as a corporation and Its officers or employees, may now have, or may later take, poSllions or trades In respect to any seCUritres menlloned In thrs or any future Issue, and such pOSll!on may be different Irom any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabelilnc , which IS registered With the SEC as an Investment adVISor, may give adVIce to lis Investment adVISory and other customers Independently of any statements made In thiS or In any other Issue Funher Informa\lon on any security men\loned herem IS avaIlable on request

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 . /1\ November 27, 1987 – — I t—should—come..r as's …surp-rise …tono-.onethat M a ctober,…198 7–achiev ed-an.o;.all-time….record-'-for..o..monthly — .,– market volatility, bettering by a comfortable margin the prior record 'set in November, 1929. However. this increase in volatility appears. so far at least, to be an isolated instance, and it remains unclear just what the implications may be. The chart below first appeared in this space in 1982, paradoxically enough in an effort to prove that the market WBS, at that time. not unusually volatile. The chart, quite simply, for each month from 1926 to date, measures the standard deviation from the mean of the daily log changes in the Dow for that month. Those familiar with statistics will understand the arcane language of the previous sentence. Others need only to know that a log change is similar to (but more accurate than) a percentage change and the standard deviation is simply a measure of variability. STRNDARD DEVIATION OF DRILY LOG CHANGES DOW JONES INDUSTRIRL AVERAGE MONTHLY 1926 – DATE lIiVft -r-,i.—r8–'.-,–,;grrTij.—r,,,,–,ij.-,–,;ij-rTrrT.—rrrri The October variability measurement (6.6 versus 4.9 for 1929) comfortably exceeds the prior record. In our view. however. uncertainty exists as to whether this constitutes a one-time aberration or whether it suggests a return to the sort of volatility which prevailed during the 1930's. It would be useful to know this. Since 1946. as the chart shows. volatility has tended to range between 0.5 and 1, with occasional spikes above L 5. These spikes have been useful as indicators of important market bottoms. They have occurred in seven instances over the forty-year period and. of the seven. six of these events happened around major lows. the most recent case occurring in August – November. 1982. If this tendency still ho1ds true. the October rating. four times the usual threshold, should be treated as a strongly bullish indication. If. however. we have-returned to volatility standards something like those of the early 1930's, the implications are quite different. If we accept a level of 3.0 or better as indicating unusual volatility during the 1929 – 1933 period. there took place eleven such occurrences. Three of them, indeed. were important lows. The first such low was November. 1929, preceding the sharp rally following the 1929 break which continued to April. 1930. The next was at the super-cycle low in June. 1932. and the third occurred in March. 1933. The eight other cases, however, all produced sharply lower prices. Measured over three months. the average decline was 23. and the largest drop. in early 1932. was 45. The questions raised by emerging wide variability have. it seems to us. implicatlOns for all facets of technical analysis. A majority of indicators we are currently accustomed to using would either have been useless in the 1930's or would have to be interpreted using very different parameters. A fundamental question exists and will continue to exist as to whether the extraordinary events of last month signal a new sort of market environment. ANTHONY W. TABELL DELAFIELD. HARVEY. TAB ELL INC. AWTebh Dow Jones Industrials (1200) 1942.64 S & P 500 (1200) 243.38 Cumulative Index (11/25/87) 3072.29 No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, directly or indirectly, an oHer orthe sohcltatlon of an oHer to buy or sell any seCUrity referred 10 or menlloned The matter IS presented merely for the convenience of the subscriber While we believe the sources of our informatIOn to be reliable, we In no way represent or guarantee the accuracy thereof nor 01 the statements made herelf\ Any action to be taken by the subscriber should be based on hiS own If\vesllgallon and InformatIOn Delafield, Harvey, labellinc , as a corporation and lis oHlcers or employees, may now have, or may later take, poSitions or trades If\ 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, labellinc , which IS registered With the SEC as an If\veslment advisor, may give advice to Its Investment advisory and other customers If\dependently of any statements made In this or In any other Issue Further If\formatlon on any secunty mentioned herein IS available on request