Tabell’s Market Letter – February 19, 1988

'U'LinBHELL S Iil1i1 Lin IRl &;; IE'U' LIE'U''U'E1Rl 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (6091 9S7-2300 – February 19, 1988 – The-performance of-thestockmark etfor -the-week must-be -describedas unimpressive. , The current position of the Dow Jones I ndustrial Average continues to be contained in the often referred-to trading range, which has confined the DJIA from the October low of last year, between a high of 2051.79 and a low of 1738.74. In a relatively short period of time, due to increased volatility, it can be shown that within this trading range there have been a DATE DJIA CHANGE DAYS/SWING number of completed short term swings as Shown in the table to the right, together with the percentage change and the length of each move. As we discussed last week, a closer examination of these market swings during this period, using the Standard & Poor's group indices as a proxy, shows an interesting process developing. On the back page these Standard & Poor's groups are ranked by percentage change, best to worst, for two periods, December 31, 1986 to October 21, 10 16 87 10 19 87 10 21 87 10 26 87 11 02 87 12 04 87 01 07 88 01 20 88 02 16 88 2246.73 1738.74 2027.85 1793.93 2014.09 1766.74 2051.89 1879.14 2005.97 0.00 -22.61 16.63 -11.54 12.27 -12.28 16.14 -8.42 6.75 o 1 2 3 5 23 22 9 18 1987 and October 21, 1987 to February 17, 1988. Examining these two separate periods clearly demonstrates the diverse behavior of these Standard & Poor's groups from one period, the final phase of a mature bull market, to another, the recent trading range from October, 1987 to date. Reviewing the first time period, we have been aware, as discussed last week, of a shift Which started prior to October 19, 1987 from the disinflation sector into the inflation beneficiary ectQ.hLs ifref1eted in.1he performance of,theindividual Standard.& Poor's.g!,oup's., . Rank Group Oct 21, 1987 to Feb 17, 1988 Percentage Change Rank Group Oct 21, 1987 tn Feh 17. J9R8 Percentage Change TIRES RUBBER RETAIL STORES DEPARTMENT TEXTILE PRODUCTS GAMING COMPANIES AUTO PARTS-AFTER MARKET METALS MISCELLANEOUS PERSONAL LOANS MACHINE TOOLS HOME BUILDING MACHINERY DIVERSIFIED STEEL 27.2785 26.7649 25.6863 20.8140 19.4948 16.3779 16.2273 16.1993 15.6984 15.6657 15.0114 MULTI-LINE INSURANCE -7.7961 ELECTRONICS SEMICONDUCTORS -8.6771 RAILROADS -8.9376 GOLD -9.2765 ELECTRICAL EQUIPMENT -9.3352 BROKERAGE FIRMS -10.0765 MONEY-CENTER BANKS -13.4763 PUBLISHING (NEWSPAPERS) -16.4271 INVESTMENT COMPANIES -16.6322 AIR FREIGHT -19.1489 TOYS -22.2222 What is interesting, however, is the performance of these same groups from October, 1987 to date. The list above shows the percentage change of the best and worst groups for this period. The natural resource sector (metals-miscellaneous and steel), capital equipment (machine tools and machine-diversified), and consumer durables (tire and rubber, auto parts-after market, and home building) are well represented. Also another major sector, showing improved relative performance, is energy and is technically positioned to assume market leadership. Just as interesting for this sallle p-eriod'\s- the-representation of the financial' sector in the -worstacting'groups. Something is going on within the limits of this defined trading range. As this letter has pointed out repeatedly in past weeks, it is possible for this process of rotational leadership from sector to sector and group to group to evolve within the current trading range. New leadership in sectors, such as natural resources, energy, capital equipment, and consumer durables seems to be emerging. If, in fact, this trading range breaks out on the upside, this rotational process that we are monitoring should give us a clue as to the leadership of the next advance. ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TAB ELL INC. Dow Jones Industrials (1200) 1987.07 S 110 P 500 (1200) 257.94 Cumulative Index (2/18/88) 3424.49 No statement or expression of Opinion or any other matter herein contamed 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 Ihe subscnber While we believe Ihe sources of our information to be reliable, we In no way represent or guarantee the accuracy thereot nor oflhe 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 corporahon and Its officers or employees, may now have, or may later lake, poSitions or trades In respecllo any secUfibes menl!oned In Ihls or any future Issue, and such poslbon may be different from any views now or hereafter expressed In thiS or any other Issue Delalleld, Harvey, Tabell Inc, which IS registered With the SEC as an Investment adVisor, may 91ve adVice to Its Investment adVISOry and other customers Independently of any statements made In thiS or m any other Issue Further Inlormatlon on any secunty mentioned herem IS available on request DC l lS6 TJ JCT 1 19;7 PRETA DT 21 1937 T '00 7 l'l83 JKCNT CiAG CrlA uLJ ; ) T'.L 4 EETGNrsMl(CNVTCs 5 MrlS NlSCELLAt1US o CuAT o 70.293 5L.711l 39.)573 ,7.7741 3T.412 31.S92 -1.8457 -.27 15.0114 -8.0771 lb.317 8.Z 1 '-LUfH.'W,,,\ J XCLUlG 2N .40TOR CLJING I.S.M 10 POLUTION C!)Nf ROL 11 CrllEY-D1VRSlflc0 1 oVlu E) 31.2736 30.5637 3J.l97 1.;.46'9 Zi.TZ24 20.51)8 9.0713 '1. S 35) -6.57'3 -4.2tu5 5.667 -O.133 .1.3 T('c4.C\C l cNTRTAINNT 15 OIL Well E'JrMNT N 5c 10 M.JF.\CTUNG(QIV. IN.) 17 ELf';T;CA (.;LlIPMENT — 2.33;4 19.4406 13.91S1 11.4725 l.H93- -.31S7 6.9.6 -1.758c 6.3356 –9335 -. d PU2J..l!iIN'; IS TEXTILE PODUTS ,LO all INTEGR.lTcD INTERNATIO 21 iHU; 22 OIL C8MPC5IT .u SJFT DRINKS 24 ELrCTxONICSOEFEN5E Z5 GcNE.l MERCHANDISE CMAINS (0 AuTOMOBILE 21 ELECTRONICSISTRdMENTATIQ za HARDWARE TOJLS 2. HJUSfnOD PROGUCTS .0 COMPUTeR SYSTEMS 31 TIRES RUB3EQ 32 OIL INTEGRATED DOMESTIC 33 RAILROADS 34 FOCi) CHAI,V 33 COMMUNICATION EQUIP/MFRS 3 Q CM EMI CAL 5 J7 HOTCl/MOTl 3d CONTAINER PAPER 3j Si.P 500 40 AUTJ PARTS-JRG. EQUIFMENT 41 PUolISHIN; (NEWSPAPERS) 42 CQNTAINE METAL & GLASS ,.3 – C.JN';lQMERA.TES – H. l07 -1 131 14.3704 25.68.3 14.2404 0.9517 13.9363 2.5511 13.3533 .. 4 OC 12.316 -3.6604 12.0291 1.aS9; 12.6935 -3.113' 12.0063 10.3024 11.S097 12.2249 11.1781 11.4971 10.7BoO 2.3799 10.73,2 -6.26Bl 10.5620 Z7.Z7b; 9.9427 6.204, 9.3067 -8.9375 9.00,5 9.2343 8.5,04 9.6340 8.6904 2.4502 7.3503 -0.1107 6.75.1 11.3265 6.937 0.3212 6.5079 3.5699 5.3119 -16.4271 5.3455 -6.9076 ……7746.. -0 .7S42 ' – – – – . . 44 CDS,oTrCS 45 TEliPrlONE (NEW) 46 FDOJS 47 CMEMlCA lS -0 IV. 4a Sti02S 4. McOrCAl PRODUCTS & SUPPLI SO HEALTH CARE-OIVERSIFlcO 51 ReTAIL STOES(ORU.) 52 RETAIL STORES COMOSIrE ,3 NATURl G4S '4 PAPER ;;3 OFFICi QUIPI!NT -. SUI'LlE 5. HEALTn CARE-COMPOSITE ;7 AUTO TRUCS PARTS 53 PRDPRTY-CASUALITY IN SUR AN 59 MdlTI-lINE INSURANCE 60 CDMPUTER SOFTwARE t SERVIC 61 GAMING COMPNIES 6. HOSPITAL MANAGEMENT CDMPAN 4.33.0 3.6992 3.3260 2.9114 2.4371 1.0111 1.4619 1.1112 0.3911 0.6633 0.643S 0.0000 0.0000 -0.2&39 -).3680 -0.9735 -1.3252 -2.2160 -3.2037 14.930b -0.5111 5.2005 B.4563 7.0000 12.4714 6.3305 5.5H, 4.2513 -0.4d60 6.4385 0. 0000 4.2017 0.653 -4.0193 -7.19bl 6.15.1 20.8140 -0.8614 6J RESTAURNrS -3.lOl 64 INVc;TMNT COPAN1ES -3.7160 65 AUT PARTS-AFTER AKT -3.B306 .6 TEXTIL APAREL MFRS. -4.122 67 FOREST PRJDUCTS -4.9&03 68 AiR TRANSORT -5.1758 I – – – – – – – – – – – – – – – ; u – – ; ,0'c1 cMAoCH,INrEn T,RaGnL.ISS'–..–n''''-'5C;.5't.7,9'9O 2.678 -16.6322 19.494, -b.4 'n 1 11.1035 -1.0S), 16 .. 14. 411953;.;;.,———–1 71 LE1UR TIM 7 AIR FRtiGHT 13 L!TlC OMPlNIES 7.. LIFt IN.iUANCE. 75 HucSEHCLO F A 70 AERJSPACE-EFNSf 77 MAJOR REGIONAL 3AK5 70 c.'101.1… 77 TRURS du RcTLL STRS JETMNT l RETJIL SP(CIALT 82 MONEY CENTER 'A.Ki TT.) e TqSP.-!SC. G 5aViNG.i t laA COPArs d7 MANJFCTCE OUIG hAlT C-SC o RSJNhl OANS 9J R ETATE !VcSTNT TRU 9L 6CKEA FIRS , HJM 3UILIN -.311 -3.997 -10.U454 -11 .. J565 -12.0656 -12.Z96 -1.551 -13s.7244 -13.197 -14.4027 -15.0155 -15.a473 -15.43S0 -1.lZ09 -17.7014 -lo.Oo4 -ld. 1 433 -1'.c301 -l;tl.1S,l -21. 39S -30. 6,1 -;. 015 .92J -19.167 1.2191 .2.634' 6.2706 O.161 -.505 2 .. )277 -3.1;7 26.749 O.J1 -13.4763 o.a90 -22.22i 4.0170 -6.S113 -.4J0 -Z.S434 15.2213 3.11 -10.07 E.,,4