Tabell’s Market Letter – April 22, 1988

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