Tabell’s Market Letter – April 14, 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 (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