\ 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) 967-2300 October 14, 1988 -.I t-is -inter-esting-how -muoh-last-week typified-the' past- marketyear. -Wehad-;-first. of-8l—-'- —l- Wednesday's 30-point decline which, like 80 many of the year's moves, was in anticipation of trade-deficit figures which were not to be published until Thursday morning. The actual release of numbers slightly worse than most expectations produced a modest Thursday recovery. (Better figures, as was the case with the unemployment release of a fortnight ago, would probably have resulted in a recovery of the entire loss.) The decline, of course, followed Monday's move to a new post-crash high in the Dow, a pesk which may have set records for unimpressiveness. A high was posted, to date at least, on only one day. it was the first new high since July, and it occurred on a day when both the Transportation and Utility Averages were down and more stocks declined than advanced. Yet this again was typical of the year's action. Next week will see the first anniversary of October 19, 1987. From that low to Monday's peak, the Dow is ahead some 24.17. However, the new highs made have been conspicuosly few and widely spaced. Two days after the crash, the DJIA had recovered from 1738.74 to 2027.85. That remained the best level attained until the string of three new peaks in early January, the last being at 2051.89. Next occurred four peaks in March, the last at 2087.37, which incidentally was accompanied by a breadth peak not achieved since. There followed three new highs in April, achieving 2110.08 on April 12th, four more in June and July, reaching 2158.61 on July 5th, and finally the new peak at 2158.96 this week. This makes for a total of only 17 days on which a new high has been scored out of 250 trading days through yesterday. In this halfhearted rise, breadth reached its peak on March 17, 143 trading days ago and has been diverging ever since. It cannot be emphasized too strongly how unusual this action is. To demonstrate this, it is necesSary, first of ill, to dispose of the notion that it ill constitutes a rilly within an ongoing bear market. This can be done fairly easily. We have pointed out many times that history strongly suggests that the bear-market is a largely mythical beast. The longest such rilly has been anywhere near a8 long 8S a year. If the year is not a bear market, it is something else, but, analyzed in buH market terms it looks strange indeed. The following table includes every major market low since 1942 and shows the highest point the Dow had reached in its first year and the percentage advance scored to that point. The final figure in the table is the number of days during that first year when a new peak was achieved. Bull Market Start Highest Point in 1st Year No. of Date DJIA Date DJIA Advance New Highs 4/28/42 98.95 4/6/43 136.93 38.38 67 10/9/46 163.12 7/24/47 186.85 14.55 21 6/13/49 161.60 6/12/50 228.38 41.32 89 9/14/53 225.49 9/14/54 351.78 56.01 92 10/22/57 419.79 10/17/58 546.38 30.16 53 6/26/62 535.76 5/31/63 726.96 35.69 58 10/7/66 744.32 9/25/67 943.08 26.70 46 5/26/70 631.16 4/28/71 950.82 50.65 63 12/6/74 577.60 7/15/75 881.81 52.67 48 2/28/78 742.12 9/8/78 907.74 22.32 32 8/12/82 776.92 6/16/83 1248.30 60.67 46 7/24/84 1086.57 7/19/85 1359.54 25.12 32 10/19/87 1738.74 10/10/88 2158.96 24.17 17 Contrasted with its predecessors, the present advance looks pretty anemic. It involves the smillest number of new highs on record and the third smillest percentage advance. It is also One of three advances in which a breadth divergence materialized in the first year, the other two being 1946 and-1966;- Wh.j! recentactlon'most resembles;-of course, is that following the low of 1946 or possibly of February, 1978. In both of these cases, the advances were small, and new highs Were widely spaced. What the two periods had in common was that they both constituted, reilly, not bull markets but base formations leading up to a later advance. 1946-1949, of course, constituted a trading range with a 20 percent range between high and low. The last year has been, in many ways, a carbon copy of that range which, it must be remembered. lasted for two years and nine months. 1978 eventuilly produced a modest bull market with an overall 38 advance, but not until its initial low was tested two years later on Silver Thursday. The week's new high certainly does not alter our conclusion that we are somewhere in a 1987-198 period of base formation. ANTHONY W. TAB ELL DELAFIELD, HARVEY. TAB ELL INC. Dow Jones Industrials (1200) 2140.11 S & P 500 (1200) 276.65 Cumulative Index 00/13/88) 3933.09 AWTlt No statement or expression of opInion or any other matter herein contained 15, or IS to be deemed to be, dlreC1ly or Indirectly, an offer or the solicrtallon of an offer to buy or sell any secunty referred to or mentioned The matter IS presented merely for the convenience of the subSCriber While we beheve the sources of our Information to be rehable, we In no way represent or guarantee the accuracy thereof nor of the statements made herein Any action to be taken by the subscnber should be based on hiS own Inves\tgatlOn and InformatIOn Delafield, Harvey, Tabellinc ,as a corporation and Its offICers or employees, may now have, or may later take, poSitions or trades In respect 10 any securriles mentioned In thiS or any future Issue, and such posllton may be different 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 to Its lvestmenl adVISOry and other customers mdependentiy of any statements made In Ihls or m any other Issue Further mlormal!On on any secu1J1y mentioned herein IS available On request

———————————————————————- – \ 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 (6091 967-2300 . Th ereappears -t(,.'exlst—an–almDs tUniVersarli-u-m.a-n-u–r–g'e,..Otoc'tCobeelero2ra1t,e-1a9i8li8li'ver-s-aries-with-t'h-e——t result that both print and electronic media launched this week into veritabie orgIes of comment on October 19, 1987. At the risk of being accused of total lack of originality, we intend to indulge in our own modest celebration of that birthday. beginning our observations with the question—Why Isn't the Dow at 1500. We do not think that query is anywhere near as far off the wall as It may seem. When we were called upon to comment about the crash five days after its occurrence, the only relevant standard for comparison seemed to be 1929. We said at the time. Monday's 500-point drop in the Dow took it down 22.61, almost twice the 12.82 of October 28, 1929. The 26.17 fall over Friday and Monday was a two-day record, bettering the October 28-29, 1929 drop, 26 to 23. Only one 1929 mark appears intact. The entire drop from September 3 of that year through November 13 took the average down 47.87 in 56 trading days. The fall from August 25 through October 19 of this year has been, so far, only 36.15. That latter mark, of course, stIll remains intact, October 19 (or the intra-day low of October 20) having turned out to be the low of the 1987 crash. What is more important, however, is that the aftermath has turned out to be quite different. Following its November low, the 1929 market rallied for SIX months, recovenng half its loss. By the end of the next six months, however, that rally had been totally erased. Three days prior to the first anniversary of the low, on November 10, 1930, the Dow sold at 171.60, 13 below the year-earlier bottom and 55 below the 1929 high. The former measurement, if duplicated today, would have the average at 1550. Instead, the DJIA, yesterday, achieved a new post-crash high. While there is some justification for questioning that strength on a short-term basis. the technical pattern minimally suggests that we are somewhere in a reaccumulation process of uncertain length which 1.1W1I.'.IUltimately-lead.to new highs.HAlthough thdefinitionof ultimately. in ths case. rema.ins I-1 uncertaiTi-;-n is hkely to Involve a shorter–period thanihe–25 years required for the 1929 high to be bettered. The obvious answer for the dIffering market patterns lies in the widely disparate fundamentals. By November. 1930. we were just embarking on an economic cataclysm, the awfullness of which the market was just beginning to antICipate. The worst case apparent on the current horizon is a nebulous recession which forecasters keep pushing further into the future. Our readers are aware that we have, in this space, discussed 1929 at great length, notably in a series of letters during 1986. We have always tned to stress our view that the 1929 crash and the subsequent depression were two separate events only partially related. This view led logically to the conclUSIOn that 1929 market behavior might be repeated (as it was in 1987) without a 1930-32-type aftermath (which at the moment appears unlikely). There are many reasons why we are lucky enough. in 1988. to find ourselves in this position, and one probable one is that we have learned a few things. There occurred, shortly after the first anniversary of the 1929 crash, an event that turned out to be symbolic—the failure of the Bank of the United States. This was the first in what was to be an ongoing string of bank failures whiCh produced one of the enduring images of the Depression era, the long lines of depositors queued up to withdraw their savings from banks. The creation of the Federal Deposit Insurance Corporation (and later the Federal Home Loan Bank) has prevented the repetition of the crisis of confidence engendered by the 19301s phenomenon of bank runs. removing one pressure toward the monetary contraction which accompanied the Great Depression. Before we begin to sound too much like Pollyanna. It should be noted that the relief is still only symptomatic. The irrepressible urge of the banking industry to loan money to those unable to repay continues, and we are just now. in our examination of the Texas situation, beginning to realize that the current policy has a cost, albeit that that cost is a small price to pay for the benefits gained. . . The current market, moreover. driven as it is by takeovers, raises at least a few echoes of the banking practices of the 1920's. Consider, for example. the fact that the upcoming Philip Morris absorption of Kraft will be financed by some 10 billion of debt. Although the ultimate Obligor IS different, it is hard to see this practice as anything other than the extension of stock market credit. a process which. when indulged In excessively in the past. has been known to lead to grIef. That. however. is a subject for another letter. Dow Jones Industrials 02 '00) 2174.61 S & P 500 02 00) 281.37 Cumulative Index (0120188) 3974.05 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWTebh No statement or expression 01 OpIniOn or any other matter herein contained IS, or IS to be deemed 10 be, directly or Indirectly, an offeror the soliCitation of an offerlo buy or sell any security referred to or menlloned The matter IS presenled merely for the convenience of the subscnber While we believe the sources of our information to be reliable, we m no way represent or guarantee the accuracy thereof nor of the statements made herein Any action to be taken by the subscnber should be based on hiS own Investigation and mformatlon Delafield, Harvey, Tabell Inc , as a corporatton and Its officers or employees, may now have, or may later take, poSitions or trades m respect to any securliles mentioned m thiS or any future Issue, and such positiOn may be drlferent from any views now or hereafter expressed m thiS or any other Issue Delafield Harvey, Tabellinc , which IS registered With the SEC as an mveslmen1 adVisor, may give adVice to ItS Investment adVISOry and other customers Independently 01 any statements made In thiS or In any other Issue FUrlher Information on any security mentioned herem IS avallabte on request

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

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, eN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION DF SECURITIES DEALERS, INC 609) 987-2300 November 4, 1988 We gLto tal5.e 8 week. gif ….itL,Jhis -LissJ.le ..irom…being.-rstq uired dO-,—CQQlmen honan – – – excrutiatingly dull stock market. This is the result of a tradition'- some 40 years old now, which calls for this letter to forecast the result of the presidential election. Although this event is a change of pace, it is not without its pressures J since everyone of our past forecasts has been correct. As we regularly point Qut, with due modesty,- this is considerably better than our record as regards the stock market. We have tried, in our most recent attempts at political forecasting, to apply the principles of technical analysis, a goal no so far-fetched as it might seem. Technical work is, after all, nothing more than historical and numerical analysis—an attempt to look at past data and draw sensible conclusions about the future. This technique can be applied to stock prices and—we think—to elections. 1988 is a particular case in point. The name of the game in Presidential elections is electoral votes, the winner being he who accumulates 270 such votes, regardless of the popular totals. This seems to be becoming more obvious to the media, which appear to be producing more state-by-state poll compilations than has been the case in the past. One recent such compilation showed ten states, having a total of 105 electoral votes, leaning toward Governor Dukakis. It turns out that these ten states are ten of the eleven which gave President Reagan his lowest percentages in 1984. Six more states with 100 electoral votes were rated, according to this source, as toss-ups. These were the remaining state in the group above (Pennsylvania), and five of the ten states which, in 1984, ranked just above that group in terms of Republican winning percentage. The polls, in other words, are revealing information that could have been gained simply by looking at 1984 results. 1984, it is necessary to recall, was a Republican landslide. This can best be illustrated by a simple statistic. Were Vice President Bush to win only those states in which the Republicans, four years ago, took 60 percent or more of the vote, he would have 260 electoral 1votes-,within..-.lOf.the-number—-needed to … wi n ….-He-would….ha..ve-2.0.-states…d..S…,.of..which ……went-for –I Reagan in 1984, and five of which now show him leading in the polls, to pick up those ten votes. Bush could, in other words, withstand a close-to-10 shift in favor of the Democrats from the 1984 voting pattern and still come away the winner. A forecast, then, hinges on the likelihood of a shift of this magnitude, a likelihood that a look at historical data suggests is not terribly great. There has, indeed, been only one case in recent history where such an election-ta-election reversal has taken place. That was the election of 1976, when Jimmy Carter was able to reverse the results of the 1972 vote in which Richard Nixon won by electoral and popular majorities comparable to Reagan's in 1984. There were, however, two easily-discernible reasons for this. One, of course. was Watergate. but probably more important was the location of President Carter's birth. Southern states, with a total of 145 electoral votes, had gone to Nixon in 1972 by margins ranging upward from 63. In 1976 all but one swung to Carter. By 1980, however, they had all (except Carter's native state of Georgia) returned to the Republican camp and, by 1984, the Reagan winning margins had returned to levels only slightly lower than those of 1972. Governor Dukakis' Massachusetts background seems hardly likely to produce the temporary shift of a single voting bloc that occurred in 1976. And indeed, temporary that shift seems to have been. The most obvious fact emerging from numerical analysis of recent Presidential election data is—in contrast with the Congressional vote—the pronounced bias in favor of the Republicans. If We ignore 1976, we find that in the three other elections since 1972, the Democratic candidates accumulated a total of 79 electoral votes, or less than one-third of those required to win a single election. Of the 51 voting entities, only the District of Columbia went Democratic in all of the last four elections. This pattern may shift in 1988, and it seems quite likely that Republican majorities this year will be significantly less, across the board, than they were four-years ago…… History– – – – – suggests, however, that they are unlikely to diminish by the magnitudes which would be necessary to produce a Democratic victory. We therefore forecast the election of Vice President Bush. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (11/3/88) AWTebh 2166.43 278.71 3934.25 No statement or expression ot opinIOn or any other matler herein contained IS, or IS to be deemed 10 be directly or Indirectly, an offer orthe solicitatIOn of an offer to buy or sell any secUrity referred to or mentioned The matter IS presented merety lor the convenience of the subscriber While we beheve the sources of our information to be rehable, 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 investigation and Information Delafield, Harvey, Tabelllnc, as a corporatIOn and ItS officers or employees, may now have, or may later take, positions or trades In respect to any seCUrities menlloned In thiS or any future Issue, and such posrhon 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 other customers Independently of any statements made In thiS or In any other Issue Further mformatlon on any seCUrity mentIOned herein IS available on request

).. 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 t' …. November 11. 1988 Stock market action following the election remains just as uninteresting as was the case before. –.-We do .not. therefore …. feel L-restrained4rom-….t8king–up …Bome -8pace..o-forpost-election…. commentWe-were – – – – , happy to see Qur'forty-year perfect forecasting record remain intact, and'it was also interesting that the Bush victory turned out to have much the same shape as we had foreseen. We said last week. it seems quite likely that Republican majorities this year will be significantly less. across the board. than they were four years ago (but) they are unlikely to diminish by the magnitudes which would be necessary to produce a Democratic victory. We noted that. were Bush simply to carry the 31 states which gave Reagan 60 or more their vote in 1984. he would be within ten electoral votes of victory. He carried not just 31. but. indeed. the top thirty-seven 1984 Reagan states—number 37 being California. Those 37 gave him 367 electoral votes. 97 more than required. In addition. he gained another 59 electoral votes from Illinois. Pennsylvania. and Maryland. We noted last week that is is amusing to attempt to apply the principles of technical analysis to election data. One of the tasks of the technician is the early identification of a change in trend. As far as Mr. Bush is concerned. the only significant fact is that he is safely in the White House. To the analyst. it is important to note that the Republican share of the popular vote 'dropped by 5.29 percentage points. That share. moreover. dropped in every state. the only exception being the District of Columbia where the Republican percentage so small as to be insignificant. The figures in the table below show the drop in percentage points in the Republican majority from 1984 figures to the almost-complete 1988 ones. We are listing them in full because we think they highlight some interesting facets of current voting patterns. DC 0,65 TENN – O. 10 GA -0.28 HISS -I. IS HD -I. 53 ALA -I. 57 –IND-22 SC -2.18 VA -2.43 PA -2.50 DEL -2.89 NJ -3.39 HUN – 3.54 ARK NC OH FLA KY ILL ME MASS NH HICH NY LA ARIZ -3.86 -3.97 -3.99 – 4.46 – 4.48 -5.16 -5727 -5.34 -5.64 – 5.81 -6 06 -6.23 -6.27 WIS CAL NEV ALAS VT TEX iVA RI UT NM MON HO WASH -6,42 -6.49 -6.49 -6.80 -7.16 -7.40 – J–0-5 -7.79 -7.81 -7.90 -8.14 -8. 16 -8.23 CONN ORE IA NO IDA WYO sti KAN COL HA NEB onA -8.45 -8.74 -8.87 – 9. 13 -9.97 -10.01 -1'0'-11'9 -10.31 -10.40 -10.42 -10.55 -10.73 The first such factor. we think. is the preponderance of southern states at the top of the list. In nine of the eleven states of the Old South. the drop in the Republican majority was less than the nationwide average and. in most cases. it was hardly noticeable. The Solid South first gained that appellation for its Democratic reliability. It is now just as solid a Republican territory. The table shows large GOP losses in the west. but these can. first of all. be ascribed to the departing President's being a Californian and to the fact that Republican majorities west of the Mississippi were stratospheric to begin with and remain healthy even today. This week's result reiterated what has been becoming more and more obvious in recent elections, the emergence of a power base. currently Republican. in the west and the south. Had President-elect Bush lost the Northeastern states that he carried (New Hampshire, Indiana, Maine, Connecticut. New Jersey, Delaware, Michigan, Ohio. Vermont. Illinois. Pennsylvania. and Maryland). he would still have won the election. This. we think. is not without significance as far as the financial community is concerned. since New York (and Chicago) lie outside the confines of this new political center. President Bush does not go to the White House with a mandate to be kind to Wall Street. The figures cited above are by no means to be read as an early attempt to forecast the 1992 election. but they are. we think. not without significance. The Reagan coattails have already disappeared, and the new President I it seems to us, will have to create his own record. Any economic—or other—disruptions that occur over the next four years will impact on 1992 Republican prospects. – —- ' – '- r –'-' – — – – . . . . . – – – – – . – – .. -…- Meanwhile. let us return to the stock market—which is telling us precious little about those four years beyond affording the vague impression, noted here since last summer, that a slow reaccumulation process is underway—the word s1t low being the operative one. The latest move to a new high a month ago produced what has come to be the expected aftermath. and the Dow has now backed off some 3-4 from that peak; A small top now exists with downside objectives between 2080 and 2000. Ability to hold in that range would maintain the pattern of ascending lows in effect since 1987 and would constitute an encouraging sign. Current patterns suggest that the August 23 low of 1989.33 probably will hold. and that the post-crash pattern should remain intact. ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL INC. Dow Jones Industrials (12 00) 2092.10 S & P 500 (1200) Cumulative Index (11/10/88) AWTebh ' 270.61 3889.09 No statement or expression of opInion or any other matler herein contained IS, or IS to be deemed 10 be, directly or indirectly, an offer orthe soliCitation of an offer to buy or sell any secUrity referred to or mentioned The matter IS presented merely for the convenience of the subscriber While we believe the sources of our Informallon to be reliable, we In no way represent or guarantee the accuracy thereof nor olthe statements made herein Any action to be taken by the subscriber should be based on hiS own Investigation and Information Delafield, Harvey, Tabelllnc, as a corporal1on and ItS officers or employees, may now have, or may later take, positions or trades In respect to any securities mentioned In thiS or any future ISsue, and such posillon may be different from any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabelllnc, which IS registered wtlh the SEC as an Investment adVisor, may give advice to fls Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further mformatlon on any secUrity mentioned herein IS available on request

\ ,. 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 (6091987-2300 November 18. 1988 There have been, in this letter since last summer. a couple of recurring themes which regular readers will, no doubt. recognize. One such theme has been.poor market breadth. We havointed out – Ulat-ou-oreadth—index(iIong wilfi…inostoihers)-a high InMarch-aiid–hasin'ce thaftime-. .. -'—- refused to confirm a whole series of new peaks in the Dow. The other theme has inVOlved discussion of the possibility that market action since last year's crash. given the extent of the technical damage incurred, might be part of a protracted rebasing period which will eventually occupy an entire market cycle. There are few precedents for this sort of thing. but one is the period between October. 1946 and June, 1949, a 33-month cycle, consisting of a narrow trading range in most market averages. During those months, however. the groundwork for the bull market which began in 1949 was laid. OJIA t BEAOTH JUNE 194G – JUNE 1949 1987 – NOV 1988 The charts above show the action of the Dow Jones Industrial Average and our daily breadth index in 1946 – 1949 and from the 1987 high to date. To make them comparable, the horizontal scales are identical. and the Dow is shown on a log scale in both cases. The construction of our breadth index makes it, 8S well. comparable across time. There exist notable similarities between the earlier epoch and 1987 – 1988 so far. Both began with a precipitous market break compressed into a short space of time. In both cases, this break was followed by a lateral trading range in the averages. and. in both cases. that trading range featured poor breadth action. There are, of course. also differences. The 1987 crash was deeper than the one in 1946. but, conversely, subsequent action has been slightly better for both the average and breadth in the present instance. Despite those differences. the two periods are close enough to warrant further comparison. After a 23 fall. the DJIA reached a low of 163.12 on October 9. 1946. Breadth also reached a low on that day. unlike the current instance, where the test of the October low last December produced a new bottom for breadth. However, in both instances, following the breadth low. the market embarked on a vigorous advance in which breadth confirmed each new high. The respective rallies ended on February 7. 1947 and March 18. 1988. Subsequent action in 1947 saw the Dow close at 163.21 on May 17, nothing more than a test of its previous low. while. as the chart shows. breadth plunged to a level well below its bear market nadir. Subsequent tests—at 165.39 in March, 1948 and at 161.60 in June. MI949;-also, saw …-breadth decline to new low levels. Conversely. new Dow highs, in July. 1947 and June. 1948, remained unconfirmed by advance-decline action. Breadth today has been posting a series of lower lows since March, and. although it has not yet moved below its 1987 bottom, it is not far from doing so. It is worth noting that American Stock Exchange breadth moved below its December. 1987 low some three weeks ago. and has been trending lower ever since. The extent to which 1946 – 1949 parallels continue to manifest themselves will. of course, depend in part on the economic background. Forty years ago, that background involved steadily rising earnings coupled with an atmosphere of growing pessimism. A comparable scenario. it seems to us, is at least possible over the next year or so. The sobering fact about the 1946 – 1949 rebasing period is its length—two years. nine months. Duplication of that pattern today would call for a market much like that of 1988 to continue through all of next year and on until July. 1990. ANTHONY W. TABELL DELAFIELD, HARVEY. TABELL INC. Dow Jones Industrials 02 00) s P 500 (1200) 2053.34 265.06 Cumulative Index (1117188) 3764.93 AWTebh No statement Or expression of opInion or any other matler herein contained IS, or IS to be deemed to be, directly or Indirectly, an offer orthe soliCitation of an oHerto buy or sell any security referred to or menllOned The maner 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 thereof nor 01 the statements made herem Any action to be taken by the subscriber should be based on hiS own Investigation and Information Delafield, Harvey, Tabetl Inc, as a corporation and s oHlcers or employees, may now have, or may later take, poslons or trades In respect to any securities mentioned m thiS or any future Issue, and such position may be different from any views now or hereafter expressed In thiS or any olher Issue Delafield, Harvey, Tabelllnc, which IS registered With Ihe SEC asan Investment adVisor, may give adVice to Its Investment adVisory and other customers Independently of any statements made In thIS or In any other Issue Further Informabon on any security mentioned herein IS available on request

. . \- 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) 9872300 November 25, 1988 The anCIent Chinese wish, liv.!.J.!..)nteresting-1!mehas en vari(msJyc1JpeJI …i!sJ!.. is' -'- – – -cut'se-anda-'-bles-slng. In –ariy case. Insofar as the stock market in 1988 IS concerned. the teImmology is irrelevant. In terms of price action, the year has been one of the least interesting in recent memory. For the DJIA, the high, scored last month, has, so far, been 2183.50. The low, posted back m January, was 187q .14, making the year's range to date 16.2 from low to high. If these boundaries hold for the remaining fIve weeks of 1988. the year wlll rank 80th in terms of distance between high and low Qut of the 92 years SInce the Dow was first computed. Since late February. the trading area's confines have been even narrower, its lower lImit becoming the May low of 1941.48. This translates to a low high difference of 12.5. Only one year (1909) since 1897 has produced a narrower trading range. From a financial point of view. though. however uninteresting stock-market action may have been, the times in general, we think. are intereshng—perhaps as interesting as any in recent memory. We are just thirteen months past an–event many of us thought we would never, in our hfetimes. witness—a market crash comparable to that of 1929. Once the shock of this event wore off, forecasts that its aftermath might be as unpleasant as that of its precursor began to emerge. They are still being heard today, and it is possible. of course, that may turn out to be true. Yet the aftermath of the 1987 break has been not the plunge to new lows of late 1930, but the almost stupefymg dullness alluded to above. Most of us, although few now are old enough to remember it, have a general Impression of 1929 and its aftermath. The pre-crash stock market, we are told, was an era of speculative frenzy. Bernard Baruch described it as crowd behavior. quotmg Schiller. Anyone taken as an indiVIdual is tolerably sensible and reasonable—as a member of a crowd, he at once becomes a blockhead. 1I Likewise, runs the popular belief, there existed a total fallure to recognize the seriousness of the situation. The entire financial community. in other words, found itself deluded. John Kenneth Galbraith, who coined the phrase, conventional wisdom, described this failure as what causes men who know that things are going quite wrong to say that things are fundamentally sound. 1—-As . oneooks…oockon–thehistor-Y4Jfte -pa&t-thlr-teen-men th si-it is-possible–toquestlOn-whether–I' the sort of conditions Baruch and Galbraith were talking about applied during 1987 and. perhaps more importantly. whether they apply today. Even if they do apply, the differences. it seems to us. are notable. We have always, in discussing the history of the Great Depression. emphasized our belief that it should be divided Into two parts—the crash itself, which was essentially a market-related phenomenon. and the long, dreary aftermath of 1930 – 1932, where the truly tragic damage was done. In those discussions. we allowed for the possible repetition of the first part—the 1929 crash. ThlS indeed took place a bIt over a year ago. We have always felt that a similar after'math however was not necessarily called for. We, therefore. remain unsurprised that it has not yet occurred. That an atmosphere of speculation, in some ways like that of 1929, eXIsted in early 1987. and indeed still exists in at least one area today. seems to us obvious on the face of it. Certainly, the takeover frenzy. which has actually reached new heights in the post-crash period, appears to be a classic example of man's periodic rediscovery of leverage as a mear13 of achieving instant riches. And indeed those riches have, in fact. been achieved. The accretion of profIts in takeovers, LBO's, etc. for all the participants involved has been astronomical and widely advertised. As far as this phenomenon is concerned. we are certainly willing to apply Baruch's further recommendation that. in the midst of this sort of behavior, it is necessary to keep repeating to oneself that two and two make four. We find ourselves, in short. as skeptical as the next person as regards the viability of the takeover boom. Yet. if the Baruch dictum were true, we should find ourselves. in this Skepticism, a lone voice crYIng in the wilderness. Instead, we find ourselves drowned out in the collective shouting. It is dIffICUlt to pick up a financial page these days without running across an article or column in which some learned savant roundly condemns the takeover mama. Indeed, even USA Today. this week, accused Wall Street of pigging out on takeovers. Warning signals. by the time they have reached that pUblication. can ha!.!ly.be saie! !.ohave gone unheard …. . -,.– .. . ……… …………. ,… . -.. There is, moreover, an obvious and significant difference between the partlCIpants In the takeover frenzy today and the margin buyers of 1929. It is. by and large, instItutIOns who are buying today's .Junior Subordinated Deferred-Interest 18 1/4's and acquirmg companies who are issuing them. We have already witnessed changes in overall market behavior as equity ownership has come to be dominated by institutions rather than indIviduals, and it is likely that the unwinding of the merger manIa will be dIfferent from the previous era's margin lIquidation. ThRt there may emerge some unpleasantness, if this whole structure ever begins to come apart. goes without saying. Whether it will take a form similar to the stock price debacle which occurred 60 years ago remains an open question. Dow Jones Industrials (1200) S & P 000 (1200) Cumulative Index (11/23/88) AWTebh 2073.43 267.22 3804.33 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. 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 or sell any secuflty 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 In no way represent or guarantee the accuracy thereof nor 01 the statements made herein Any action to be taken by the subscflber should be based on hiS own investigation and Information Delalleld, Harvey. Tabe!! Inc. as a corporation and Its officers or employees, may now have, or may laler take, positions or trades In respect to any secuflbes mentioned In thiS 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, Tabe!! Inc, which IS registered With the SEC as an Investment 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 secunty mentioned herein IS available on request

1 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 1609) 9872300 December 2. 1988 One of the basic tenets of technical analysis is that trends persist—ln other words that, at any given time. markets . aremost .Hkely…..to-,-con ti!tu '!-to Ldojusl….w.bat..-1by …haye ….most……recently…..,been -\ doing. Inevitably, of course, there is a turning point for every trend, and technicians spend 8 great deal of energy In attempts to identify those turning points. The point IS that reversals are relatively rare events, and trend continuances constitute the norm. Such is the case at the moment where there exists little evidence to suggest that equity markets are likely to begin doing anything significantly different from what they have been doing throughout 1988, i.e. nothing. Date ——— Dec 4 87 Jan 7 88 Jan 20 88 Apr 12 88 May 23 88 Jul 5 88 Aug 23 88 Oct 21 88 Nov 16 88 Nov 30 88 DJ Average ——– 1766.74 2051.89 1879.14 2110.08 1941. 48 2158.61 1989.33 2183.50 2038.58 2114.51 P e r c e n t Ch a n g e This Swing ———- From Hi From Lo ——- ——- – — 16.14 — -8.42 – 12.29 2.84 – -7.99 – 3.32 11.18 2.30 – -7.84 – 2.46 9.76 1.15 – -6.64 – 2.48 3.72 — Number Of Days This Swing Cumulative ———- ———00 22 22 9 31 57 88 29 117 29 146 35 181 42 223 18 241 9 250 The table above teUs the dreary story. On January 7, the fourth trading day of the year, the Dow was at 2051.89, within a couple of percentage points of where it is today, and above its low of two weeks ago. That January high culminated a 16 advance from the early December test of the crash lows. The entire year has. therefore, consIsted of seven interme(hate-term b swings, three up 1 and. four dow.n ,a,er.agtngjusLover9Wn…ex.tent,and……bitover 30-tJ!adingdaysi'-;'J1;ju'ratio,n,….,.I There exists a hny ray of sunshine in the fact that this trading range appears to have a shght upward bias. Each of the three major highs so far, April, .July, and October, has exceeded the previous one by around 2, and each of the lows, May, July. and—assuming it holds—November 16, has likewise been slightly better than its predecessor. Projecting this environment through December, one might expect a high some 2 above October, say 2225, as a possible target for a year-end rally We would hesitate to make such a prediction on extrapolation alone, but there is nothing in the present evidence which seriously contradicts it. The downside objective for the Dow was reached at the October low, and, although there currently exists no ba.se to suggest an immediate upward move, one could form fairly quickly, particularly were a pull-back testing the mid-November bottom to occur. As we suggested above, the technioian is condemned these days, to scratching for reversal evidence, and finding none. Such evidence is certainly not to be found in looking at volume, which appears to be in a sort of a bear market of its own. In any case, a 50-day smooth of daily NYSE volume peaked at around 218 million shares in October and again in December, 1987. The figure dropped from there to 175 million in February and, Rfter a short rally, to 161 million in June. August saw a rise back to 176 million but, as of Tuesday, the average posted a new low at 147 million shares. Looked at another way, total Volume for the month of November was 2.8 billion shares. the first month under 3 billion in two years and the lowest monthly aggregate since August, 1986. Of course, as we have always noted in discussions of volume. the real way to look at it on a long-term basis is in terms of shares listed. The turnover ratio is the percentage of total listed shares which trade in any given period. Measured in terms of months. that number dropped under 4 in November for the first hme since September, 1985. The November ratio. estimated at 3.7 compares to 6-plus levels achieved repeatedly in 1987. A long-term view of the turnover raho is an interesting story. Its record value was 15.5 in 1928, and, over 14 years, It declined to under 112 of 1 in 1942. By 1946,-it had-soared to 2-1'12, I , and then in 1946-1949—a period, our readers know, to which we have compared the present one–it once more retreated to around 8/10 of 1. It did not move above 3 for almost 30 years, until 1978. Subsequent expansion was mOle rapid. The 5 level was attained in 1982. It remained mostly in the 3 – 4 range through 1985 and then expanded to 6 in 1986. There now exists a year's worth of evidence suggesting that the trend may have turned down again. Under these CIrcumstances, it IS not unlikely that trading could return to 1982 levels with a turnover ratio of around 2 1/2 4 Given today's listed shares, this could mean months in which daily volume averaged close to, or even under, 100 million shares, not, It must be admitted, a particularly pleasing prospect. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow Jones Industrials (12 00) 2090.15 S & P 500 (12 00) 271.18 Cumulative Index (12/01/88) 3842.40 AWTebh No statement or e)(preSSlon of opInion or any other matter herein contained IS, or IS to be deemedto be, directly or indirectly, an offer orthe solicrtatlon of an offerlo buy or sell any secunty referred to or mentioned The matter IS presented merely for the convemence of the subscnber While we believe the sources of our InformallOn to be rehabte, we In no way represent or guarantee the accuracy thereof nor olthe statements made herein Any acllOn to be taken by the subscnber should be based on hiS own investigation and miormallOn Oeiaileld, Harvey, TabeH Inc, as a corporation and ItS officers or employees, may now have, or may later take, poSitions or trades In respect to any secufll!es mentioned In thiS or any future ISSue, and such poSitIOn may be different from any views now or hereafter e)(pressed In thiS or any other Issue Delafield, Harvey, Tabellinc whlch IS registered With Ihe SEC as an Investment adVISor, may give adVice to ItS Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further tnformallOn on any secUrity mentioned herein IS available on request

.– TABELL'S MARKET LETTER 600 ALEXANDER ROAD, eN 5209. PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 December 9, 1988 Purportedly under the stimulus of Gorbachev peace overtures and an ever-so-slight glimmer of -ctight-at-tlreehilofJh'e-Mijmer-ast'tunnelfhe-marl,rrallied-ffirough01lt'!he nrW part of last week, pushing well into the overhead supply at 2140-2180 remaining from October's short-term top. All possible projections of the most recent base have been run Ollt, and we continue to feel that the major averages are somew'hat overextended on a short-term basis. We would, therefore, prefer to see a minor pullback from which a decent year-end rally might be mounted. There exists some tentative evidence of an improving technical background in a number of areas. An example of such an area is advisory sentiment. where it develops that. for the weeks ended November 25th and December 2nd, more than half of all market letters were adopting a bearish stance. Thls lnformation comes from Investors Intelligence Inc. of New Rochelle. New York which, for many years, has compiled a regular tabulation of published market letters. claSSIfying their current opinion as bullish, bearish or neutral. As many of our readers will be aware, these particular figures, hIstorically, have not been kInd to our profession. A large number of bearish advisors is considered by many analysts to be a bullish slgnal and vice versa. This impression is borne out by analysis of the past 25 years of sentiment data. Over 1300 one-year periods taken at weekly intervals, the Dow was up, on average, some 6 1/2. Over thls time span there occured 142 weeks in which the majority of market-letter writers were reglstered as bearish. The average one-year rise following these occasions was 1'3.13. twice as great as the overall average. The same is true, to a lesser degree. when six-month intervals are measured. Over shorter periods. one month and three months, the data is inconclusive. This bias undoubtedly arlses from the well documented tendency of letter writers to achieve maXImum majority bearishness precisely at major bottoms. In the period for which we have available data, major lows occurred in 1966. 1970, 1974, 1978 and 1982. In 1966 the low for the Dow occurred nOctober-'7th7''2-5of'aavisorswe'i'ebearlsh on precisely that date. The May-I970 bottom provided an even more dramatIc lnstR.nce. More than half of advlsors were bearish in 17 of the 19 weeks surrounding that low, beginning in March and ending in July. The bear-market low of October. 1974 was preceded by 19 weeks in which the majority of commentators expressed bearish VIews, and the 1978 low was at the midpOlnt of a string of 12 such weeks. We all remember August. 1982 to have been a major bottom. Seven of eight weeks ending in July of that year saw a plurality of pessimistic advisors. One fact that has not. to our knowledge, been widely noted lS the tendency of advisors to become bearish after the market has moved down. which may account for the heavy pessImism seen around lows. Again, separating out the 142 weeks which saw more than 50 of advisors bearish, we find that, on average, the Dow had been more than 14 higher a year before the forecasts were made. In other words, pundits tended to become pessimistic only after the market had declined approximately 12. Likewise, the market was down an average of 8 over six-month periods prior to the weeks of bearIsh majority opinion. One could, in other words, condemn letter writers as being little more than simple-minded extrapolators of trend. All of this brings us to the cu rrent instance. The last two weeks are examples of the extremely rare case of advisory sentIment's being more than 50 bearish after the market had risen over the prior year. Indeed, of the 142 weeks showing bearish majority sentiment. only 15 have occurred at a time when the market had been lower a year before. It must be admitted that the record for the 15 weeks in question seems to be just about the same as for the others. The market generally was higher—often considerably higher—- a year later. The exception was 1981, when a – . – -string of bear–i-s–h forecasts in … the early part of that year actually turned out to be correct. Advisory sentiment figures would become especially encouraging, in our view, if a protracted string of weeks with majority bearlsh opinion were to emerge. It will be lnteresting to see If such is the case. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (12/08/88) AWTcg 2149.36 277.20 3857.42 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL, INC. No statement or expression at opinion 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 security referred to or mentioned The matter IS presented merely for the convenience of the subSCriber While we beheve the sources of our Intormatlon to be rehable, we In no way represen1 or guarantee the accuracy Ihereof nor of the slatements made herein Any ac\lon to be taken by the subSCriber should be based on hiS own Investigation and information Delafield, Harvey, Tabe!1lnc , as a corporation and lis officers or employees, may now have, or may later lake, positions Of trades In respeclto any securities mentIOned In thiS Of 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 wrth the SEC as an Investment adVisor, may give adVice to ItS Investment adVISOry and other customers mdependently of any statements made In thiS or In any other Issue Further Informabon on any securtty menttoned herein IS available on request

'.' 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 December 16, 1988 We must confess that we face the challenge of preparing this particular piece…!!w'.!i!;tha.–c —- -certaih7de'ffree…o. f ohtrepldatiCustom re-q uires us. alon-g -wifh 'maS-tather market commentators. –.- to produce a year-end forecast. ano, traditionally, we have divided this forecR.st into two parts, the first part, due in this issue, being a review of the year 1988. The difficulty lies in making such a review more interesting than watching paint dry. It seems, indeed, that the theme of just about each letter we have produced over the past six months has been how excrutiatingly dull the action of the stock market has been. It really has not been all that bad a year. The Dow, with two weeks of 1988 to go, finds itself a bit over 12 above its 1987 close. and there have, heaven knows. been worse year-ta-year results. It is that markets which are exciting and Interesting are those that are going somewhere or doing something. This. the 1988 market never seemed to want to do. Quite obviously. since the averages are up on the year. there were a number of occasions, notably In January. March – April, July. and October, which featured the attainment of new post-crash highs. However, the typical pattern was two or three such highs scattered over a period of a couple of weeks followed by a retracement of almost the entire move. We reviewed the details of all of this two weeks ago 1988 began with the culmination of a fairly dynamic year-end rally, which topped out three days into the year. Since then, the year's pattern has comprised seven swings of between, roughly. 6 and 12 percent, lasting on average for some 30 trading days. The highs and lows for each successive swing tended to be slightly above the level of its predecessor, thus giving the whole pattern a minuscule upward bias and producing the modest overall rise noted above. All these moves back and forth. however. produced one of the narrowest trading ranges in market history. The range between the year's high and low, 16.2, ranks 80th on the list of 92 years since the Dow was first computed. If one omits a dozen or so trading days in January and February when the Dow traded below its May bottom, an even narrower range of 12 1/2 has been I .'ifararlge narrower th'1-t of 91 of the 92.years sinc!, 1897.,-,,….., – 1 As if all of the above were not bad enough, the last three quarters of the year have, as we have repeatedly pointed out, been characterized by subnormal breadth, a divergence between breadth and the averages having been in effect since March. In addition, as we pointed out last week. volume, as the year went on. tended to dry up, and there exist some indications that it might fall to levels even lower than today's already-depressed ones. A number of other factors need, it seems to us, to be mentioned in a review of 1988. One obvious one is that it followed on the heels of October, 1987. We will not cite all of the gory statistics (they have been set forth repeatedly here) that show this was the worst market crash since 1929. We will simply note that, in our view, the occurrence of the crash and the torpor of 1988 are not unrelated. We find ourselves in agreement with conventional wisdom that the 1987 break produced general discouragement in regard to the equity market, and that this contributed to the dullness which pervaded last year. Ironically, the general public, unfamiliar with Wall Street, may well have the impression that the year was an exciting one. For it was, as we all know, the year of the takeover. This phenomenon, which did. indeed, produce tiny islands of excitement among the dullness, spilled over from the financial section to the front pages of the nation's press, especially as it began to take on, as in the case of the RJR-Nabisco affair, some of the elements of soap opera. The takeover boom, however, raised more serious issues. Many of these issues involved, in one form or another, the process of debt creation, especially the proliferation of so-called Junk debt. Prolonged and intense debate among serious students of the stock market on this subject continued throughout the year. The issue remains, we think, largely unresolved. Discussion was not confined to the area of private debt creation. 1988. of course, was an election year. and we heard a great deal about two economic issues in particular—the budget and trade deficits. Few analysts seemed terribly optimistic about an immediate resolution of either of these problems . . To borrow a phrase from ex-President Carter, 1988 can be characterized as a year of malaise. Just about everything in market history, or course, has taken place before, and malaise is no exception. As is typically the case with majority opinion, it often proves to be unfounded. We have pointed out from time to time during the year the similarities of 1988 market action to that of past rebasing periods. focusing to a great extent on 1946-1949. This particular aspect of market behavior will be relevant, we think. to next week's 1989 forecast. ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) 2139.46 S & P 500 (1200) 274.82 Cumulative Index (12/15/88) 383470 AWT ebh A VERY MERRY CHRISTMAS TO ALL' No slatemenl 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 or sel! any security referred to or mentIOned The maner IS presented merely for the convenience 01 the subSCriber While we beheve the sources of our Information to be reliable, we In 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 investigatIOn and Information Delafield, Harvey, Tabellinc as a corporation and Its officers or employees, may now have, or may later take, poSitions or trades In respect to any securrlles menllOned In thiS 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, Tabellinc , which IS registered wrth the SEC as an mvestment adVisor, may give advice to ItS Investment adVISOry and O1her customers Independently of any statements made In thiS or In any other Issue Further information on any secunty mentioned herein IS aval!able on request