Tabell’s Market Letter – July 29, 1988

Tabell’s Market Letter – July 29, 1988

Tabell's Market Letter - July 29, 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 July 29, 1988 Despite a Thursday and .. -,. n J rally, July, 1988 will, almost certainiy, turn out to have been a down month. The DJIA, along with almost all other averages, reached a closing high early in the month, on July 5, at 2158.61. At Wednesday's close of 2053.70, it was down 4.86 from that high. This action is in near-perfect conformity with recent trading patterns. We pointed out two weeks ago in this space that the market since October 19 had consisted basically of backing-and-filling action which could be isolated by using a 4 filter. The July 5 – 27 period constitutes the seventh 4-or-greater correction in the almost-ten-month period since the October crash. The July decline also conforms to what appears to be a recent alteration in the summer-rally pattern—if, in fact, there exists such a pattern, a proposition of which we find ourselves less convinced than most analysts. In any case, five of the seven Julys since 1982 have been downward months, and the July record for the past 63 years is now 38 advances versus 25 declines, a ratio not all that different from the overall average. For what it is worth, August, in recent years, has tended to retain its upward bias. This upward bias also appears to be valid for Augusts occurring in an election year. Based on average price, the market has been up during August in 17 of 22 election years since 1900. It will also be recalled that, in general, the second half of election years possesses a bullish bias. We are probably due for a test of whether this pattern will hold in 1988. As noted above, most major AVPAapq nPAkrl on July 5. Likewise .the.. vast of major reached lOWS on wea ana saw tneIr r JOWS on May ZJ. q. tne short-term tops for these indicators have downside objectives just above the lows of last May—indicating a test of the May lows which is likely to be successful. The table below shows the relevant statistics. July 5 July 27 Decline Downside Objective May 23 DJ Industrials DJ Transportation DJ utilities S & P 500 S 8. P Industrials S & P Financial NYSE Composite NYSE Industrials NASDAQ Composite NASDAQ Industrials 2158.61 908.45 182.14 275.81 318.52 25.22 155.57 188.33 396.1 413.1 2053.70 l!55.73 175.50 (7/22) 262.50 303.15 23.97 148.74 179.75 383.3 393.2 – 4.86 – 5.80 – 3.65 – 4.83 – 4.83 – 4.96 – 4.39 – 4.56 – 3.23 – 4.82 2010-1950 845 – 820 174 – 169 262 – 256 301 – 295 23 – 22 145 174 – 1941.48 784.05 167.67 (5/11) 250.83 290.74 21.83 142.21 172.22 363.3 312.6 What is particularly interesting, we think, is the uniformity among the widely disparate averages—to a degree we cannot recall observing in recent years. With the single exception of the Dow Jones Utilities, all of the averages in the table show a low on May 23. a high on July 5, and a low last Wednesday. The similarity of the percentage declines is likewise 'remarkable. – With the -notable exception of 'the -OTC averages, each -indicator has a short-term -top which counts to around the low of last May. If the lower end of the downside target ranges for the various indices is achieved. the action of those indices versus their respective May lows should be observed very closely. The resultant test should, we think. be a significant indicator of market direction for the remainder of 1988. AWTebh ANTHONY W. TABELL DELAFIELD. HARVEY, TABELL INC. Dow Jones Industrials (12 00) 2097.44 S & P 500 (1200) 267.35 Cumulative Index (7/28/88) 3868.98 No statement or expression of 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 Of sell any security referred to or mentioned The matler IS presented merely for the convenience of the subscriber While we believe the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereol nor 01 the statements made herSln Any action to be taken by the subscriber should be based on hiS own investigatIOn and Information Delatll;lld, Harvey, Tabelllnc, as a corporation and ItS officers or employees, may now have, or may laler take, post/Ions or trades In respect to any seCUrities mentioned Irl thrs 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 ItS investment adVISOry and olher cuS10mers Independently of any statements made In thiS or In any other Issue Further information on any securrty mentioned herein IS available on request

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