Viewing Month: April 1988

Tabell’s Market Letter – April 08, 1988

Tabell’s Market Letter – April 08, 1988

Tabell's Market Letter - April 08, 1988
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r , .. 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 April 8, 1988 After the Dow had backed off to a low of 1978 at the end of March, a 60-point rally on Wednesday …………brought the–averageback ..to-'.-8-,point … where ..it- was .. flirting with….the previous recovery -high of-2 08 1.0;-07 —— It is now almost six months since the October 19 low, and, as far as the general market is concerned, there exist still 8 number of uncertainties, some of which we have been discussing in recent issues. Regardless of the general market, however, a half-year is long enough for differing individual ..point-and-flgure chart patterns to have unfolded. Four typicsl cases are discussed below One sort of pattern is conspicuous by its almost total absence at the moment. The chart above left is a one-point unit chart on Hershey Foods. typical of the consumer issues which led the last bull market. Its base formed over no fewer than four major cycles—note the successively lower lows in 1962, 1966, 1970, and, finally, 1974. From that date an uptrend began, breaking the stock out of the entire pattern at 20 in 1981. It hardly declined at all in the 1982 bear market and, when that market turned upward, the breakout was confirmed. The high eventually reached, adjusting for subsequent — splits, –streng-t- was h- of . 227. . .t-he- b uTllh…i.ms aBrkoertt..offrocmh-aAr tugpusitc–t;u–r1e98e2xi;st'scahusaerddlaylmoasttallantlondvaeySfotlrfftwiToIitreraasdo.enss.tbckFSitros-tDreathke'o-u'zt-oI—-1 multi-cycle bases, and, in the majority of cases, carried them to all readable upside objectives. Secondly, the October, 1987 collapse was broad enough to include almost all stocks so that, in general. new patterns have had to form in less than a half-year. An example of the most common sort of pattern today is Ford. above right on a two-point-unit basis. The stock fell from 56 to 32 last fall, and all downside objectives were reached at that point. A small base was traced out, with an upside breakout early this year. That base. however. is no wider than the original top. and it is hard to forecast anythmg more than a testing of the 1987 highs. Although fundamentally the same sort of pattern. the two-point chart for InternatIonal Paper presents a more bullish configuration. The 1987 base is considerably broader than that shown by Ford. and. It is possible to read, from that pattern, objectives well above the stock's previous high. Such a reading is reinforced by the fact that the base is considerably larger than the previous top. A significant mInority of stocks now show such a pattern. and it is possible that more will do so as further broadening takes place. Unfortunately. a fair number of stocks have developed patterns like that of IBM. display above right. After its low at 102 in OctOber. it has never been able to move above the 122 area, and the lateral formation seems to suggest dIstribution rather than accumulation. With the Dow close to new highs. IBM remains only a few points above its October bottom. This exercise is an attempt to show that individual stocks are beginning to show widely differing characteristics. Given an uncertain general market outlook. it may be possible to achieve both upside potential and downside protection by restricting holdings to those issues which have formed the most positive patterns in post-October trading. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWTebh Dow Jones Industrials (12 00) 2060.51 S P 500 (12'00) 266.70 Cumulative Index (4/7/88) 3658.40 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 Oftha soliCitatIOn of an offer to buy or sell any security referred to or mentioned The matler IS presented merely for the convenience of the subscnber While we believe the sources of our Informahon to be reliable, we tn no way represent or guarantee the accuracy thereof nor of the statements made herein Any action to be talo..en by the subscriber should be based on hiS own investigation and Information Delafield, Harvey, Tabelllnc, as a corporation and liS officers or employees, may now have, or may laler lake, positions or trades In respecllo any secuntles mentioned In thiS or any future Issue, and such pOSllion may be different from any views now or hereafter expressed In thiS or any other Issue Delafield Harvey, labelllnc, which IS registered With the SEC as an Investmenl 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

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Tabell’s Market Letter – April 15, 1988

Tabell’s Market Letter – April 15, 1988

Tabell's Market Letter - April 15, 1988
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, \, '1TIBUEIL.IL. S RIEU' 1L.1E'1T'1J1E R 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 April 15, 1988 Lord Keynes (who, besIdes being a professor of economics. was a highly successful stock-market -I—- 8pecula tor )–once.. hkened-theinv-estmen-t–proce8S- to-'-bein g –one 'Of–'-8 ….panel-of–jud ges for-a-' beauty'con test. In this parhcular contest. however, the object of the exercise was not to pICk the most beauhful girl, but rather to pick the girl most of the other judges were likely to choose as most beautiful. Thursday's IOO-point fall in the Dow brought this comparIson to mind. since the universally accepted rationale for the drop was the fact that the U. S. merchandise trade deficit for February (Today's date. remember, is April 15) was 13.83 billion which, we were told. was substantially above expected levels around 11 billion. Perhaps so, but the link between the two events, at least according to most fmancial commentary, depends roughly on the following chain of reasomng 1. The trade deficit is an important indicator of the health of the economy. 2. A one-month observahon of a highly volatile series is significant in predicting the future course of that series .. 3. Chairman Greenspan and the rest of the Fed Board of Governors believe that short-term interest rates have a substantial impact on the balance-of-payments deficit, since hIgher U.S. rates tend to attract increased foreign investment. 4. These same gentlemen further believe that Federal Reserve policy, for which they are responsible, is a major determinant of interest rates. 5. They are. therefore. likely use their power to raise short-term rates, which, in turn, should produce a concomitant decline. 6. Bonds, therefore. will attract investment funds away from stocks, and, thus— 7. Stock prices will move lower. On this. we are to blame a loss of well over 100 bilhon in equity values. Now, none of the theorems postulated above are inherently implausible, but the extent to which they depend on what goes on in other people's heads is Interesting. There are, essentially, two mutually exclusive theories as to just what the Fed produces when it manipUlates the tools at its . . .-I—–,disposal- .-..!l'-hecla-ssieal–vlewsuggest-5tha-t suchmanipulahonaffects-the—economy-by-changes-'in—- -,—–.- interest rates. Thls view was standard from the birth of the Federal Reserve System and appears to be regaining stature today. There was, however. the interregnum of former Chairman Volcker during which the Fed appeared to believe that it was charged with the manlpulation of the money supply. Monetarists. who, during this perIod, were kings of the economic mountain, conceded that Fed action might have a short-term effect on interest rates but that, over the long term, expansive monetary policy. by producing a greater demand for credit, would, ultimately. cause interest rates to rise. Wall Street, it will be recalled, was never quIte converted to thIS view. Only a few years ago, everything stopped on Thursday afternoons awaiting the report on the week's money-supply data. An increase in Ml, or one of the other assorted M's. was sure to produce a decline in the stock market since psychoanalysis of Paul Volcker indicated that he would feel compelled to tighten money, thus raising interest rates, which would affect the bond market, which would affect the stock market, etc etc. Chairman Greenspan is no less immune from psychoanalysis. It is wldely felt that he will react to faster-than-average economIC expansion by tightening money for fear of a renewal of inflation. We have even, mirablle dictu. reached the stage where rising profits are used as Justification for a falling stock market. This particular paradox arises from yet another compulsion to probe the minds of others. Earnings are significant these days, not by being up or down but by being greater or less than expected. This has given rise to a new cottage industry, the compilation of earnings estimates. There has even developed a theory that investment managers should be following, not changes in earnings, but changes in estimates. Here we have Lord Keynes' beauty contest with a vengeance. There exists. of course, an opposing hypothesis of how the investor should react to the opinions of others—the theory of contrary opinion. Along with many of our fellow technicians, we are believers in this theory, but it has always. in our view, had a practical difficulty in that it is difficult to know to just what opmions one should be contrary. A recent summary of widely read market-letters contained – one' suggestion that there were far 'too many disbelievers in the – – …. ongoing- bear-market theory. and that, therefore, the market should head lower. There were 18 other market letters quoted on the same page, and, of those, 15 were bearish. There are, we think we have emphasized. a fair number of uncertainties about the current market picture. and investors should react to such uncertainties in a fashion that makes them feel most comfortable. If the market is to continue to move lower. though, it will do so in response to forces a good deal more basic and fundamental than a one-month change in a smgle isolated economic series. AWTebh Dow Jones Industrials (1200) S & P 500 (1200) Cumulative Index (4/14/88) 1995.69 256.67 3613.77 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. No statement or expression of opInion or any other matter herein contained IS, or IS to be deemed to be, dlreclly or indirectly, an offer or the soliCitation of an offer to buy or sell any security referred to or menlloned The matter IS presented merely for the convenience of the subscrtber 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 Investlgallon and information Delafield, Harvey, Tabelllnc, as a corporation and Its officers or employees, may now have, or may later lake, posrtlons or trades In respect to any securities mentioned In thiS or any future Issue, and such pOSition may be dlHerent trom 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 rts llweslmenl adVISOry and other customers mdependently of any statements made In thiS or In any other Issue Further information on any secUrity mentioned herein IS available on request

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Tabell’s Market Letter – April 22, 1988

Tabell’s Market Letter – April 22, 1988

Tabell's Market Letter - April 22, 1988
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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 (S09) 987-2300 April 22. 1988 Today will be the 129th trading day since the market crashed on October 19. At its most recent ,- – -high on -April-12;-the 'DJIA';-at2UO08;-hadadvanced -2h4'from -its 'October 'HIc1ose'of ' i 7il874'.—- Since a 20 filter is a common rule-of-thumb for identifying major turning points. it is necessary to confront the hypothesis that 8 new major bull market began on October 19w Resolution of this issue is as important to the bear as the bull. for the pessimist needs to refute it in order to justify his stance. One market aspect that supports such a refutation is the lack of follow-through following the posting of new highs. The table below shows the date of 15 past major lows plus the current one. The columns show the number of days on which new highs for each advance were scored, over periods ranging from 30 to 240 days following the market low. Market Number of New Highs Over Low 30 Days 60 Days 90 Days 120 Days 180 Days 240 Days 11/13/29 07/08/32 10 10 18 34 19 27 27 27 27 27 03/31/38 04/28/42 7 7 16 20 27 14 21 21 21 39 63 10/09/46 06/13149 4 9 11 11 11 21 18 26 32 40 59 72 09114153 19 27 37 43 70 90 10/22/57 7 7 11 11 25 47 06/26/62 11 17 17 28 40 57 10/07166 13 13 24 29 38 45 OS/26/70 12/06/74 6 9 15 18 41 57 15 28 37 42 48 48 02/28/78 08/22182 10 22 24 31 32 32 13 22 22 26 42 46 07/24/84 11 11 12 12 19 27 1- —–Fol1i0o1w191i8n7gO ctober.1192newhighs–w5ere–posted '5C)IiOctotier110.r..and-21but''the'nextnew;O- peak .. waB–not–I—. achieved until January 5. a gap of 51 trading days. This is reflected in the table which shows that the number of daily new highs In the Dow posted for 30. 60. and 90 days following the low were lower in 1987-8 than in any past bottom. The current period's eleven new peaks scored after 120 days ties two other markets for the lowest figure. Interestingly. these two past bottoms. 1946 and 1957. required long basing periods before advancing. Such may be the case at the moment. Market Percent Advance to High After Low 30 Days 60 Days 90 Days 120 Days 180 Days 240 Days 11/13/29 07/08/32 32.6 68.3 32.6 93.9 38.7 93.9 47.7 93.9 93.9 93.9 03/31/38 22.3 22.3 41.9 47.2 55.8 04128/42 9.9 17.0 17.0 17.0 2S.2 37.6 10/09/46 7.7 9.3 10.5 13.1 13.1 14.6 06/13149 9.1 12.6 15.6 19.8 26.9 33.2 09/14153 7.7 10.9 14.6 17.3 28.6 37.1 10/22/57 7.2 7.2 9.3 9.3 14.8 27.1 06/26162 10/07/66 11.6 10.3 15.0 10.3 15.0 15.7 22.1 17.8 28.6 22.2 35.7 26.1 OS/26/70 14.1 16.5 22.5 24.2 39.8 47.8 12/06/74 14.1 31.2 41.9 48.7 52.7 65.2 02128/78 08/12/82 4.3 20.3 15.7 37.1 16.8 37.1 21.3 40.6 21.3 57.0 21.3 60.7 07124/84 14.1 14.1 14.5 14.5 19.6 23.1 10/19/87 16.6 18.0 18.0 20.6 The table above is SImilar to the first but instead shows the percentage advance at the high for the various periods. On this basis, 1987-88 does not look bad at all. The two-day rise following the low wasexceptiofi81, 'and indeed. if one eliminates the volatile markets of the 1920's and 1930's, the performance folloWing October was the second best for a 30-day period. For longer periods, while not quite as impressive, the percentage advance posted fits comfortably within the framework of past major market turning points. This dichotomy. we think, supports our own stance. which is neither wildly bullish nor wildly bearish. but. rather, calls for the continuation of the sort of trading range that has characterized 1988 so far. ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL INC. AWTebh Dow Jones Industrials (1200) S & P 500 (1200) 1999.83 257.47 Cumulative Index (4121/88) 3589.53 No statement or expression of oplnton or any other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, an offeror the soliCitatIOn of an offer to buy or sell any secUrtty referred to or mentioned The matter IS presented merely for the convenience of the subscriber While we believe the sources of our Information to be reliable, we to 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 mvestlgatlon and mformatlon 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 secunbes mentIOned In thiS or any future Issue, and such poSition may be dlfterent from any ViewS now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabell Inc, which IS registered with the SEC as an Investment adVisor may give adVice 10 Its Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further InformallOn on any security menttoned herein IS available on request

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Tabell’s Market Letter – April 29, 1988

Tabell’s Market Letter – April 29, 1988

Tabell's Market Letter - April 29, 1988
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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 April 29, 1988 – at uLQv.ersix .m9Qth..J1avenow –P(!ssed–.since …the 8tockarket .crash of October…19.,1987. –To date least, none of the onward disasters predicted in the wake of the crash have materialized. Neither, however, has a new uptrend, of the sort that might suggest October was no more than a bad dream, emerged. What has happened, rather, especially over the last month, is a burst of lassitude. This can best be observed by a glance at trading volume. Yesterday's activity, 128 million shares changing hands, was the third lowest figure since the crash. We have had, in that time, only three lower-volume days, all related to the Thanksgiving and Christmas holidays. A ten-day average of trading volume was as low as 155 million shares earlier this month and will probably be lower today. AU of this does nothing to penetrate the fog surrounding the current market outlook. It is axiomatic that increased volume would be required to suggest a rally of any significance, but such an increase could manifest itself at any moment. The last two major bottoms, in 1982 and 1984, it will be recalled, manifested themselves after protracted periods of duUness. Meanwhile, group rotation has been pronounced. This can be illustrated by the following table which shows the levels for three Dow Jones Averages, Industrials, Transports, and Utilities, at various points following last August's all-time high, preceded by the dates, often different, at which the various benchmarks were reached. Following each average is its percentage change from the prior level. Industrials Transportation Utilities 1987 High Crash Low Initial Recovery December Test – January High – i fanuary–kow Late March High Jan-March Low Early April High Late April Low Recent 8/25 2722.42 10/19 1738.74 -36.1 10/21 2027.85 16.6 12/4 1766.74 -12.8 117 2051.89 16.1 U201879..14—.8.4 3/18 2087. 37 11.1 3/30 1978.12 – 5.2 4/12 2110.08 6.7 4/20 1985.41 – 5.9 4/28 2041.28 2.8 8/11 1100.11 10/20 740.25 -32.7 10/21 787.01 6.53 12/4 661. 00 -16.0 1/7 789.43 19.4 1/1131.576.6 3/23 904.12 22.6 3/28 854.84 – 5.5 4/12 884.56 3.5 4/20 827.36 – 6.5 4/28 840.20 1.6 8/14 213.79 10/19 160.98 -24.7 10/21 188.66 17.2 12/4 173.19 – 8.2 1/7 188.42 8.8 U14116.!l2–6.-1 1/29 190.02 7.4 3/30 171.29 – 9.9 4/8 176.56 3.1 4/20 167.26 – 5.3 4/28 170.40 1.9 As measured by the Industrials, the all-time high was reached on August 25 of last year, and the low, after a 36 decline, on October 19. Following a two-day initial recovery, the market moved gradually lower to a successful test of the crash low in early December. This test was followed by the attainment of a high above 2000 in early January. Since then, two subsequent highs have been posted, in March and in early April, neither one producing much in the way of followthrough. However, along with the series of higher peaks, each of the intervening lows has also taken place at a higher level, thus producing a pronounced uptrend channel, although not a terribly steep one. Measured from 1987 highs, the Utility Averaged has acted better than the other two. It now stands 20.3 below that high, with comparable figures for the industrials and transports being 25.0 and 23.6. For 1988, however, utilities have been the worst performers. The average is now more than 10 below a peak scored back in January, whereas the Transport Index is now 7 below its March high, and the Industrials level is now just 3.3 below a peak chalked up only a couple of weeks ago. Patterns have varied in other ways. Through the December low, the table clearly shows the Transport Average as the worst performer. It was the only average of the three to break its October low at that time. This was immediately foUowed by a period during January-March when it clearly outperformed the Industrials. That Qutperformance. however, seems to have evaporated since the March highs, with the average failing to better its early 1988 peak. The utility pattern is almost the opposite. That average was the best-acting one for the October.-December period. ,declining the least in .the. crash.showing the strongest subsequent recovery, and the smallest decline to the early-December test. For 1988, however, the utilities reversed this behavior. They struggled to a new peak in January—which has turned out to be their post crash high so far—and, as we noted at the time, actually moved below their early-December lows this month. All of this, of course, only shows what we have been suggesting for most of 1988—that market action remains varied and without any clear-cut indication of a general market trend. Needless to say. the appearance of such evidence will be welcome. and we hope to be able to identify it when it occurs. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWTebh Dow Jones Industrials (12 00) 2027.69 S & P 500 (1200) 260.89 Cumulative Index (4/28/88) 3638.96 — NO statement or expression of opInion or any other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, an offeror the solICitation of an oHerta buyor sell any securrty relerred to or mentioned The matler IS presented merely for the convenience of the subscriber While we beheve the sources 01 our Information to be rehable, we In no way represent or guarantee the accuracy thereol norolthe statements made herein Any action to be taken by the subscriber should be based on hIS own investigation and InformaMn Delafield, Harvey, Tabelllnc, as a corporation and Its officers or employees, may now have, or may laler take, posrllons or trades ,n respeclto any securrlles menlloned In thiS or any future ISsue, and such osltlon may be different from any views nowor 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 rls Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue FUr1her Information on any security mentioned herein IS available on request

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