Tabell’s Market Letter – October 28, 1988

Tabell’s Market Letter – October 28, 1988

Tabell's Market Letter - October 28, 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 – October 28, 1988 This letter has always had a fondness for trying to discover expected events that fail to occurT simply-because-sut!hfailures-tend -to'beIM-sidel'l–noticed-than-actual-happeningS—Arn,.,-..,..–t.,..– instructive example'can be found in the ;eries on daily and weekly NYSE new highs. What is more important about these numbers is that they have increased hardly at all in recent weeks. To see why this is significant, it is necessary to know how the new high figures reported in the financial press are computed. For each week, they cover the prior 52 weeks pius the current one (current week-to-date in the case of the daily figures). This means that the numbers reported starting this Monday were the first that did not include the week of October 19 – 23, 1987. This is the culmination of a ten-week process during which the stock ranges on which new-high and new-low statistics are based have been losing the figures for the 1987 crash. First Week Last Week Week's High vs. Avg. Daily Weekly Week Ended DJ!A High Week Ended DJIA High Gain First Week New Highs New Highs Aug 28, 1987 2746.65 Aug 26, 1988 2027.36 -719.29 9 26 Sep 4, 1987 2695.47 Sep 2, 1988 2064.72 37.36 -630.75 9 30 Sep 11, 1987 2625.96 Sep 9, 1988 2088.73 24.01 -537.23 19 28 Sep 18, 1987 2634.57 Sep 16, 1988 2113.26 24.53 -521.31 17 55 Sep 25, 1987 2603.95 Sep 23, 1988 2103.31 – 9.95 -500.64 23 74 Oct 2, 1987 2662.37 Sep 30, 1988 2140.29 36.98 -522.08 21 68 Oct 9, 1987 2658.78 Oct 7, 1988 2157.72 17.43 -501.06 32 98 Oct 16, 1987 2528.39 Oct 14, 1988 2167.85 10.13 -360.54 33 116 Oct 23, 1987 2164.16 Oct 21, 1988 2193.28 25.43 29.12 53 151 Oct 30, 1987 2049.07 Oct 28, 1988 2195.06 1.78 145.99 49 — 'Through Thursday, October 27, 1988 The table above shows, for the past ten weeks, the dates of the first week and of the last week included -I—;';Do'iw';-;isshown. in the new-high-and-low It can be seen that the count. For perIOd-has each of these generally been weeks, the in a rising one, t reai-gdhafy-oh(Itghh-eforratshe-t—t–I nine weeks posting an advance4 The column of interest is the one which subtracts the Dow high in the first week in the period from that of the last week. For most of the period, that earlier figure exceeded the later one by more than 500 points. Under these conditions, it was highly unlikely that great numbers of new highs would be taking place. However, with the removal of the crash weeks, this spread has reversed over the past fortnight. and this week's high is significantly above the figure of a year ago. The normal expectation, therefore, would have called for an explosion of new highs. This totally failed to occur. The average number of daily new highs and weekly new highs for this week expanded but remained at an historically low level. One can gain some insight into the weakness of these figures by comparing them with past history. Differences in the method of computation make comparison somewhat inexact, but as recently as 1984 (when the computation was the same), the number of daily new highs reached 309 six months after the market's low. In October, 1982, the series record was set with 653 new peaks. For 1988, so far, the peak has been 72, attained a week ago. As the table at right shows, the figures for the ASE and NASDAQ have been even more anemic. The average number of daily new highs for the former exchange has hardly expanded at all since August, and the high figure for the OTe market was actually reached over a month ago. We think these figures reinforce what has AMEX New Highs OTC New Highs Week Ended Avg. Daily Weekly Avg. Daily Weekly Aug 26, 1988 7 16 45 108 Sep 2, 1988 13 18 62 134 Sep 9, 1988 9 22 83 163 Sep 16, 1988 11 25 82 202 Sep 23, 1988 10 30 91 232 Sep 30, 1988 14 42 76 208 Oct 7, 1988 12 36 79 218 Oct 14, 1988 11 36 66 188 Oct 21, 1988 18 53 89 263 Oct 28, 1988 12 65 — been this letter's basic thesis for some time—that the current market, by most measures, lacks the vitality characteristic of the normal bull market. This suggests in turn that the current. year-old market cycle may consist largely of a trading-range reaccumulation phase. in preparation for a market upswing to begin at a considerably later date. ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) S & P 500 (12 00) Cumulative Index (10/27/88) 2151.85 279.04 3925.24 AWTebh No statement or expressIon of op!mon or any other matter herein contained IS, Of Isio be deemed to be, dlrectty or Ind!rectly, an offer orthe soliCitation 01 an offerlo buy or sell any securrty referred to or mentIoned The mat1er IS presented merely for the convemence of the subSCflber While we beheve the sources of our Informat!on to be reliable, we In no way represent or guarantee the accuracy thereot nor of the Slalemt'11IS made herem Any acllon 10 be taken by the subscnber should be based on hiS own investigatIOn and mformatlon Delafield, Harvey, Tsbell Inc, as a corporallon and ItS officers or employees may now have, or may later take, positions Of trades In respect to any secufltles mentioned In thiS or any future Issue, and such poSlt!on may be different from anyv!ews 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 other customers Lndependently of any statements made In thiS or In any other Issue Further information on any secuflty mentIoned herem IS avaltable on requesl

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