Viewing Month: April 1989

Tabell’s Market Letter – April 07, 1989

Tabell’s Market Letter – April 07, 1989

Tabell's Market Letter - April 07, 1989
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-, TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 085435209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (60919872300 – April 7, 1989 The subject of this leiter will be the stock-market crash of 1987. We have no particular excuse for returning- once- again to this-rather painful- subject. –Possibly-ourchoice -was–stimulated -by -the – – – – – 1 1 – fact that the central New Jersey spring has lately been interrupted by a series of cold, gray days. Perhaps it is because the market remains locked in a narrow lOO-point trading range, which, as a subject for discussion, we have exhausted over the past two weeks. Or, conceivably. it is that a yet longer-term perspective on the events of a year and a half ago may provide some helpful insights into the current market environment. In any case. here goes. On August 25, 1987, the Dow reached its all-time high at 2722.42. As late as early October, it was still within eighty points of that high. On Tuesday, October 13, four trading days prior to the crash, it was down less than 8 at 2508.16. Then, three successive days of decline erased 262 points by the end of the week, and, Monday, October 19 brought the crash itself, a 500-plus-point plunge on 600 million shares of volume. For the Dow, that day's close of 1738.74 remains the low, although it was tested six weeks later in December. The obvious comparison. indeed the only comparison, is wIth 1929, and we. along with many others. duly noted the fact at the time. The October 19 fall, 22 in a single day, was almost twice as great as that for the worst day of 1929, and the two-day (Friday-Monday) drop also set a record. After the initial fall, the 1929 break was extended with a further leg down, so that the total 1989 drop of 36 did fall short of the earlier 48 plunge. It was scant comfort at the time. The writer's late father. whose career included the 1920's and 1930's, once became exasperated with gloomy predictions which recalled that era and used the phrase, Relax, Bustera You'll never see 1929 again. In one sense, this assertion turned out, years later, to be incorrect. and yet. in another sense, it was still prophetic. To the extent that he was using 1929 as shorthand for 1929-1932 the assertion remains correct. For the salient difference between 1929 and 1987 is that 1988-1989, so far at least, remains the polar opposite of 1930-1931. We find ourselves today, 19 months following the August, 1987 market high, having recovered almost two-thirds of the ground lost. Within a comparable timeframe 60 years ago, the Dow had moved 20 below its November, 1929 low. It would later be cut to a quarter—of 'that value. By the time 1931 rolled around. moreover. the stock market was the least of the nation's worries. The year's Gross National Product would be down 25 from its 1929 level on its way to even lower figures in 1932 and 1933. The two paths having diverged so dramatically, we should be compelled to keep asking ourselves why. One explanation, which is rapidly attaining the status of conventional wisdom, (and WIll probably continue to do so as 1987 recedes further into the past) may be called the It-Was-All-A-Bad-Dream theory. Protagonists of this hynnthesis are fond of pointin out that the market was at basically the same level (in the 1900's) at both its 1986 and 1987 close. Eliminating 1987 from a chart produces a lovely ongoing—if slowing—bull market. This thinking is buttressed by the fact that the break can be. at least partially, explained by recent structural anomalies in the market, i.e. the emergence of derivative products and such esoteric illusions as portfolio insurance. The more optimistic proponents of this theory would hold that we have now recognized the problems, put them behind us, and can get on with our business. There is much to be said for this argument. We have deplored for many years the tendency to link 1929 and 1930-32 as inseparable phenomena. The former, we have always contended, was market related. The causes of the latter, where the real damage was done, were far more fundamental. The late 1980's and 1990's may turn out to confirm this thesis. The 1929 crash will have recurred without the consequences of the 1930's depression. Yet, as market technicians, we cannot help but feel that 1987 will leave a number of footprints. Our own impression is that we are seeing some of these footprints at the momenC Our evidence for this remains largely anecdotal, although we are working on quantifying it. However, we find ourselves amazed at the number of stocks which. at this moment. are hesitating as they reach the overhea.d supply. which stems, for the most part, from the lower limits of 1987 trading ranges. Another question which 1987 raises in our own mind centers around the speed with which it developed. A 36 bearmarket fall is not without precedent. Having- it compressed into two months (the bulk of it into four days) is something else again. Not only was the break frighteningly precipitous, but the formation of the tops leading to that break took place with equally unusual rapidity. It is of course possible that this was simply an aberration. but we are, honestly, not so sure. We would be failing in our responsibility were we not to be vigilant in watChing for the same speedy formation of distributional patterns which occurred two years ago. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials 02 00) 2298.39 S & P 500 (1200) 295.91 Cumulative Index (4/6/89) 4272.48 AWTebh No statement or epresslon of opinion or any other matter herein contained IS, or IS to be deemed to be, directly or IndlreC1ly, an offer orthe sollCltalion of an offerlo buy or sell any security referred to or menlloned The matter IS presented merely for the convenience of the subSCriber While we believe the sources of our Informallon 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 Informallon Delafleld, 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 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 rts Investment adVisory and other customers Independently of any statements made In thiS or In any other Issue Further Information on any secunty mentioned herem IS available on request

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Tabell’s Market Letter – April 14, 1989

Tabell’s Market Letter – April 14, 1989

Tabell's Market Letter - April 14, 1989
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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 r– April 14, 1989 It has been a while since the table below appeared in this space, but this will be neither the we- -,-first northe last occasion whi,,-h it has graced these pages. It outlines our own interpretation of the four'year-cycle, pattern -which, -iirmly–contIJiUe' ,to believe, iSllusefUJ. aspect fr6mwhich to view the stock market The table shows some relevant statistics for the 24 completed cycles since the DJIA was first computed late in the last century. '- LOW AS HIGH AS START —lA–TE— DJIA ——- HIGH -D–A-TE—- –D–JI-A– LOW TOTAL —D-A-TE— DJIA ——- M–O-S MOS ADV — MOS A-D-V- r. A-D-V- '- OF OF D–EC- P-R-E-V—LO-W- PREV HIGH ——— JUN 1896 30.22 APR 1999 5.90 JAN 1901 49.53 55 34 62 82 -10 0 0 JAN 1901 49.53 JUN 1901 56.53 NOV 1903 32.09 34 5 15 14 -43 164 103 NOV 1903 32.09 JAN 1906 72 .32 NOV 1907 40.83 48 06 54 125 -44 65 128 NOV 1907 40.83 NOV 1909 71.95 OCT 1911 56.22 47 24 51 76 -22 127 99 OCT 1911 56.22 tEC 1912 64.50 M 1915 58.29 41 14 34 15 -10 138 90 MAR 1915 58.29 NOli 1916 107.89 DEC 1917 70.17 33 00 61 85 -35 104 167 EC 1917 70.17 OCT 1919 113.91 AUG 19!1 66.93 44 2! 50 62 -41 1!0 106 AUG 19!1 66.93 MAR 19!3 103.87 JUL 1923 89.32 23 19 83 55 -l 95 91 JUL 19!3 89.32 SEP 1929 364.93 NOV 1929 232.60 76 74 97 309 -36 133 351 NOV 1929 232.60 AP 1930 288.17 JUL 1932 46.19 32 5 16 24 -84 260 79 JUL 1932 46.19 FEB 1934 107.26 SEP 1934 90.54 06 19 73 132 -16 20 37 SEP 1934 90.54 MAR 1937 188.40 APR 1938 112.85 43 30 70 108 -40 196 176 APF 1938 112.85 NOV 1938 151.96 AF'P 1942 97.79 48 7 15 35 -36 125 81 APR 194! 97.79 JUN 1946 207.32 NOV 1946 168.94 55 50 91 112 -19 87 136 NOV 1946 168.94 JUN 1948 191.05 JUN 11;.49 165.5Q 31 19 61 13 -13 173 92 JUN 1949 165.59 JAN 1953 288.44 SEP 1953 !61.9(l 51 43 84 74 -9 98 151 SEF 1953 261.90 JUL 1957 514.64 DEC l Q 57 436.9! 51 46 90 97 -15 158 178 lEe 1957 436.92 DEC 19Q 1 728.44 JUN 1962 57!.64 54 48 89 67 -!1 167 14! .tUN 1962 57!. 64 JAN 1966 985.93 OCT 1966 778.10 5.2 '3 83 7! -21 131 135 OCT 1966 778.10 DEC 1968 968.39 MA 1970 691.96 43 '21. 60 24 -29 136 98 MAY 1970 691.Q6 JAN 1973 10!6.82 tEC 1974 596.50 55 32 58 48 -4! 89 106 — DEC 1974 596.50 SEP 1976 994.37 MAR 1978 756.14 39 1 54 67 -24 86 97 MAR 1978 756.14 (iP 1981 1004.86 JUL 198 818.41 50 37 71 33 -19 17 101 'IUl1ge2'-'Bl–e–41ttCt19B7o-55OI—IEC19B7–19-1()-U7-65'..tfte…..944B-l0S..-264 — — — — — —- —- AVERAGE – JUNE 1896-JUI. Y 19B! 46 30 63 81 -28 126 131 – – I – The figures shown are the average price for the Dow at the start, the high point, and the end of each cycle, the cycles being measured from low to low. The following columns give the length of the cycle in months, the number of those months in an advancing phase, and the percentage of the total months spent in the advancing phase. Following is the percentage rise in the upward phase and the subsequent percentage decline. The 46-month average length is the reason for the appellation, four-year cycle. There have been exceptions (we will come to this), but note how many of the cycles have approximated that length. Some two thirds have, indeed, been between 41 and 55 months in extent. There appears to be a slight tendency, observed here in the past, for the latter cycles to be lengthening. Seven of the nine cycles since 1949 have exceeded 50 months in length. There has been little recent discussion of the four-year cycle because the last half-dozen or so years have been difficult to analyze in these terms. If we assume the last cycle to have begun in Summer, 1982 and ended in 1987, two screamingly obvious low points, we get a 65-month cycle—the second longest on record, exceeded only by the 76-month cycle from July, 1923 to November, 1929. Likewise, the 224 rise in the 1982-1987 period is exceeded only by its predecessor in the 1920's. We can get around this difficulty by dividing July, 1982-December, 1987 into two components, recognizing a high in January, 1984, a second cycle having begun in the following July. This, however, results in two abnormally short cycles, the first one of which, at 24 months, would be the second shortest on record. In any case, we are disinclined to write off the four-year-cycle pattern because of these difficulties. It seems obvious to us that October or December 1987 (take your choice) represents a major low. Thus, we have been, since that time, in a cycle bull market. –.- — It has been to date a somewhat anemic one. The advance to the February average price of 2304.30 has been 20.6 percent, but there have, in the past, been fairly short advancing phases—for example, January to June 1901, October, 1911 to December, 1912, and, especially, November, 1946 to June, 1948. So far, the advance from December has consumed only 14 months, but again, as a glance at the table will show, this also is not without precedent. There exists no certain evidence in this analysis that the current rIse is over, but, as our readers know, our working scenario is that the present cycle will complete without an unusually large advance having taken place. Likewise. we expect the subsequent correction to be relatively small. The lapse of only 16 months to date, however, suggests that the whole process may take considerably more time. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (1200) 2328.45 S & P 500 (1200) 298.27 Cumulative Index (4/13/89) 4288.66 AWTebh No stalement or expressIon of oplruon or any other matter herein contained IS, or IS to be deemed to be, directly or Indlrectty, an offer or the soliCitation of an offer to buy or sell any securIty referred to or mentioned The matter IS presented merely for the converuence of the subscrIber While we believe the sources 01 our Information to be reliable, 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 Delalield, Harvey, Tabellinc , as a corporallon and Its offIcers or emptoyees, may now have, or may later take, POSItions or trades In respect to any securrlJes mentIOned In thIS 01 any future Issue, and such pOSItIOn may be different from any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabell Inc, which IS regIstered wrth 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 menlloned herein IS available on request

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Tabell’s Market Letter – April 21, 1989

Tabell’s Market Letter – April 21, 1989

Tabell's Market Letter - April 21, 1989
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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 April 21, 1989 The shsrp, sudden upward move into new high territory on Tuesday and Wednesday suggests that -the market's short-term -corrective -phase, -which beganon .F..bruary 7.th ,-may ,have.been completed with the double low at 2243 on March 1st and March 23rd. This 4.4 pullbaok would qualify as the smallest correction of the bull market so far. This, Indeed, is encouraging, but it is hard to find other signs of Improvement. The Tuesday rise produced a tepid 173 new 52-week highs, this with the Dow having been under 2000 a year ago. Breadth action, moreover, remains subpar, and we ask the reader to bear with us In our explanation of the massive panoply of numbers set out in the table below. Pts Pc\. Pcl 1 Chanse lIe Adv lIe – Pts Pel Pel tl Chane ite Ay ile – Pt. Pcl Pcl 1 Ch.. 11e Adv ile – Ph Pd. Pel 1 D.l, Ch,n. il. Adv ile – -.6AY 31 88 ' 48 99 111 9b -3 ftAR 29 88 18.57 90 102 83 -7 HAR 31 88 9.94 76 B24' -21 FEB 7 89 4.82 61 616 1 APR 6 BS 64.16 99 1187 94 -5 JUN 30 88 19.73 89 1164 93 4 APR 3 89 11.18 7 82 61 -14 OCT '89 4.4 61 864 64 3 5EP 2 88 52.28 99 1J97 96 -3 JUH 3 88 18.85 89 946 74 -15 NOV IS 88 9.96 75 841 61 -14 MAR 8 89 4.83 61 785 4 -12 JUH 8 88 48.36 99 1306 97 -2 OCT 18 88 19.39 89 891 67 -22 JUN 17 89 9.78 74 662 30 -44 DEC 1 88 4.27 60 817'4 -6 JUL 29 88 46.40 99 1178 94 -4 MAR 6 89 20.53 89 995 81 -9 JUL 14 88 9.25 73 779 49 -24 JUH 6 88 3.91 5' 854 61 2 OCT 20 88 43.92 98 1058 86 -12 MAR 16 89 20.17 8S 939 74 -14 APR 26 BS 8.62 72 926 12 0 DEC 13 88 3.91'9 '41 16 -43 JUN 22 88 43.03 98 1144 92 -6 AUG 16 99 17.24 9 984 6S -23 OCT 29 88 9.06 72 68 61 -11 DEC 28 89 3.1'6 790 50 -8 OCT 7 ae 42.68 99 1140 92 -6 HAY 16 88 17.08 88 901 68 -20 APR 11 89 9.71 72 978 65 -7 NOU 21 88 3.'. 56 5. 19 -39 JAN 27 89 43.75 9a 929 70 -28 APR 5 99 16.91 99 915 70 -18 JAN 25 89 9.46 72 920 54 -18 SEP 12 98 3.56 56 606 24 -34 AUG 24 88 37.34 98 1089 89 -9 SEP 14 88 17.60 97 979 79 -9 APR 15 88 8.29 72 573 20 -52 JAN 89 3.'8 ' '6 16 APR 14 89 41.06 97 1074 89 -9 DEC 16 88 17.71 87 998 80 -7 OCT 10 88 8.71 71 693 38 -33 JAN 13 S' 3.75,8 836'6 -2 APR 18 89 41.61 97 1047 85 -12 JAN 31 89 18.21 66 960 75 -11 JUN 10 68 8.36 71 675 64 -7 HAR 21 8' 3.7' 56 995 69 II JAM 24 99 38.04 97 1009 91 -16 HAR 28 89 17.68 86 638 60 -26 DEC 23 88 8.57 71 651 64 -7 APR 2' 88 J.15 755.4 -13 SEP 29 88 33.79 97 1065 88 -9 DEC 29 88 16.25 85 987 78 -, AY 19 88 7.63 71 6.0 27 -.. 5EP 28 88 3.20 5' 0 46 -11 JUM 1 88 32.89 97 1290 97 0 JUL 15 88 15.83 85 787 5. -34 HAR 3 89 8.5e 70 865 64 -6 5EP 21 88 3.02'6 689 36 -20 JAM 4 89 33.04 96 1187 94 -2 HAY 3 88 15.09 85 897 66 -19 fEB 28 89 8.03 69 'II 70 1 OCT 2' 86 3.02'6 7.9 39 -18 DEC 5 88 31.48 94 929 71 -2S JAM 12 89 15.89 84 907 68 -16 APR 12 89 8.07 68 818 54 -14 NOV 8 88 2.85 56 8'2 61 , -Z' ' . 7JUL 28 88 28.63 95 884 67 -28 NOV 23 88 14.58 83 893 70 -13 OCT 17 88 7.29 68 7.9.3 AUG J 88 2. 6 -9 PR 22 88 27.67 95 940 74 -17 NOV 17 88 13.87 83 435 24 -57 OCT 13 88 '.12 68 71 45 -23 HAY 12 88 2.14 6,1 -J APR 8 88 29.02 95 1110 90 -5 APR 12 88 14.09 83 898 47 -14 AUG 26 88 6.58 67 72' 2 -Z5 NOV ' . 8 2.31'4 I JO 24 JUt S 88 27.03 94 934 74 -18 KAR 27 89 14.82 82 767 48 -34 JUH 15 88 6.93 67 781 48 -19 OCT 21 88 2.31 54 , 44 -10 JaM 21 88 25.24 94 937 7S -17 JUL 20 88 13.34 81 849 60 -21 MOU 28 88 6.76 67 110 38 -29 JUL 26 88 2.14 54 764 41 -1 lEe 6 88 25.40 94 914 69 -25 NOV 3 B8 13.51 81 781 48 -33 FEB 16 89 7.50 61 816 5 -12 APA 21 88 1.91'4 668 J2 -22 JUN 14 88 25.01 74 110489 -5 rtAR 15 89 14.29 81 798 53 -28 IAPR 19 89 7.51 67 827 55 -12 MfIJ 1 88 1.'8'2 8JO 5h – – – – ——-1;;-;1—–!-!- !.- -3–!–;–2 -!1i-;- -;- FEB 1 89 26.01 93 1095 89 -4 JAM S 89 12.86 80 837 59 -21 IAPR '5 89 6.60 65 181 50 -15 fEI 21 et i.6S,1 611 J -ze JAil 26 89 25.18 92 962 15 -17 .JAil 18 89 24.11 72 1036 B4 -8 MY 24 88 21.05 92 948 76 -16 ,JUJII 28 88 22.41 '12 905 71 -15 MR 13 89 24.11 92 878 os -21 NOV 15 88 12.09 79 FEB 17 89 13.39 79 AIL 13 88 U.91 79 IIOV 22 88 U.73 19 APR '89 12.83 78 715 38 -41 946 75 -4 782 48 -31 719 40 -39 881 66 -12 SEf 16 B8 AfR U B8 Sf 9 88 MY 24 88 IfOV Z. 82 5.87 ,I 5.eo 65 5.69 44 5.3e 64 5.e7 44 889 67 2 939 71 4 8-46 40 -4 7f!7 53 -11 468!O -J.4 MR i8 as iIWG 18 8S OCT 6 se MR z.e Be ,AOO 2 sa i.D'1 i.07 50 i.06 50 0.82 50 0.11 49 716 140 J1 42 –Ue ,ez.'2 2 .48 10 -40 1U 4i –e IUlR 11 ae 21.12 '12 995 79 -13 RAY 2 88 10.94 71 617 24 -53 11M 29 S9 5.98 64 741 42 -22 . 1 7 o.n ..' 6f1 J4 -I' 0.9.'…. n aa 2l.O'!i 92 '39 71 -21 lIAR 31 89 12.28 77 1038 as 8 AUG 11 ee 5.16 43 . u 29 -34 fSP 7 88 !' lID 88 21.91 91 841 58 -33 JlK. 25 88 10.84 77 M!2 34 -43 ..II&. U ea 516 63 '759 4' -Jt 7 a 050' f'IItI 78 MIl .2 119 22..67 91 982 80 -11 SP 6 88 10.67 71 Eel t5 -22 FEr 2J 89 553 OJ 741 44 -19 ,JM 19 eJ 016 …, e … 5J I IS 89 22.68 91 907 69 –22 SEP 13 &e 1067 7& 7B5 51 -25 – 9 S9 5.17 62 BeO 44 2 J.4 IS'f OH .., t.e,JJli -14 I!OV 29 118 20.09 90 938 73 -17 SEP.,,3 88 10.67 76 744 42 -34 1tU&l7 88 ;45 &1 660 U -10 Our breadth index reached its high on March 11. 1988. and there have been. since then. 216 trading days of which 151 saw the DJIA advance. Statistics for each of those 151 days are shown above. Although point changes are shown. the days are ranked in order by percentage change In the Dow. Thus the 74.68-point. 3.8 advance of May 31st is listed first. The next figure shown for that day is the advance's percentile within all of the 11.092 trading days since 1946. The rise exceeds that of more than 99\ of such days. (Indeed. it is the 19th largest advance in the entire period.) As the table shows, however. it produced only 1.211 advanefng stocks. 62 of all Issues traded. On this basis. the dill' ranks only in the 96th percentile of all trading days since 1946. The difference (96 less 99) is shown in the final column. Similar statistics are given for all 151 days. According to this standard. on no fewer than 135 of the 151 advaneing days in the past 13 months, breadth action WIlS subpar. The average difference between the percentile based on percentage advance in the Dow and the percentile based on percentage of advaneing stocks was 15. l8king all of the 276 days in the stndy. the average percentage of advaneing stocks out of all issues traded 1I8S 37.n Despite the fact that the period in question was a bull market. this is below the 39.71 average which includes all bull and beAr markets since 1946. This continuing beIo..-average breadth suggests that further market strength. whfJe JfkeJy. will be relatively .adest and characterized by rotational leadership. as has been the with the ad so far. no… -…s Industrials nzl!O) Z3!13.911 s P 500 (lZOO) 39i.n JUT'THOIIGY 11'. TABELL DELAFIELD. HARVEY. TABELL me. Culnu!a1live Index (4ZIl89) 0419.1111. A1FTlt No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, an oHer or the soliCitation of an offer to buy or sell anysecurrty 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 of the statements made herein Any action to be taken by the subscnber should be based on hiS own InvestlQallOn and In.formatlon Delafield, Harvey, Tabellinc ,as a corporation and liS officers or employees, may now have, or may later take, POSitionS or trades In respect to any securrlles mentioned In thiS or any future Issue, and such pasloon may be dlfferenlfrom 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 olher Issue Further information on any secUrity menllOned herein IS available on request

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Tabell’s Market Letter – April 28, 1989

Tabell’s Market Letter – April 28, 1989

Tabell's Market Letter - April 28, 1989
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'U'Lii.\ 1mIE Il.Il. ' S IiUiILii.\iii IEV 1l.1E'U''U'1E1Rl —- 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 April 28, 1989 – Yesterday's .strengthpovided. uS.JVitLoJ'LL-Qf.Jhos'l.. rreQPporju!'it!l .10 ,make a defin,ietl,,vce.-,..- statement about the stock market. With new highs being reached in-the Dow, we,couldSay; without fear of contradiction, that, as of last night's close, a bull market existed. That statement, unfortunately, does not help us all that much. For every bull market has a final high, and, as each successive peak is made, it is necessary to examine the question of whether it was that final high or, at least, fairly close in price and time to what will come to be known as the final high. Two weeks ago in this space we reintroduced the concept of the four-year cycle, suggesting that it might be emerging as a useful context in which to discuss the current market. Given yesterday's ascent into new high territory, let us then review current market action from this perspective. We pointed out two weeks ago that, if one views cycles from low to low, there have been 24 such since 1896, the last one having completed at the December, 1987 low of 1910.07. (Average prices for the month are used in this study.) These 24 cycles have averaged 46 months in length. Length, however, is only one of many aspects in which a given market cycle may be viewed. Another aspect is the cycle's horizontal shape, the position of the high in terms of time between the two low points. On average, past cycles have spent 30 months advancing, but there has been wide variation, with as few as 5-7 months spent in an advancing phase and as many as 74 months (more than 6 years). The market has spent as little as 15 and as much as 97 of a cycle's total length in its advancing phase, with the average being 63 The vertical shape of a cycle refers to the extent of the cycle's advance and how much of this is retraced by the ensuing decline. The record advance was the 309 rise from July, 1923 to September, 1929 and, interestingly, the July 1982-August 1987 cycle takes second place with a 224 rise. Declining phases have amounted to as little as 9 (January-September 1953) and as much as 84 (April 1930-July 1932). The final way in which a cycle can be viewed is in relation I—–to-'-the–cycle–which–precededit;' one ..suchtn-easure–being….the–cycle's-peak….expressed –as—-S — percentage of the previous one. The four cycles which occurred between October, 1966 and July, 1982 all had similar highs (1000, plus or minus, on the Dow). In the last cycle, as we all know, the market broke into new high territory with the August, 1987 high (2655) being 233 of the April, 1981 prior cycle peak. Where are we now The current cycle, from its December, 1987 low, has lasted for 16 months, all of it so far, obviously, constituting an advancing phase. Most cycles (20 of 24) have had an advancing phase longer than this. The average is 30 months, which, in the present case, would mean an advance continuing until June, 1990. The average price for April, through yesterday, was 2345.23, 22.8 above the 1910.07 average price for December, 1987. There have been bull phases that have been cut short after an advance of this magnitude, 1966-1968 being the most recent one. However, the four post-World-War-Il cycles averaged 77 advances, and even the relatively tepid advances of 1966-1981 averaged 43 In terms of comparison to the previous cycle, we remain of course, on the Industrials at least, well below the August, 1987 high, although the Transportation Average has, of course, exceeded this peak. Using all of this as a framework for a forecast, our own market scenario remains little changed from what we have been expressing. We think, given the recent strength and the relative shortness of the advance so far, that strength could be extended further into 1989, perhaps indeed into early 1990. In view of the extent of the 1982-1987 cycle advance, however, we would expect the rising phase to be smaller than most previous cycles. It is our view, at the moment at least, that this cycle peak will not significantly exceed the 1987 high before the cycle is complete. Among the reasons for this, reasons which we intend to discuss in future issues, are the relative narrowness of the advance so far and the historical tendency for the bulk of advances to take place in their early stages. . It is obviously early on to start worrying about the declining phase of the current cycle, since it may well not begin for many months. but we continue to feel that it also will be relatively limited in extent. Later evidence could change this opinion also, but we do not think that current evidence justifies the extreme pessimism expressed by a significant minority of investment commentators. Meanwhile, yesterday's strength confirms the current existence of a cycle bull phase. Dow Jones Industrials (12 00) S & P 500 (12 00) Cumulative Index (4/27/89) AWTlt 2418.80 308.75 4400.86 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL 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 orthe sohcllallon of an offer to buy or sell any securrty referred to or mentioned The matter IS presented merely for the convenience of the subscnber 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 Informahon Delafield, Harvey, Tabelltnc, as a corporallon 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 posilion may be different from any views now or hereatter 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 mentioned herein IS available on request

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