.- .- -. —-.– –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

– – – – ,, vlilImIELL'S rMiI&RIEV L IEVTIER – – ————– , 600 ALEXANDER ROAD. PRINCETON. NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC (609) 987-2300 1 – -'-Two aiffere1'it'SCh06lSofttrnu-ght-'-h-averecentlyemeArguegubsatmo7H,gAh1o9s8e7ofour–bret-hrenwho —- comment on the stock market from a fundamental point of view. The first school asserts that the market must, at some point, go down because it is overvalued. Proponents of this theory have recently maintained a stony Silence, as the overvalued market continues to sail merrily along to new alltime highS. The second school of thought says, in effect, that the market, despite its sharp advance, is likely to go higher, since earnings are likely to be up in 1987 and, indeed, probably in 1988 as well. This school has, of course, been more vocal recently. We have repeatedly, oVer the years, examined the above two assertions against the historical record. The second, that rising earnings will pull the stock market higher, is demonstrably false. A better case can be made for the first theorem, but practically it should be applied with extreme caution. Let us set the scene. The S P 500 is now at, roughly, 320. The latest 12-month period for Which we have actual reported earnings ended in the first quarter of this year. The earnings for the Index for that period were 15.17, producing a price/earnings ratio of over 21. Enough improvement will probably occur in the second quarter to bring that figure down to 19. For the year 1987, the consensus earnings estimate for the S P is around 19, whiCh, of course, with a 20 multiple, would support a price of 380, a healthy 20 above current levels. These are, however, heady numbers. Using trailing 12-month figures, the 500 has sold above 18 times earnings on only 29 occasions in the 165 quarters from 1946. It is currently yielding 2.75 which is lower than all but one end-of-quarter return figure for the ,ast 41 years. 1Since p/ e ratios at current levels are relatively rare, it becomes possible to examine the aftermath of their -prior occurrences. Such examlnailon–atflrliiF'Ule tnesls lhm–h…—I been reiterated in this letter for four decades. That is, that earnings do not predict stock prices; stock prices predict earnings. Let us examine a few instances. In June, 1946, the S P sold for almost 22 times Its earnings. This figure was a correct harbinger of future earnings, which rose for 12 consecutive quarters, at the end of which they had almost tripled their 1946 level. While this was going on, the S P 500 had dropped some 29 between 1946 and 1949. For all of 1961 and the first quarter of 1962, the pIe ratio again remained over 20. Again, its forecast, insofar as earnings were concerned, was accurate. Earnings expanded quarter-to-quarter for the next 5 1/2 years. Along the way, however, the stock market advance was interrupted by the December, 1961 – June, 1962 bear market, a 28 decline. For two years, in 1971-2, the pie ratio for the S P remained at a level of around 18 times. Earnings continued to increase and had advanced more than 50 by mid-year, 1974. At that point, of course, the market was on its way to the low point of a 48 decline. . There have, it must be admitted, been certain occasions where high mulitples for the averages continued for long periods of time without a market decline. Multiples above 18 were the rule for the S P between mid-1963 and 1965, and the market advanced throughout that period, not turning downward until early 1966. Such periods, however, have been the exception rather than the rule. The inescapable conclusion seems to be the eminently plausible one, that investors have the ability to forecast earnings over the short term and express the results of that forecast by adjusting the price they are willing to pay for a dollar of earnings or dividend income. The thesis appears to be correct in both directions, since bear market bottoms tend to be reached well before.earnings declines bottom out. The record, we think, does favor the thesis that a high valuation generally leads to market drops. It is, however, difficult to put this into practice since there appears to be no hard-and-fast rule about how long such periods of overvaluation may last. All of which is justification for the practice of technicial analysis, Which, for the moment at least, with the averages soaring to new peaks, shows little in the way of deterioration. It is, thus, possible to remain optimistic regarding the current market outlook, While continuing to recognize that leading indices are, to say the least, fully priced. ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. AWTebh Cumulative Index (8/6/87) Dow Jones Industrials 0200) S P 500 (1200) 4030.74 2592.79 323.11

– .. – …. -, TABELL'S I j MARKET LETTER I I ..,I – – – -. – – . – J f!/akI( fJnc. 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIA TlON OF SECURITIES DEALERS, INC (609) 987-2300 August 14. 1987 The market put on another one of its whiz-bang performances last week, posting gams in excess I -f-f-Ort.y-DQW-'Points-oonda-y-..and.Tues..dayan;LJat..r–thrting with the 2700 level on Thursday before mood to-backingoff- a-obit. – T-he prevailing among those of- us–r-eq-uir-ed comrrCerif on -tllis-'sli1hect. seem eo to be one of astonishment. We did not find ourselves all that astonished by the move, but It was certainly unexpected. We noted just two weeks ago that the Dow had just about reached what we regarded as plausible near-term objectives in the low 2500's. There were also possible objectives, which We regarded as less plausible, around the 2600 level. These price targets were left in the dust by the week1s spectacular advancea The rally was called, in many quarters, a record-setting one, especially by those who, ignormg common sense and theIr Sixth-grade arithmetic class, still insist on measuring advances in terms of pointsa In this instance, though, the correct measurement of the rally. in terms of percentages, still yielded results that had seldom, in the past. been equalled. Monday's and Tuesday's advances were each approximately 1.69 and, by themselves, were hardly uniquea Lookmg at longer periods, however. the four tradmg days ended yesterday. for example, shows that 3a84 advance to be somewhat unusual. There have, since 1946, been only 69 cases where the market has moved ahead this much over a four-day perioda Interestingly, this sort of strength has tended to occur for the most part after major market bottoms. The emergence of such dynamics in a market which has been going up for 37 months appears to be far less common a Measuring the rise from May 20, when the Dow closed at 2215a87 after the only recognizable correction of the year, gives us an advance of 21.49 over 59 trading days. Measuring from the end of 1986. shows a 156-day advance of over 40. This was exceeded in only in May 1975. July 1975. March 1983, and April 1986. All of these instances, interestingly, occurred around the mid-point of major advances. and a general truism regarding sharp advances over periods of six to eight months is that they almost never suggest lower prices over the near term. SurprIsmg 8S the current strength may be, it is best to regard it as suggesting a relatively high level of demand rather than market overextension. '-I–'–0n –Ilut a f-ew-Occa-sions-of-late..-we41av-e-foun-G-ou-r-selQs gQin g 9 sked wbe n w.e….1.houghtthe……b.1WJill1 '—l-I market had started. Others, apparently. are being asked the same question, since last week there appeared a host of opinions regarding the exact date of the bull's birthday. The most popular dates appear to be July 25. 1984. August 12. 1982. and finally December 6. 1974. whlch saw the Dow at 577.60. To many of our readers, such controversy may be equivalent to medieval scholastic arguments about the number of angels which can dance on the head of a pin. However, to those of us who believe the market exhibits some degree of periodicity, all this is more than Idle speculation a The three dates mentioned above are all plausible depending on just what bull market we are talking about. In our view we find ourselves at this time in at least three separate bull market cycles—a super-cycle, or secular, bull market that may well have begun in 1974, although it is generally measured from 1982, a cycle bull market which, at this point, probably should be dated from July, 1984 snd finally a rIsing phase within that cycle bull market WhICh we prefer to regard as having started on the first day of 1987. There are problems with this interpretation. It requires, first of all, calling 1982-1984 a completed cycle only 23 months in length. As readers are aware, such cycles have generally required in excess of four years to complete. Still another problem is that we Seem to be in the third maJor advancmg phase that has taken place since 1982. Such a three-phase advance makes the market of the 1980's look uncomfortably like the one of the 1920's. We first noted this similarity a year and a half ago, and we find ourselves, at the moment, being uncomfortable with the number of people now discovering the similarity we mentioned at that time. Regarding the 1920's vs. the 1980's, we think two points need to be made. The first is that we have so far come nowhere near duplicting the 1921-1929 advance in the current instance. In order to do so, the Dow. as we noted 18 months ago. would have to rise to between 4000 and SOOOa The second and most Important factor, however, is the fact that 1929-1932 was totally unexpected. Even the few voices crying in the wilderness in the late twentles did not forsee anything like the magnitude of the decline which eventually ensued. A repetition thereof -is hardly likely at a time when half the world seems to be looking at the 1920's with some degeree of trepidation. We have stated in the past that, human nature not having changed, we do not think something approaching the importance of the 1930's depression should be though impossible. We have also stated our belief that, if such a phenomenon were to occur, it would take an entirely different shape than that of 1929-1932, a shape that would make it unrecognizable until too late. We feel, moreover, that, while the preconditions for such a phenomenon might emerge some time in the future, they cannot be said to be present given the widespread scepticism of 1987. ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL INC. AWT ebh Dow Jones Industrials (1200) 2703.13 S P 500 (1200) 333.98 Cumulallve Index (8/13/87) 4097.17 No statemClnt or erpresslon of opinion or any otller matter Ilereln contained IS or IS to be deemed to be, dlrectty or Indirectly an offer or tile soliCltalion of an offer to buy or set I any security referred to or mentioned Tile matter IS presented merety for the corwenlel1ce of tile subscriber Willie we believe the sources olour information to bereflilbte we In no way represent or guarantee tile accuracy thereot nor 01 the statements made herem Any acllon to be taken by the subscnher should be based on hrs own Investrgatlon and rnformatron Delalreld, Hatvey, Tabell Inc, as a corporillion and ItS officers or employees, may now have or may later take, positions or trades In respect 10 any secufliles mentIOned In tillS or any future Issue, and such pOSition may be different Irom any views nowor heleafler expressed In tillS or any other Issue Delafield Harvey Tabell tnc which IS registered WI til tile SEC as an Investment adVisor, may give adVice to lIS Investment adVISOry and Olhe' customers Independently of any statements made In thiS or In any other Issue Furtller Information On any security mentioned herem IS available on request

,——————————————————————————————————————— – – . – . – – – – – – – – – – – – – – – – ' 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 August 21, 1987 1— —- or.,the-flft.ythlrdmthisy.er.–t1I-.'O1es …lpgQstrialyerl!g-seJ.wx-9-d'htgJL c1osingThurs-day at 2706.79. This was achieved in spite of 8 45.91 point correction on Tuesday the- seventh largest one-day point declIne in the industrial average. In terms of percentage decline. this 1.70 correction registered was, of course, not historically as significant. Within this framework, the recent performance of the Financial stocks and Utilities stocks has greatly improved, posting impressive gains within recent weeks, suggesting that interest rates may be on their way down and inflation fears temporarily arrested. CUMULRT I vE nSE CGHO'I 5iOC.r fjPEQDTH nmfll CUMULRTIVE NSE PPEFEpo;ED ')TOcr, EPEq!lTH IJOE( The potential significance of this recent strength in the interest-sensitive sector of the stock market can be shown by examining a traditional technical tool—market breadth—in a slightly different manner. The NYSE, for some sixty years, has recorded the advances. declines. and unchanged of all issues traded. More recently. breadth figures have become available for common stocks only. This new series constructed as a breadth index (advances – declines divided by total issues traded) is shown in the upper third of the chart above. As expected. this common stock index behaves in a similar manner to that of the traditional total issues breadth index. By subtracting common stock issues from total issues traded, we are also able to develop a preferred stock breadth index representing over one quarter of the total issues traded. This interest-sensitive index is shown above in the middle of the chart. Both of these breadth indexes are compared to the DJIA in the lower third of the chart from the August, 1982 low to date. It is interesting to point out that the common stock breadth index spent most of the second half of 1983 declining, while the DJIA went on to new highs in October, 1983. This divergence was followed by a correction of 15.39 in the DJIA lasting until July 1984. The preferred stock breadth index during this period, however, went to a new high, reflecting the ongoing strength in the interest-sensitive sector during the general market declme. From the July. 1984 low to date. the DJIA has advanced without major interruption, 149.11. However. as this letter has pointed out in recent weeks. there contmues to exist a divergence in the breadth of the marketme8surement8 partially a8'a-result of the poor relative performance-of the interest-sensitive sector during the second quarter of this year, and partially due to the narrow, selective quality of the leadership. Currently. both breadth indexes discussed above are improving, but they have not posted new highs above their preVIOUS March, 1987 high. Also, the daily raw advance-decline lme has not yet posted new highs WhICh would confirm the ongoing bull market, but it is improving. A move through -these levels would negate the potenbal negative divergence. Representing 8 major component of the stock market. the interest-sensibve sector of the market. usmg this unique breadth index 8S a proxy, should monitor the contmued improvement in the sector in order to determine if market breadth is signaling a change from the narrow, selective leadershIp of the advance, to a more broad-based partIcipation. ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY TABELL RJSebh Dow Jones Industrials (1200) S & P 500 (1200) Cumulative Index (8120187) 2710.78 336.02 4105.38 No slalemenl or a.preSSlon 01 OPinion or any other mailer herein conlalned IS or IS to be deemed to be, directly or indirectly, an oller or Ihe solicitation 01 an offer to buy or sel! any security referred toor mentioned lhe malter IS presented merely lor the convenience of the subSCriber While we believe Ihe sources of our Information 10 be rellabte, we In no way represent or guarantee the accuracy thereof nor 01 the slatements made herein Any action to be taken by Ihe subSCriber Should be based on hiS own Inestlgatlon and Information Oelahetd, Harvey, label! InC as a corporation and ItS ofllcers or employees may now have, or may laler take, POSitions or trades In respecllo any securilies mentioned In thiS or any future Issue, and such POSition may be dltferent from any views nowor he'eatler expressed In Ihls or anv olher Issue Delaheld Harvey labell Inc, which IS registered With the SEC as an Investment adVisor may give adVice to ItS Investment adVISOry and 01he' cUSlomers Independently 01 any slatements made In Ihls 01 In any other ISSue Furlher Informallon on any security mentioned herem IS available on reQuesl

.. – – . – — ————- sT Lii.\IBHELn..' MLii.\RCIET LIETTIER ,—.- 600 ALEXANDER ROAD. PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9872300 August 28, 1987 I 'P!.rTtutegsdta1yors-awney2et70a0no''tJheJeerl!ln!e-wp'iehipgrhevfioolrl-Sth- We eDeRow's- lJrofJnAetsffgIn. du.sjtVriadlneAsaaeyraagneafTohlluorwsidnagy tbwL)dtnessleSdiy'ea–i-F couple of pullbacks of 20 points or so, but most of us, by now, have reached the pOInt where we can be blase about 20-point losses since. at current levels. they represent less than 1 of the Dow. 1987 has been, to say the least, an interesting year. It comprises, through yesterday. 167 tradIng days. Over that period, the average has moved ahead over 800 points from its 1986 close, which was under 1900. On no fewer than 54 of the 167 trading days, or about one day in three, we have seen newall-time highs scored in the Dow. The longest period during which the market falled to post a new high was a bit over two months, between April 7 and June 15. However, the lowest point achieved during that hiatus was a mere 7.88 below the prior high. Numerous predictions have, lately, been forthcoming suggesting the likelihood of the market's reaching the 3000 level. These strike us as being somewhat less than heroic, 3000 being barely 10 above this week's high. We salute those (we were not among them) who were mentioning 3000 at a time when it was meaningful, such as, for example, almost any time during 1986. Our own feelings regarding the market have, we hope, been made clear in recent issues. We consider the current level of most major averages as vergIng on the dangerous. The S & P 500, as we pointed out early thIS month, is selling in the vicinity of twenty times earnings. We are aware of the prospect for favorable quarter-to-quarter earmngs comparisons for the remainder of 1987 and 1988. Estimates have tended to be scaled down over the past few weeks—lBM is the most recent victim of this process—but let us, for the moment, accept the more optimistic estimates regarding earnings increases. We have noted before that, over the intermediate term, the stock market is a better predictor of earnings growth than the other way around. We think the prospect of better earnings for late 1987 and early 1988 constitutes a highly logical reason for the market's being up 800 points this year. We remain, hoever, somewhwat sceptIcal of projected 1987-88 earnings growth as a ..,.pnoredicto-OLiutule-StQck-priGs. 8stlon .' . – Along with a market that is, to say the least, fully valued on a fundamental baSIS, we continue'to see fairly strong indicatIons of Internal technical weakness. Our daily breadth index last posted a new high on March 23, with the Dow around 2300. It has recovered some two-thirds of the ground lost since its subsequent low In late May, but remaIns, at this wrlting, well away from an imminent confirmation. Indeed, a mini-divergence has now developed, since, through yesterday's close, breadth has remained below its high of August 11, scored with the DJ IA at 2680. Weekly breadth, as has been the case since 1982, acts better than that based on daily figures and could post a new peak at any time, although it is unlikely to do so this week. (There have been hypotheses as to why weekly breadth has been outperfroming the daily measure, but noone, to our knowledge, has come up with a documented cause for this phenomenon.) Having said all of the above, we remain technicians, and no such practitioner can, in our oplmon, fail to be impressed by the dynamism of the 1987 trend so far. One of the oldst adages on Wall Street IS, Don1t fight the tape., and certainly those who tried to fight it during 1987 have been knocked out of the ring and into the cheap seats. The short-term course of the market—although obviously not the very long-term course—will be determined by supply and demand rather than economic factors. The sources of potential stock-market demand have, of course, been well documented. The relabve cheapness of the U. S. market In relation to foreign ones, notably Japan, has, to be sure, probably produced a spate of foreign buying. Mutual fund cash—and, as near as can be documented, cash held by other institutions—has not, so far, been dIssipated, and the money flow Into mutual funds and other intermedlarles conbnues at a high level. Yet another source of demand appeared this week in the short interest figures, espeCIally taking into account the exceptionally high levels of short interest in the blue-chip issues that have led the advance so far. We are reminded of the old adage about the investor who confessed ,to his psychotherapist that, he could not sleep at-night for worrying about the stock market. Sell. advised the therapist, and the Investor asked How muchl1. To the sleeping point. was the answer. Investors at this time particularly. should pursue some sort of self analysis. If one finds hlmself worried about current market levels for the perfectly valid reasons discussed above, we would be loath to argue against the accumulation of some reserves. If this decision is made, however, such an investor will have to be prepared to forego losing patience if recent short-term strength continues unabated, as, indeed. it may well do. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. AWTebh Dow Jones Industrials 0200) 2654.18 S & P 500 (1200) 329.07 CumulatIve Index (8/27/87) 4097.07 No statement or expression ot opInion or any other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, an offer or the SoliCitation 01 an offer to buy Of sell any security referred tOOl men' tOned The maIler IS pfesented mefely lor the convenience of the subscriber White we betleve the sources 01 our mformatron to be reliable, we m no way represent or guarantee the accuracy thereol nor of the statements made herem Any action to be taken by the subSCfloor shoutd be based on hiS own mves\lga\lon and mformatlon Delafield, Harvey, Tabell Inc as a corporal Ion and lIs officers or employees may now have or may fater take POSitionS or trades In respect to any secufltles mentioned In thiS or any future Issue, and such POSition may be dillerenl from any views nowor heleaUer expressed In thiS or any other Issue Delafield Harvey Tabell Inc which IS registered With the SEC as an Investment adVisor, may give advice to ItS Investment advisory and otho' customers Independently of any statements made In thiS Of In any other Issue Further mformatlon on any security mentioned herem IS available on reQuest

,6 , …….. ——– — ,, ! TABELL'S MARKET II , LETTER I ! (– — – – —–.- – J f!7ak11 //nc. 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9872300 September 4, 1987 I..'.'.. -he-1' ,correction whlClll'irougnCtile-Dow -toa- POlnCluf'unaertIiF'260Ul';veI-at;; -. –'-.'.–..–,- Thursday's close and still lower early Friday does not, in and of itself, appear to be too disturbing. Through September 3, it is only the third largest correction of 1987, having been surpassed by short-term declines in both April and May. Moreover, most downside objectives for the averages have now been reached. What is interesting is the timing, the downswing having begun on August 25. This fits in with a pattern we have noted in the past, the downward bias for the month of September. The following table summarizes the 1088 monthly changes that have taken place in the DowJones Industrial Average since It was first calculated in 1897. It shows, from left to right, the mean percentage change for each month over the past 91 years, the standard deviation (a measure of the dispersion of individual values around that mean), and the number of months in which the Dow was up or down. As the final total shows, the mean of all percentage changes was a bit over one half of one percent, and, over the 91 years, the Dow has posted 620 up months and 468 down months. Mooio /1e.!.i!L StJ–De!J. I1lJLJ1i..lU /jwClt.blJOWCl ZCo!!ff … Cll.1.-S.lUZi'L..! .Jan 1 1 1.67 38 33 0.9'1 1.67' Fob -0.35 4 10 3 48 1.8 3.i2 Milr () -, I' 0.76 08; '5.1'12 6.78 ;1 . 9 37 0.33 0.21 4 o. P, 0.37 M2 1.lJ(1 – ' — . . -JIJl 0.37 0 -..4 1. '13 5.81 ') 6JJ .6-9 ,,,' 46 4.2 ;6 – 4il 35 1 .60 .0.).2 1 6 1 j Ldl, ) ''7-' ('i!J Ser- 1 .81 -1.30 5.91 6.09 6 37 2 1 , 61 r. -z Jo 3.1 S 9.2; Ocl 0.13 5.;; 50 40 0.7-1 0.08 Nov 0.80 'J.84 ;5 35 0.38 0.63 DeL' 1.31 '1.23 64 6 1.2; I 7'-' 7'-' ToLal 0.57 5.59 620 168 The final two columns represent bits of arcana of interest only to statisticians. The two statistics, z-score and Chi-Square, are standard tests of statistical significance. Both attempt to measure the probability of attaining by chance a subset of given characteristics from a larger set of values whose properties are known, in this case the 1088 known values of monthly percent changes in the Dow. The z-test relates to mean and the Chi-Square to fixed attributes, in this case, direction — up or down. In the case of September, we have a record of 90 months with a mean change of -1.3. In 37 Septembers, the Dow was up for the month, and in 53 it was down. The z-test tells us that the chances of choosing a sample of 90 with a mean of -1.3 by pure chance from the 1088 months are considerably less than 1 in 200, and the ChiSquare figure shows the same thing with respect to choosing a sample with 37 up- and 53 downmonths. The table quite clearly shows that, in terms of mean, September shows the highest degree of statistical significance of any month under study, surpassing even the well-documented tendency toward a December rally. A couple of sidelights are, perhaps, worthy of note. Part of the downward bias in September stems from its including two of the' worst declines of the 1929-1932 period, September, 1931, the second worst (after October, 1929) month in stock-market history, and September, 1930. However, interestingly enough, the tendency towards a weak September has become especially pronounced since the start of the current secular bull market in 1974. The Dow today is almost five times its level at the low of that year. Yet, since 1974, eleven out of thirteen Septembers have been downward months. Thus the weakness of early September, 1987 conforms to the historical pattern. AWTebh Dow Jones Industrials0200) 2580.04 S I P 500 (1200) 318.62 Cumulative Index (9/3/87) 4008.27 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL, INC. NO statement or epresslon of oplfllon Of any olher malter herem contamed IS, or IS to be deemed to be, directly or Ifldlfeclly, an oller Of the sollcllatlon 01 an offer to buyor sell any security relerred to or mentioned The matter IS presenled merely lor the convenlCnce of thesubscnber While we believe the sources of our Information to be reltable we In noway represent or guaranlee lhe accuracy theroof nor 01 Ihe statements made herem Any action to be faken by the subscriber Should be based on hiS own rnvestlgatlon and mformatlon Delafield. Harvey. Tabell Inc. es a corporation and tts officers or employees. may now h.we, or may later take. pOSllions or trades In respect to any securities mentioned Ifl thiS or any future Issue. and such posItion may bo dlfloren! from any views now or hmeaUere… pressed In Ihl; or any other Issue Delafield. Harvey, Tabell Inc, which IS registered wllh lhe SECas an Investment adVisor, may give adVice 10 115 Iflveslmenl adVISOry and othe' CUSlomers Ifldependenlly of any 51 elemenlS made In thiS or Ifl any other Issue Furlher mformatlon on any security menlloned 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 September 11. 1987 1—II—————-WithhE'.,'e'0Ird-rOIslle1tnecrr1987nviin'come-to;-atleastaemperaryen,dl————I—) Tuesday's close, it is, perhaps, worthwhile to stand back and assess the damage. Quite simply, that damage appears to be rather minor. It is necessary to cite a few figures to suggest how ordinary the decline really was. The Dow last peaked on August 25, with a close at 2722.42, with the average at a new, all-time high, up some 43 from the 1986 close. Over a period of nine trading days, the index dropped 6.51 to this Tuesday. With the average at its current level, the fall was almost 180 Dow points, and the DJIA was off some 60 points during the day on Tuesday before recovering. We are provided with yet another example of how measuring declines in points causes us, unconsciously, to overestimate their extent, since we are still used to thinking of the Dow as selling around the lower levels which prevailed a few years ago. The ten-point unit point-and-figure chart at right is an attempt to track 9 the footprint of the average since the beginning of the year. The left hand auo side of the chart shows the sharp advance of the first few months of 1987 ,5 111111111111111I11111ownhliychp,rioofr cnooutrisce,abwleassefroilolouws eddecblyineth, e 1llj!IlI1lllEillItfrom 2410 in April to 2200. This low was later sucessfully tested and a base oo III formed, as indicated by the letter A are well aware that one of the doctrines of point-and-figure charting is that the extent of a lateral base tends to give '00 some clue as to the extent of a subsequent upside move. It is thus possible, as shown at B, to project an upside target of 2600, one that was 1\00 significantly overreached at the recent high, an event not uncommon in a strong bull market but still suggesting an overbought position. Eventually a top formed at C, with a downside objective, at D, of 2540. This level was reached early this week. The Dow, therefore, finds itself in a position which suggests little in the way of short-term downside risk. It is, however, entirely possible that the decline from 2700 constitutes the start of a complex top formation, especially since the breadth high, shown on the chart, occurred back in March, producing what is, now, a six-month divergence. Such a top formation could include at least one test of the previous high, and the buildup of such a top could well occupy most of the remainder of 1987. If the Dow follows this projection, the ultimate downside objective might be around 2300-2200, where, as the chart shows, strong support exists. An ultimate break below 2200 would be the only event that, technically, would validate the disaster scenarios which have become so common of late. The above is, of course, hypothetical and would have to be discarded were a new base to form suggesting a further high. However, with the advance continuing to be narrowly based, the top-formation thesis, in our view. appears more probable. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWTebh Dow Jones Industrials (1200) S & P 500 (1200) Cumulative Index (9/10/87) 2607.62 320.03 3961. 33 No statement or expression of oplmon or any other matter herein contained IS, or IS 10 bedeemedlo be, directly or Indlreclly, an offer orthe sollcatlon 01 an offerto buy or sell any security relerred to or menhoned The matter IS presented merely for the convemence of the subscnber While we believe 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 mvestlgabon and information Delafleld, Harvey, Tabell Inc ,as a corporallon and Its otllcers or employees, may now have, or may later take, posrtlOns or trades In respect to any secuntles mentioned In thiS or any future ISsue, and such poSition may be dltlerenl from 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 Independently of any statements made In thiS or In any other Issue Further Information on any security mentioned herein IS available on request

Y BIELL'S jUiJIR2 lEY LIEYYIEIRl 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 The frequency of apocalyptic market comment has, it appears to us, been increasing of late. The most recent example may be the front page of Wednesday's Wall Street Journal which headlined a story on the bond market with the pronouncement, Debt-Securities Prices May Slide for Years, Many Analysts Think. The story went on to link the prospects for the stock market to the gloomy forecast for bonds. It is no criticism of The Wall Street Journal to suggest that, by the time a market opinion reaches the front page of that august publication—or, indeed, feature status in any medium with wide circulation—it may well be already discounted in the marketplace. We are, incidentally, somewhat skeptical of the purported stock market-bond market linkage. There is no doubt that bond prices have moved down sharply, with the Dow Jones Bond Average having sold at 95.51 on February 9th and having closed last night at a new low of 84.13. Correlation with the stock market seems less than apparent when we note that, on February 9th, the Dow Jones Industrials were at 2176 .84, on the way to a high at 2722.42 just 3 1/2 weeks ago. By that time, the bond market had already completed 2/3 of its decline. We are being asked to believe, in other words, that having responded to a 7.6 bond-market fall by rising 25, the stock market should now move lower in response to an additional 4 drop in bond prices. The above is cited not in an attempt to be wildly bullish, but to suggest that market comment at this stage should lean more in the direction of circumspection than that of extremism. Our readers are aware of our belief that the equity market, based on historical valuation standards is, to say the least, fully priced. We continue in this belief despite-t.heassorted-I'ationales–br.eaku p value ,Jorexample–currently–being l offered to justify present prices. We think it highly likely that the major averages may, at the moment, be forming a distributional top of some importance. We continue to think, however, that we are more likely to be in the earlier stages of forming that top rather than in the later ones. Looking at the short-term pattern, in other words, it may well be that current action consists of a test of the lows scored on the Dow last week. (Closing levels for the DJIA on Wednesday and Thursday were below their week-ago figures, but the September 8th intra-day low just under 2500 has not, as yet, been breached.) If this test is successful, a further test of the late August highs is hardly out of the question. This attitude of wait-and-see is further justified, we think, by the fact that, at its lows of a week ago, the market appeared to be at least moderately oversold. On September 9th, the familiar 10-day total of advances minus declines sunk to -4771, some 23 of total issues traded. This hardly qualifies as a deeply depressed figure—in the past, negative levels of more than 30 have been standard at major bottoms—but it may rank as being sufficiently oversold in terms of the recent record. Through 1974, it will be recalled, major lows were generally accompanied by climactic selling. This remained approximately true through the 1974 low but, beginning with the low of March, 1978, bottoms tended to be achieved by exhaustion rather than by selling panics. We had, in 1979, 1980 and 1981, climactic action taking place at intermediate lows rather than major ones, and, since 1981, we have seen no climactic lows at all. The September 9th figure constitutes the third lowest level in six years for the advance-decline oscillator, and the two previous occasions on which it was exceeded produced fairly decent short-intermediate term rallies. Likewise, the downside volume percentage.achieved on September 8th was around 82 of total volume, a reasonably high level, but not the 90 that we have generally used to denote a sold-out condition. Volume action, therefore, like breadth, suggests that a minor low may be close but that an unusually strong rally is not suggested. While a distributional pattern may be forming, in other words, we do not think that a serious drop is imminent less than a month after the averages have demonstrated sufficient momentum to generate an all-time high. We need, in other words, more evidence that that momentum has, in fact, been dissipated. AWT It Dow Jones Industrials (1200) S & P 500 (1200) Cumulative Index (9/17/87) 2535.08 316.66 3959.01 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. No statement or expression 01 opinion or any other matter herein contained IS, or IS to be deemed to be, directly or indirectly, an offer or the soliCitatIOn of an offer to buy or sell any secunty referred to or mentioned The matter IS presented merely for the convenience of the subsCriber While we beheve the sources 01 our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements made herem Any actIon to be taken by the subSCriber should be based on hIS own Investigation and Information Delafield, Harvey, Tabelllnc, as a corporalton and ItS ofhcers or employees, may now have, or may later take, posrttons or trades In respect to any securities menboned In thiS or any future Issue, and such postllon may be different from any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, TabeH Inc, which IS registered With the SEC as an Investment adVisor, may give adVice to Its Investment adVISOry and other customers Independently 01 any statements made In thiS or In any other Issue Further Information on any security mentioned herein IS available on request

III.ii.\1mIED..D..' S Ia1lII.ii.\iii IEII D..1EIIVIEIiI 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 September 25, 1987 The rrisi JS. Bachatlif;'!'rr;tively simple—hi th-aTif is ti'sually based -on a few- simple themes. It is Bach's ability to create an almost infinite number of permutations, combinations, and variations on these themes that make him one of the greatest of all composers. Technical analysis, certainly, is a good deal less stimulating than a Bach fugue, but it is, to a degree at least, similar in that it often consists of finding widely variant points of view from which to consider a few simple data items. One such simple item emerged early this week, as, on Tuesday, the Dow advanced 75.23 points, a percentage increase of 3.02. It is the technician's task to view this reasonably rare occurrence in a number of different contexts. It can be noted, first of all, that the rally took place from a logical starting point. The week's intra-day low of 2468.99 and the closing low of 2492.82 were lower than, but in the general vicinity of, comparable lows which occurred a number of weeks ago. As readers know, we have based our own short-term market outlook on the hypothesis that a base is forming in, roughly, the 2500-2600 area in preparation for a future test of the early September highs. Taken in this context, the Tuesday rally, which traversed much of the range of that base, was not all that surprising. It is necessary, however, to consider the implications of the rally's magnitude. We can start out by noting that, since 1926, a one-day advance of 3.02 or greater has occurred 175 times. On the surface, at least, this would seem to suggest that the Tuesday episode was not all that rare a bird. A further look, however, reveals that 146 of the 175, 3.02-plus 1- advances-.9pcurred prior to World War II. Only 29 cases have occurred since 1946, and the-41'c—–II years since have been characterized by long stretches of time during which no such rally occurred. For 11 years between 1946 and 1957 no one-day rise as great as Tuesday's occurred, and the same was true of the 6 1/2 years from November, 1963 to May, 1970. All of this tends, first of all, to support the often-made observation that equity markets in the 1920's and 1930's possessed many characteristics which differ widely from those of the mid-1940's to date. The important question, of course, centers on whether large, one-day rallies such as the one this week. possess any implications for the market's future action. The answer, based on recent years seems to be that they do posses some forecasting value and the outlook indicated is bullish. Between 1957 and 1986 there have been 27 such rallies. In 24 of the 27 cases, the Dow wound up higher after six months. The average advance for the 27 instances was 11.07. Roughly the same average advance is shown for the period 1933 to date. During these 54 years, there occurred a total of 87 large, on-day rallies following which the market was higher after six months in 70 cases. It is possible and, indeed appropriate, to carry the analysis of this phenomenon a step further. Much of the bullish bias attributable to the indicator seems at first to result from the fact that SUbstantial rallies often occur at major bottoms—part of a conventional selling climax. This can hardly be said of Tuesday's advance since it occurred following only a minor downswing from a new, all-time high chalked up just few weeks previous. In an effort to distinguish the two sorts of rally, we can divide the 172 cases into instances in which the preceding six months showed a rise and in which they showed a decline. The present case, of course, falls into the former category since. six months prior to its occurrence, the Dow was around 8 lower. This particular pattern—a sharp, one-day rally following a market that has been rising for six months— has taken place only 59 times since 1928. Of these, only 17 instances produced a lower market six months later, and all 17 of them occurred prior to 1941. Since that time, there have been 8 cases, all of them leading to a higher market after a half-year, with an average advance of 15.7. A rally of Tuesday's sharpness, therefore, seems to suggest an intact bull market or, at worst, one that is early in the topping phase. ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. AWTebh Dow Jones Industrials (1200) 2559.56 S & P 500 (1200) 319.26 Cumulative Index (9/24/87) 3973.07 No statement or expression of opInion or any other matter herein contained IS, Of IS to be deemed to be, directly or Indirectly, an offer or the soliCitation of an offer 10 buy or sell any securrty referred 10 or mentioned The matter IS presented merely lor the convenience of the subsCriber While we believe the sources of our Information to be rehable, we In no way represent or guarantee the accuracy thereof nor of the statements made herem Any actIOn to be taken by the subscriber should be based on hiS own tnvesbgallon and Intormatlon Delafield, Harvey, Tabell Inc, as a corporation and Its officers or employees. may now have, or may later take, poSitions or trades In respect to any securrtl8S mentioned In thiS or any future Issue, and such poSl\!on may be different from any vIews now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabe!! Inc, which IS registered wrth the SEC as an Investment adVISor, may give adVice to rts Investment adVISOry and other customers Independenlly of any statements made In thiS or In any other Issue Further mformatlon on any secunty mentioned herein IS available on request

'll'&.\IBlIEIL.IL.' S &'\Rl rxtlE'll' 1L.1E'll''ll'1E1Rl 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 October 2, 1987 – – -Regular, readers are–,-aware of our view-that the. most J probable -stock–mar-ketscenario calls-for- , – short-term strength. but strength that is not likely. for the time being at least, to carry much beyond the vicinity of the August high. The week's action seemed to conform to this hypothesis as the DJIA posted a 40-point rally on Thursday, breaking out of a month-long base formation in. roughly, the 2500 – 2600 area. Interestingly, the upside objective of this base appears to be 2720, a level just about equal to the previous high. Our own further hypothesis is that this test. and perhaps further future tests, of the Dow peak just above 2700. will compose a top formation. not yet complete, which may. ultimately. suggest the possibility of a conventional bear market. This thinking is buttressed by the continued abysmally poor breadth action which has prevailed since the August peak. It will be recalled that the last time our daily breadth index posted a new high was March 23, 1987, at which time the Dow was at 2363. By July, breadth had moved almost 40 points below that high and remained 11 points below it when the Dow peaked at 2722 on August 25. At the recent low, the breadth indicator was not ali that far from its July bottom, and any new low in the near future would confirm an ongoing downtrend. Unless a dramatic reversal is seen shortly. it appears unlikely that any approach to new high territory on the part of the Dow will be accompanied by a breadth peak. This. of course, would confirm an ongoing divergence. One of the most important tenets of breadth analysis, it should be remembered. is that highs in breadth indicators are likely to lead peaks in the Dow by a significant amount. As of August 25. 1987, the last DJIA high, the breadth high had led the Dow by 108 days. Today is the 134th day following that breadth peak so that a move to new high levels by the Dow would probably lengthen the divergence. A comparable divergence preceding the November, 1983 – July. 1984 downswing lasted for only 115 days. Bear markets during the 1960's and 1970's tended to be led by breadth for slightly longer periods, but we have definitely moved, in our view, into the time range where a breadth divergence ought to disturb us. New hIghs versus new lows, another serIes we have recentlyIocuseac;n-in gaugmgthe marketls internal strength continues to show below-average action. The net difference of daily new highs and lows moved. last month, into negative territory for the third time so far in 1987. Like deteriorating breadth, such action has, historically, tended to signify underlying market weakness. 'A broadened market top and an eventual conventional bear market—on the order of, say, a 20 decline. would not disturb us and would leave the market. we think. in 8 much healthier condition than that in which it now finds itself. This view puts us. we realize, on dangerous ground. There is a natural tendency—which has to be fought—to hope that the market will do what one wants it to and to seize on whatever shreds of evidence point in that direction. We hope we are not succumbing in this case. since at least a moderately convincing case for lower prices can. we think. be made. Why should we view the prospect of significantly higher levels with some alarm One reason relates to a study we began in early 1986 when we pointed out that the action of the Dow to that point showed what seemed almost eerie parallels to the market action of the early 1920's. Prices have diverged. recently, from the exact path traced out between 1921 and 1929 but they are still close enough for just about everyone who feels that stock-market history is important to have by now drawn attention to the similarity. The action needed to carryon the 1920's – 1980's parallel would, of course, be further strength to levels significantly above the already achieved highs around 2700. We would feel forced. therefore. to be less than enchanted were such strength to manifest itself without an intervening correction. Higher equity prices, moreover, would, in terms of earnings and dividends, both relative and absolute, bring the market to historically dangerous levels—levels which have, in the past. produced important market tops. As technicians we realize that this sort of analysis, while undeniably possessing underlying significance. is less than helpful over the intermediate term. during which prices tend to be influenced to a greater degree by suppply-and-demand factors. These factors may be strong enough at the moment to move the market into new hIgh territory. Such an achievement would bring us into totally uncharted waters. This is not impossible—it has already happened in Japan—but the risk produced by such an eventuality would be significant. We are thus comfortable with the forecast outlined above, which suggests that a relatively non-dangerous cyclical top may be in the making. Should this scenario ultimately prove untenable, the implications would require reexamination at that time. AWTebh Dow Jones Industrials (1200) S & P 500 (1200) Cumulative Index (10/01/87) 2633.65 327.69 4034.97 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL IN C. Noslatement or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, an oHer orthe sollcltallOn of an oHer to buy or sell any secunty referred 10 or mentioned The matter IS presented merety for the corwenlence of the 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 to be laken by the subscriber should be based on hiS own investigation and information Delafield, Harvey, Tabelllnc, as a corporation and ItS officers Of employees, may now have, Of may later take, positionS or trades In respect to any secUrities men\loned 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, Tabelllnc, 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 Further Information on any security mentioned herein IS available on request