Tabell’s Market Letter – August 11, 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 -. — — – – -……. . . .–T1———Aitl1, 1989' —-….-.— — …-.,;;- – The stock-market story that made headlines this week was the Thursday move of the Dow Jones Industrial Average above 2700 and its momentary flirtation with a new, all-time high—actually consummated as we go to press. Since most other major averages have long ago achieved such highs. this action was hardly earthshaking. If one is seeking truly unusual behavior in a market average, the history of the week1s trading in the Dow Jones Transportation Average is worth a glance. That indicator closed. a week ago, at a level of exactly 1250. Monday's close was 1344.06, a 94.06-point, 7.52 advance. On Tuesday, the Average moved further ahead to 1355.80, making the two-day advance 8.46, and Wednesday's trading took it to a close of 1406.29, making the total three-day advance 12.5. (Another modest advance was achieved on Thursday.) All of the above figures, if not records. were, at least. in record-setting territory. Almost all of this. of course, was due to the action of one stock, UAL Corporation. which became the object of a takeover bid or—in today1s charming language—was put into play. The construction of the Dow Jones Averages is such that, to arrive at the Transportation average. one adds up the prices of the 20 stocks therein and divides by 0.703. Thus, each move of one point in a component is sufficient to produce a 1.42-point move in the indicator itself. Thus, the vast bulk of the Transportation index1s rise can be accounted for by the fact that UAL, which closed at 164 1/2 a week ago, attained closing prices of 210 3/4 on Monday, 19 1/4 on Tuesday, and 243 718 on Wednesday. We will return to this point later,. But first a quick look at the action of the Transportation Average in an historical context. The 7.52 move in that index on Monday is, by far, the largest in the history of the Average since 1949, as far back as our computerized data bank goes. The two-day move to Tuesday has been exceeded only twice in those forty years, and the three-day, 12 112 move, only once—at the 1987 bottom. Looking at the Dow Jones Industnals, for which we have history back to 1926, there have been only 14 larger one-day moves, 24 two-day ones, and 14 three-day instances. With the exception of 1987, all of these cases took placepriorJo..J.19AO…Thus.theweek!s….action-,-in-,-the…..transpor..ts—can-be'8aid–tobea,——I–I modern -record. Yet the cause of all this, the 28 UAL rise, was hardly unique. It was, in fact, just another in a series of takeover-related moves. A scan of our data bank reveals that, looking only at NYSE stocks selling over 20, there have been over 100 one-day moves of greater than 25 since 1982. The left-hand column of the table below lists the 20 most recent such moves and the right-hand column shows the 20 largest. a.OSIHQ P!I1IIOUS I'RCElf( – – – – – -STOCK DOll PRlc a.OSE CWGE a.OSIHQ P!I1IIOUS I'RCElf( – — – – -sm DOll PRlc a.OSE CHAHG UHCIlW AtIII 7 1989 210.750 164.500 28.12 BIIEFICIAL COR!' 111.22 1!SO 71.000 -44.!iOO 61,04 SIlUIIB CW JIJ. 27 1989 112.500 87. 28.21 ICAII STAIIDARI IIIC JAIl 27 1988 58.875 Je.oOO 5MJ llARllIH LABS JIlL 17 1989 33.500 25.250 32.17 PROlIUCTS IIS I CHElUCAI. JIJ. 10 1989 Jl.025 25.125 25.87 IIIRCII1IRT BRA( .lO'J!JIII IUAAI milo IIFG I 18 1997 I 9 1988 .6.625 SJ.750 Jo.sOO , 52.,7 SO,J5 Tl/lIHe JJII 7 1989 170.000 126.000 J4.92 CHVCW AtIII 14 1997 J9.25O 26.125 50.24 CITIWIS I SD1ITlIERH CIl.DIAN COI'IPAHY INC. IIURl.IHGTOH RfS01JRCS 'AA Jl 1m .S7S 26.750 34.11 fJJ 1 1989 7G.125 49.125 2.75 fJJ &1989 49.12'5 J9.25O 25.1& EmJtIRYIHS 8!HK TmS JROC1(1jAI SP 25 1997 711.000 52.250 428 JAM 161m 45.000 JO, 48.76 SP 11 1997 58.m 39.250 48.73 TmS ESTl!Jt CIlW PWSEYLID CflCAGO POCIFlC R J RHABISCO JAIl II 1989 HOU 16 1988 OCT 2 1988 OCT 20 1988 5.ooo .J7'S S6.625 n.25O JO.25O Jl. 4J.J7'S Sl.87S .a.76 2.17 JO.Sl 38.26 J!R;\AlDF.TTlHlHEe. . P!llSB1IRl co SAIIIIIIS !SSOClATE5 OCT 18 1988 OCT 27 1!SO lET 4 1988 JUH 27 1!SO 88.250 29.&25 57.000 SO.SOO 60.125 20.250 J9.ooo 3.750 … 78 46.30 46.15 45.J2 !RAFT lHC. lEST PRWJUTS PlllSBUIIl co OCT 18 1988 88.250 6G.125 46.78 OCT 10 1988 26.875 2'J.75O 29.52 OCT 4 1988 S7.000 39.000 46.15 UJCKT STIlR6 lHe 1lJfOX lHC IIIIIIRE IICCOIIIIACII RfS lIAR 22 19811 .750 32.250 4.91 ..ftJM B 1983 4J. 29.815 4.n FE! Z 1988 34.500 lJ.875 H.SO CO SP 13 1988 SI.25O J9.S00 29.75 SPECT1!A-PItl'lICS )flo 26 1997 3.000 2J.&25 43.92 INSllCO CIlW 111AiI lHe 1llllRA1 01110 ItFIl CAU'.'T Co AtIII J 1988 MY 18 1988 MI 9 1988 ' lJ 1988 2.250 &8.875 SJ.75O 45.375 21.250 50.&25 Jj.7S0 31.875 28.24 J;.os 50.Jj 42.l5 RElO1W1 ICAl ….;I 25 1997 IMOO 42.250 43.20 AffUEi DOTA R&AJtH HOV 18 198 JI.5oo 22.000 .3.18 – CILEIWt COIi'RIJT IHe. CERTAIII !lEI PRODUCT fJJ 14 1989 70.12'i 49.125 42.75 FEB 2S 1988 5.125 JI.&25 2.49 , As the table clearly shows. the UAL rise is hardly unusual. There have been four similar cases in the past month and nine in 1989. It is. in addition. hardly the largest. having been significantly topped by all the moves shown in the right-hand column,. The extent to which takeover-related moves have provided the fuel for the current bull market is a proper subject for a future letter. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials 0200) S P 500 (1200) Cumulative Index (8110189) 2718.13 349.69 4897.72 AWTebh No statement or expression 01 opinion or any other matter herein contamed IS, or IS to bedeemed to be, directly or mdlrectly, an offeror the soliCitation of an offer 10 buy or set! any security referred 10 or menlloned The matter IS presented merety for the convenience of the subSCriber While we beheve the sources of our mlormatlon to be rehable, we m no way represent or guarantee Ihe accuracy thereof nor olthe statements made herein Any action to be taken by the subscriber should be basad on hiS own Investigation and Inlormahon Delalleld. 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 m thiS or any luture Issue, and such posl\!on may be different from any views now or hereafter expressed m thiS or any other Issue Delafield. Harvey. Tabet! Inc, which IS registered wrth the SEC as an mvestment adVISor, may give adVice to rts Investment adVISOry and other customers Independenlly of any statements made m thiS or In any other Issue Further Information on any secUrity mentioned herein IS available on request