Tabell’s Market Letter – August 18, 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 – August 18, 1989 As the market has sailed merrily ahead over the past 22 months, a number of observers—including, -admittedly, ourseleslfave1!lp-reSsed – reservations regarding-thepaucity-of-dailynew highs.,–Just – – recently, on August I, almost two years into the advance, NYSE stocks managed to achieve a bull-market record by posting 306 52-week, daily new highs. In comparison, we may recall that, in October, 1982, two months into the advance which began in August of that year, 653 daily new highs were posted, and, during the next five years, numbers in the 400 to 600 range were not at all uncommon. The table below attempts to provide some perspective by Showing some relevant figures for new highs for the past eight bull markets including the current one to date. For each of the markets studied, the starting low, the eventual high, the percentage advance, and the length in trading days is shown. A number of additional figures are then calculated for the first, second, and third 200-day periods of each bull market. These include the highest daily figure during the 200-day period for new highs and the highest figure for those highs expressed as a percentage of issues traded (smoothed by a 10-day moving average). Also shown are the high for the Dow reached during the 200-day period, and the percentage of the ultimate advance completed at that high. . 6/26/62 10/ 7/66 5/'26/70 1!/ 6174 12817B B/12/82 7124/87 10119/87 21 9/66 ——– -1-2-1–3-/-6-8 –1-/-1-1-1-7-3 –9-/2-1–1-7-6 –V-2-7–/B–l 11129/83 ——– –8-1-2-5-1-8-7 –8-/1–0-/8–9 Low 535.76 70101.32 631.16 577 .60 701.12 776.92 1086.57 1738.74 Huh r. Adv NUlliber of !Iays 995.15 86 913 985.21 1051.70 1014.79 1024.05 1287.20 2722.-42 2712.63 32 67 76 38 66 151 56 518 665 5 798 39 780 458 -D—-1—2-0-0 Peak New Hulhs Peak. New Hlh 184 10.07 229 12.72 298 11.65 393 11.12 284 9.26 653 18.28 3\ ; 100( 3 52 1.81 DJIA H1Sh 706.03 909.63 899.10 S81.81 907.74 1232.59 1299.l6 2J58.61 Advance COtlP, -n,—-'0–'–'0–0- 37 69 64 70 59 89 13 43 Pea, Ne. H13hs 121 251 237 451 174 498 229 PeaI-, New HIgh 6.22 11 .19 10.71 101.11 6.75 16.08 6.05 DJIA Huh 787.78 943.08 950.82 1011.02 893.901 1697.71 2463.89 Advance Camp. 0 0101-600 ———– Pea!-, Ne. Hlhs 55 160 83 76 269 9' 54 224 37 74 332 PeaI-, New HUlh X 10.301 8.99 9.58 11.77 DJIA Hl!lh 991.71 973.51 915.10 1955.57 Advance COIIP. 77 81 61 52 To End Peak New HIghs 157 PeaI-, New Hl!lh Z 10.10 272 13.48 103 4.61 195 278 5.013 10.29 306 9.80 258 7.75 306 10.56 A few observations may be adduced. The first is that the 1982-1987 period appears to be exceptional as opposed to the two decades preceding it. During the five bull markets of those decades, the peak figures for new highs as a percent of issues traded—the fairest way of comparing the statistics over time—tended mostly to be in the 9-12 range. By those standards, the 10.56 level, which represents the high for this market so far, does not appear all that anemic. Markets that score most of their advance in their early phases also tend to produce concentrated peaks in new highs. In the present case, the rise has been fairly gradual. ThIS was also the case in 1962-1966, where only 37 of the eventual advance was completed in the first 200 trading days and just over half of the rise occurred in the first 400. Interestingly, never during the course of that ad vance were over 200 daily new highs achieved. Finally. it must be noted that the shape of the previous bear market has a great deal to do WIth the new high-figures for- thesubsequent upswing. As we all know, the two-month bear market of August-October. 1987 was unique in its shortness, and this made It difficult for the present advance to post large numbers of new peaks in the early stages, since the August, 1987 highs were still being used as a standard for comparison. Most of the other advances followed bear markets that lasted around a year and a half, and levels achieved at the top of the preVIOUS upswing were not taken into account when computing new highs. In addition, it must be noted that only since 1984 have new-high figures been computed on a 52-week basis. Prior to that time they included periods ranging from three to fifteen months. Although the effect of this varies. in many cases it has caused reported new high figures in the early stages of past bull markets to be higher than they probably would have been had they been calculated on today's basis. In the light of all this, current figures for new, 52-week highs, while not stellar, are probably not as bad as they have often been made out to be. ANTHONY W. TABELL Dow Jones Industrials (12 00) 2684.18 DELAFIELD, HARVEY, TABELL INC. S & P 500 (1200) 344.50 Cumulative Index (8118189) 4860.10 No statement or expression of 0p'lon or any ether matter herein contained IS, or IS to be deemed io be, directly or Indlrec1ly, an oHer orihe soliCitation of an oHerto buy Of sell any secunty referred to or mentIOned The matter IS presented merely for the convenience of the subscnber While we beheve the sources of our InformaliOn 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 respec1to any secuntles mentioned In thiS or any future Issue, and such posr\ion may be different from any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabe!llnc , 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 securrty mentioned herein IS available on request