Tabell’s Market Letter – January 13, 1989

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) 987-2300 — —– — – – — —-'; – January 13989—- – ;-I- At the'beginning of December, some two weeks after the market had embarked on its latest short-term advance. we made an attempt to fit that rally into the context of 1988 market action. We said at that hme. Projecting (the 1988) environment through December, one might expect a high some 2 above October. say 2225, as a possible target for a year-end rallyll. The Dow closed yesterday at 2222.32, pulling back after spending most of the afternoon well above the 2225 level. 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 Jan 12 89 DJ Average ——- 1766.74 2051.89 1879.14 2110.08 1941.48 2158.61 1989.33 2183.50 2038.58 2222.32 This Swing ———0.00 16.14 -8.42 12.29 -7.99 11.18 -7.84 9.76 -6.64 9.01 C han g e Number Of Days From Hi From Lo This Swing Cumulative 2.84 2.30 1.15 1. 78 3.32 2.46 2.48 o0 22 22 9 31 57 88 29 117 29 146 35 181 42 223 18 241 38 279 The analysis we used a month ago was based on the table above, now updated, and suggested that market action since December 7. 1987. when the October lows were tested. had consisted of eight trading swings, four up and four down, averaging some 9 in extent. It pointed out that the three short-term highs in April, July. and October had each exceeded the preVIous one by about 2 and that each low had likewise slightly bettered its predecessor. It was suggested that another rally comparable to the previous ones, a 9 advance to some 2 above the hIgh of October 21. would produce a -2225objective.'l'his.,ventu . .lityhasMndcedf'..t , .. .n s p i 1 ' e d '— – – What has. unfortunately. not come to pass is any Cumulative Net Advances improvement in the dreary undertone which was typical Upswing Total Avg per Day of the 1988 stock-market scene. One way to measure the strength of a short-term advance is to accumulate the net difference of advances and declines over the course of that advance. The table at right shows the results of such an accumulation for the five rallies which have composed market action since December. ——————–Dec 4 87 – Jan 7 88 Jan 20 88 – Apr 12 88 May 23 88 – Jul 5 88 Aug 23 8 8 oct 21 88 Nov 16 88 Jan 12 89 ———– 6,109 277 7.348 129 5.007 172 3.304 79 3,494 92 1987. For the last previous rally. that of August-October. the average daily difference between advances and declines was only 79. On the current rally, thl'ough yesterday. that figure had improved very little and remains well below previous levels. Av e r a g e Upswing ——————— 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 Jan 12 89 Da i 1 Y Total ——– 178.9 178.4 188.1 146.1 136.9 V 0 1 u m e (million shares) Upside of Total Downside of Total —— ———- ——– ———- 97.3 54.4 61. 3 34.3 87.7 49.2 67.7 37.9 94.8 50.4 64.1 34.1 74.8 51.1 51.1 35.0 66.4 48.5 48.4 35.3 Volume figures offer no more encouragement than do the breadth numbers. The table above shows the average daily volume for each of the five rallies in the 1987-89 advance. dividing that volume into upside and downside volume. As can be seen. total volume has decreased on each of the fIve successive rallies. and this pattern has continued through the current upmove. In addition. upside volume for this rally is. by far. the lowest of the five both in absolute terms and as a percentage of total volume. Clearly. for the first two weeks of 1989 at least, the pattern of deteriorating breadth and momentum which characterized most of 1988 IS continuing. None of this is to suggest that there exists any immediate vulnerability, and. indeed, the opposite is the case. There still exists the possibility of an extension of the year-end rally to the 2300 level. which we previously suggested as one criteria for a positive 1989 proJection. Given the pattern indicated above, however, the sudden emergence. at this stage, of a broad and dynamic rising phase must be considered unlikely. ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL INC. Dow Jones Industrials (12 00) 2221.61 S & P 500 (1200) 282.82 Cumulative Index (1/12/89) 4039.05 AWTebh 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 offer to buy or sell any security referred to or mentioned The matter IS presented merely for the corlVenience of the subSCriber While we believe the sources of our Information 10 be rehable, we In no way represent or guarantee the accuracy thereof nor 01 the statements made herein Anv action 10 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 secuntles 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, Tabellinc , 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 secUrity menlloned herem IS available on request