Viewing Month: January 1990

Tabell’s Market Letter – January 05, 1990

Tabell’s Market Letter – January 05, 1990

Tabell's Market Letter - January 05, 1990
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/' ,- TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC 1609) 987-2300 January 5, 1990 The 'boy' Called' ou t -Wolf, Wolft anci th'e villagerlPCame-u t 'to he1p' hlm.c' A''few days afterward he tried the same trICk, and again they came to his help. Shortly after this a Wolf actually came, but this time the villagers thought the boy was deceiving them again and nobody came to his help. Aesop -' The year-end rally extended its near-perfect record of continuing past year-end, with 1990's initial trading day producing a 57-point move to new highs on the Dow. The current market cycle will, therefore, be known (at least) as the 1987-1990 bull market. Despite the strength, technical action can hardly be said to have improved, and particularly abysmal has been the action of market breadth, as shown in the chart below of our daily breadth index from October, 1987 to date. '-. DOW JONES INDUSTRIAL 4YcR4GE 8EDTri (ADv – DEC lUNCH) , ,liY – —— if-;'f\!t.'Jt -'l\v-J.,J-I!I\/or—- – – – – – I I –17a Dcl 2C3b 7-.5-ae on 21se IO-21-!!8 on 213 -s -e!' OJI 2700 lo–e 0.'1 271 i, 'iI We use the Aesop quote as prologue to a discussion of breadth since it is an indicator which led us astray back in 1988. Breadth anlysis, our readers will be aware, involves the construction of an index based on the difference between advancing and declining stocks. (Thre can be further refinements We divide that difference by the number of issues unchanged.) In any case, the theory runs. new highs in the averages should be confirmed by peaks in breadth, and repeated failures so to confirm constitute an early-warning (often a very-early-warning) signal of an impending top. As the chart shows, just such action took place between March and October of 1988. Three successive market rallies took the Dow to higher levels, f,rst at 2086, tlien at 2158, and finally at 2183. The breadth peak on each one of these rallies was lower, thus producing a classic divergence. It was not a very good signal. The 1989 rally broke the breadth downtrend early in that year, and the new high was finally confirmed in July with the Dow on its way to 2700. Barely a month after this belated confirmation, a new divergence appeared. Breadth peaked on August 8 with the Dow just under 2700. The corresponding peak at the average's 1989 high was noticeably lower. The level of the breadth index at Tuesday's new high was lower still We intend to monitor breadth closely during 1990. Its historical record is, in our view, not tarnished by the false 1988 warning. Further new market highs unconfirmed by breadth may well, at this stage, signify the arrival of the bull market's final phase. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (114/90) AWTebh 2797.57 355 11 5013.67 No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, dlrectJyor Indirectly, an offer orthe sollcltallOn of an offer to buy or sell any security referred to or mentioned The matter IS presented merely for the convenience 01 the subscriber While we beheve the sources of our information 10 be reliable, we In no way represent or guarantee the accuracy thereof nor 01 the statements made herein Any action to be taken by the subSCriber should be based on hiS own Investigation and Information 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 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, Taben Inc, which IS registered With the SEC as an Investment adVIsor, may gIVe adVice to ItS Inves1ment adVISOry and other customers Independently 01 any statements made In thiS or In any other Issue Further information on any security menboned herein IS available on request

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Tabell’s Market Letter – January 12, 1990

Tabell’s Market Letter – January 12, 1990

Tabell's Market Letter - January 12, 1990
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— ————- TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 January 12, 1990 -…. Three -weeks -ago, -when.. we ,-isBued our-year-end foreca8t ….-we expressed .ourbeliefthatan important- market top was likely to occur during the year 1990. We qualified this, however, by opining that the year would see new highs above the 2791.41 peak which had been registered by the Dow on October 9th. The latter part of this forecast has already turned out to be technically correct. On the very first day of the new year the Average staged a 50-point rally to another newall-time high at 2810.15. However, the market promptly backed off, and that January 2nd figure remains the only instance of a new market high that has occurred since last October. We hasten to say that we are not bragging about the so-called correctness of. our forecast, and, indeed, we herewith promise not to do so if January 2, 1990, turns out to be the high of a 1990 – 19 bear market. It is. of course, irrelevant that a new peak. less than 1 above the old one, has been attained. The important question. obviously. is whether further meaningful new highs may occur later on in the young current year. It is our view that such is likely to be the case. We say this despite the poor market breadth which we spent the entire last issue of this letter detailing. Indeed, the breadth picture is even a bit worse than the one we described last week, for that letter discussed only our daily breadth indicator. Its weekly counterpart which, in recent years. has shown more pronounced upside bias—and which did, in 1988, corroborate the new highs which the daily index failed to confirm—is now showing the same sort of action as the daily figure. It has refused to post a new high since September 1st, producing a 19-week divergence which is easily the longest of the bull market to date. It needs to be remembered. however, that breadth and momentum indicators. none of which are acting all that well, tend to show a significant lead time on market peaks. There would be nothing historically inconsistent in market action in which the September-October peaks turned out to be the final ones for breadth while the averages continued to rise well into the new year. In addition. of …. coul'se-;-it ould–alBo-be possiblegivEm-!-furtlrer–market'!-strength -for-riewbreadth-p–eEik-slobeC—–'- – achieved and present us with the gift of a general market in gear with the popular averages on the upside. ' An example drawn from the historical record is the study we published last September which summarized what took place in post-World-War-II bull markets after they had staged their longest rally. The longest advance for the present bull market. we now know, covered 225 trading days. almost a year, between November 16, 1988, and October of last year. We are, at the moment, 65 trading days past the high of that rally. We noted in September that the ultimate peak for'past bull markets occurred by amounts ranging from 106 to 705 trading days following the end of the longest upswing. This statistic alone suggests that the current rise might possess a further life span. While history does provide us with plenty of precedent for a bull market lasting longer than this one has, it also demonstrates that the bulk of any bull market move tends to take place in the early stages. All but three of the post-1949 bull markets had completed three-quarters or more of their total advance by the time their second birthday had been attained. Thus while it is possible to foresee new highs, it remains probable that they will not be all that different from levels already reached. It must furthermore be remembered that the question of whether the bull market's final peak has been attained may not be all that important. Market analysts, like the generals who are always prepared to fight the last war, tend to worry about action that resembles the last bear market. This is why the Friday-the-13th decline was so scary. It occurred after only a short top formation and was compressed into one day. thus exhibiting an uncomfortable similarity to the 1987 bear market. It must be stressed that this is not the way market tops usually form. The record shows that once an actual peak is attained. the market tends to remain in the vicinity of that peak for an extended period of time. During this time period. hopefully. the assiduou technician….. can detect the deterioration which leads to a defensive stance. We are, thus, ready to extend the year-end forecast to call for further upside action. We stress. however. that such action is likely to be not very dynamic and highly selective. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (1/11/90) AWT It 2716.51 342.79 4999.56 No statement or epresslon of opinion or any other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, an oHer orthe soliCitatIOn of an oHer to buy or sell any security referred 10 or mentioned The matter IS presented merely for the convenience of the subscflber While we beheve 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 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 securities mentioned In thiS or any future Issue, and such position may be dlHerent from any views now or hereafter epressed 1(\ thiS or any other Issue Delafield, Harvey Tabell Inc, which IS reg1stered With the SEC as an Investment adVISor, may gIVe adVice to ItS Investment adVisory and other customers Independently 01 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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Tabell’s Market Letter – January 19, 1990

Tabell’s Market Letter – January 19, 1990

Tabell's Market Letter - January 19, 1990
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– – – – r- ' – – – – – TABELL'S MARKET LETTER 600 ALEXANDER ROAD, eN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC 1609 967-2300 January 19. 1990 I..,.-.. ,,—Thj lette! ouJ-lQitself QJ1ce…..ag'!!D blind-ied-la!l!wek -byb.t .. w–hy COIJlJto .call .. tbe , Friday-Afternoon Syndrome ,In order that the U.S. Post Offic-e manage delivery of our weekly . opus before the markets under discussion have become ancient history. it is necessary to have it in the printer's hands by Friday noon. Friday-p.m. stock-market action seems, with distressing frequency. to be 'at variance with the scenario discussed in the letter. ….- ….. Such was the case last week. when we chose to reiterate our year-end forecast, suggesting that. while we still expect a market top sometime in 1990. a further push to new highs before that top seemed likely. On Thursday, when we initially prepared that comment, the Dow had been up 10 points and, at 2760, was off only modestly from its all-time January 2 high of 2810. Friday then produced a 71-point decline, which and was followed by further weakness later on in the week, as the average probed for support in the lower 2600's. We will be commenting on the technical implications of all this below. but we cannot resist first noting what seemed to us a dramatic shift in psychology in last week's financial press. A wave of pessimism appeared to arrive from across the Pacific, as the Tokyo market plunged sharply. It currently finds itself down 5, hardly a major disaster. (Even more than with our own market it is necessary to convert the Nikkei Average to percentage terms since it sells around the 36,000 level and, on Friday, posted a 653-point decline.) U.S. stocks tended to open, each morning last week to the tune of portentous comments regarding the latest Tokyo drop. , There are, actually, two schools of thought as to the effect protracted weakness in Japan might have on U.S. markets. The pessimistic view suggests that what is now the world's largest stock market could, in a protracted collapse, drag the U.S. and other markett down with it In some sort of global cataclysm. The contrary contention is that money coming out of Japan has to go somewhere, and the U.S. might prove to be a convenient haven. It was the former argument, however, that prevailed last week. 1—II——…..;-Theweek'''large''t–doseofgloomy4inafleial-newsothough,-wased-by-thGhapter-l1 — filing of Campeau Corporation. There were, on Tuesday, 40 separate stories on the Dow Jones news ticker, and these were followed by thirty more through Friday morning. Although we maintain many statistics, we do not keep score of single-topic stories showing up on the broad tape. We would guess, however, that this was some kind of a record. It was certainly not without justification. Campeau had managed to spend some 10 billion on the purchase of Federated Department Stores and Allied Stores and, as some legislator is purported to have said, a billion here, a billion there; pretty soon you're talking about a lot of money.1f A New York Times editorial had, we thought, the best comment on the situatIon, noting that it was Mr. Campeau's special genius to find a way to bankrupt more than 250 profitable department stores. The problem with the Japan and Campeau incidents is their potential to constitute the seed of all sorts of panic scenarios—global financial collapse in the one instance and a spreading round of bankruptcies if Campeau Corp. turns out to be the Krueger & Toll of the 1990's. The problem is that the technical scenario does not seem to be foretelling any sort of economic Ar,mageddon. ' The Dow, last week f broke below a short-term top. which has a plausible downside target of 2600. The 2650-2600 level constitutes fairly strong support, having been the POHt-October platform from which the year-end rally took off. It is the possibility of the market's penetrating that support which must now concern us a What such a break would imply is that October 1989 – January 1990 constituted a double top and that the high of the bull market which began in late 1987 was scored on the first day of the new year in 1990. This scenario was referred to as a possible but less-than-likely prospect in our year-end forecast. We still regard it with some degree of skepticism. Were it to prove to be the cRse—and we are not yet ready to Bct on this assumption—the likely aftermath would be a conventional bear- market with a downside objective around 2200, not a pleasant prospect goodness knows, but something considerably short of the end of the world. This is probably worth keeping in mind if the upcoming weeks bring a continuing onslaught of pessimistic financial news. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (1118/90) AWTebh 2679.61 340.06 4859.66 No statemem or expression 01 opinion or any other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, an offer orthe soliCitatIOn of an offer to buy or sell any secUrity referred to or menhoned The matter IS presented merely for the convenience of the subscriber While we beheve the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor oj the statements made herein Any achon to be taken by the subscriber should be based on hiS own Investigation and information Delafield, Harvey, Tabellinc , as a corporation Bnd ItS officers Of employees, may now have, or may later take, posrhons or trades In respect to any securities menhoned 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, Tabetllnc, 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 Informabon on any security mentioned herein IS available on request

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Tabell’s Market Letter – January 25, 1990

Tabell’s Market Letter – January 25, 1990

Tabell's Market Letter - January 25, 1990
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD, eN 5209, PRIN CETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 January 25. 1990 ..Onlyaninc!,r.'!bl-pti!!CUld .find aything construcive to.say abou!!,e market – , achon of last week– ltb-egan Wlth-a-77-pOlnt. Monday dechne whlC'flDrougnt the-Dow.at —– day's end. to almost exactly the 2600 level. Tuesday produced a sporadic recovery with early and late strength surrounding mid-day weakness. The poor reception accorded the Resolution Trust financing touched off a 60-point decline for the Dow on Wednesday morning along with the unsurprising bond-market weakness. A good portion of the ground lost was recovered in late Wednesday and early Thursday trading. but that rally attempt fizzled and produced the first close below 2600 for the DJIA. What is going on here is. of course, fairly obvious. Most major averages are now probing for support in that broad 2600-2500 area where the Friday-the-13th debacle of last October was halted. By the end of the day on Thursday. most averages. especially the broader ones. had moved below their October bottoms. Only the Utility Average (along with the Industrials on an intra-day basis) remained above their levels of last fall. There are, unfortunately. 8 number of negative factors now present with which markets did not have to contend in late 1989. Among them is the failure of the year-end rally which topped out on the very first day of the year. In addition. the December low of 2687.93. reached on the 20th. was decisively penetrated two weeks ago. We discussed the significance of this phenomenon in our regular treatise on the year-end rally at the end of December. We noted that. in years when the December low has been broken. the subsequent trend of the market has been downward two-thirds of the time. L.ikewise, the rally's end in early January does not augur well for 1990's prospects. Meanwhile. market breadth. a thorn in the side of the market ever since it failed to confirm new peaks in the averages in early October, has continued to show abysmal action. The 1336 NYSE declines in Monday's trading and the 1207 falling stocks for Wednesday are hardly the sort of numbers that inspire confidence. Our daily breadth indicator is now 25 1…,.-J…,,o-..,.points..,ij.l!-,and….since….1heree1ists no market uswingon record where b.relad'.!t,hc…,,…,,-,….,–t has dropped this much. and the market then 'wenf on to new -peaks. ' (This is not to say that the averages have never moved to new highs after this sort of a breadth decline. Since breadth is a leading indicator. they have often done so. although in most cases the margin over the previous high was not great.) Likewise disturbing are the 194 52-week lows which emerged on Wednesday. They represented a bit over 9 of the total issues traded on that day. and this is a level which usually emerges well after the market has passed its zenith. There remain, of course, even after last week's weakness, a few indicators, most of them dealing with sentiment, which remain positive. One such is the level of mutual-fund cash which, the latest reports tell us, is, to say the least, currently ample. Advisory sentiment likewise has recently swung to bullish levels. Market action, however, tends to belie these figures. We have reached that point, it seems to us, a point which occurs in the mature stages of most major upswings, where it will be necessary for the mRrket to prove itself. The move below their October levels by most averages still falls a bit short of being decisive. One way that improved action could be demon!Jtrated would be for the major indices to hold around current levels and eventually rebase. There is. unfortunately, very little in last week's pattern which suggests the likelihood of this taking place. In one respect, action over the past few months, since early last fall, has been much like that of 1987. As was the case at that time. tops have built up with a rapidity totally atypical of market action prior to the late 1980's. This phenomenon—substantial market deterioration occurring in the space of a few weeks—is a new one and remains to be fully examined. What must be noted, though. in contrast to the pattern prior to the crash a couple of years ago. mmt tops appear to be small and; in many cases, indicate nothing more than a return to strong support, support. just above bases which still indicate higher objectives. However unpleasant possible upcoming I weakness may be. a fair number of stocks. we think. should reach levels at which they will be attractive buys. ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL INC. Dow Jones Industrials 0200) 2561.26 S & P 500 (1200) 327.91 Cumulative Index (1/25/90) 4725.17 AWTebh No statement or expression of opinion or any other matter herein contained IS, or IS to be deemedto be, directly or Indirectly, an offer orthe solicitation 01 an offerto buy or sell any securrty 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 acllon to be taken by the subSCriber should be based on hiS own investigation and Information Delafield, Harvey, Tabellinc ,as a corporation and s officers or employees, may now have, or may later take, positions or trades In respect to any securities menlloned In thiS or any future Issue, and such pOSition may be different from any Vlews 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 lIs Investment adVISOry and other customers Independently 01 any statements made m thiS or In any other Issue Further Informallon on any securrty mentioned herem IS available on request

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