Viewing Month: February 1990

Tabell’s Market Letter – February 02, 1990

Tabell’s Market Letter – February 02, 1990

Tabell's Market Letter - February 02, 1990
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11 1mIE 1l..1l..' S 1R2&t1E1I n.1E1I1I1ER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC 1609) 987-2300 February 2, 1990 Finally, what must be conceded to have been. on the whole, a rather dismal January, managed, on – , .-,;-Wednesday;-tOjrodu',,,otlerlrtely'vigorous recove'ry;–The-Dow- rallier!l15!lie-47 -poiht;P!irfd7'fo-rth,,–,,-,,.,-,1 ,..,.. first time since January 2, the number of advancing stocks managed to attain four figuresa After a mixed Thursday, strength continued Friday morning. For those who insist on grasping at straws, we herewith offer one by pointing out that the rally managed to occur without the Dow. in the strictest sense, posting a new low. Tuesday's close of 2543.24 was, indeed, below the October 13 close of 2569.26. However, the intra-day bottom of 2513.06 held, by the skin of its teeth, above the October 16 intra-day low of 2496.93. More importantly, perhaps, our point-and-figure charts, which are posted on half-hour figures, did not show a new DJIA bottom. All this might be encouraging had not the major S & P Averages moved decisively to levels below those of October. It seems, indeed, that the broader the average one looks at the worse its short-term relative performance. This phenomenon—good relative strength by the Dow—is not, historically, encouraging. As might be expected, the word oversold surfaced repeatedly in last week's market comment. This, in our view, is one of the most abused words in the technical lexicon, in that about 99 of the time it appears, it is accompanied by no quantitative definition of Just exactly what it means. There are, indeed, many indicators designed to register oversold (or overbought) market conditions, but let us, for the purposes of this exercise, focus on one of the most widely used of such indicators, the 10-day advance-decline oscillator. The wide usage of this particular indicator may well be attributed to its simplicity of construction. It consists of nothing more than the total of advancing stocks for the prior 10 days less the corresponding total of declines. We have tracked this figure for some time and its popularity, we think, does not affect its usefulness. A fairly good market trivia question concerns the date of the all-time low for this particular oscillator. That date was not October 19, 1987, but October 27, 1978, when the advance-decline difference reached an astonishing -9382, almost 50 of al1 issues traded. -This comp-ares Wit)\ the 1987 low of -9141, 01' 455-of stocks changing-hands. This- further adjustment—the conversion of, the oscillator to a percentage of issues traded—is Obviously necessary if one wishes to track it over long periods of time. AI1 of what fol1ows wi11 refer to the indicator in those percentage terms. The recent low for this particular indicator occurred three days before the .January 30 market low at -23.88. It had not been below this level since the current bul1 market's onset two years ago October. We wi11 attempt here to put this number into perspective. A useful way of looking at market history for analytical purposes is by the application of a filter rule, taking each move of a given percentage or greater. Applying a 10 filter, there have been 28 identifiable market lows since June' 1949. (We ourselves recognize only ten of these as having been major market bottoms, but our definition is, admittedly, subjective, while the filter rule produces a more disciplined structure.) AI1 28 low points have, unsurprisingly, produced an identifiable low on the 10-day osci11ator frequently occurring (in 12 of 28 instances) on the actual day the market makes its low. In 15 of the 16 other cases, the osci11ator low led the low on the Dow by amounts ranging from 1 to 18 trading days. Our first task is to relate these prior instances to the current one. When we do so, we find that 19 of 28 instances wound up producing a lower figure than the present -23.88. The 1978 record is noted above, and most major bear-market bottoms seem to have produced a low somewhere in the -30's. There are. of course. exceptions. Prior to August 12, 1982, for example, the osci11ator never got below -19.72. We said above that a negative figure for the oscillator had appeared in the vicinity of al1 28 market lows under study. Unfortunately. low numbers tend to appear at points other than major bottoms. thus producing falsen signals. If one envisions -24. the recent figure. as a threshold level, in how many of the 28 declines under study has a group of such figures appeared prior to the market's actual bottom I In the 1950's Rnd 1960's, there were relatively'.. few such false signals and again relatively few in ……;.. the 1980's. In the 1970's. however. many declines took place in which repeated oversold conditions occurred on the way down. A good example is 1968-70, when the Dow dropped some 36 from a high of 985.21. The 10-day oscillator reached below -24 in February 1969 (Dow, 908), June 1969 (Dow, 12), July 1969 (Dow, 834), November-December 1969 (Dow, 823), January 1970 (Dow, 744), and April 1970 (Dow, 775), for a total of six false signals before the Average finaJly bottomed out on May 26, at 631.16. We are, therefore, unwilling to attach a great deal of significance to the IO-day oscillator's having reached a relatively low level latlt week. Its tendency to lead market oottoms tIuggests that further lows over the next two to three weeks might be seen, and the existence of past similar conditions within the framework of major bear markets is not encouraging. We intend. therefore. to await further evidence before assessing the finality of the January 30 market low. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) 2613.29 S & P 500 (12 00) 330.91 Cumulative Index (2/1/90) 4712.72 No statement or expression of opimon or any O1her matter herein contained IS, or IS to be deemed to be, dlreclly or Indirectly, an offer or the sohcltatlon of an offer to buy or sell any security referred to or mentioned The matter IS presented merely for the convemence of the subsCriber White 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 subSCriber should be based on hiS own inveStigation and mformatlon Delafield, Harvey, Tabellinc ,as a corporation and Its officers or emptoyees, may now have, or may later take, positions or trades In respect to any seCUrities menboned In thiS or any future Issue, and such posillon may be dlfferenllrom 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 lIs 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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Tabell’s Market Letter – February 09, 1990

Tabell’s Market Letter – February 09, 1990

Tabell's Market Letter - February 09, 1990
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– — – ———– TABUELL'S MaRKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (6091 987-2300 February 9, 1990 I—-,-',——C'''——–'-'-'''''''–'''''-'— I- It occurs to us that, on our comment over recent months. we are especially vulnerable to the charge of hedging—an art which, we must admit, over 35 years of penning market letters, we have learned something about. One of the oldest hedging rules is. If you give 'em a number, don't give 'em a time, and if you give 'em a time, don't give 'em a number. It is, in other words. permissible to forecast the Dow's reaching, say, 5,000. if you do not specify precisely when this happy event is going to occur. Likewise, one can opine that the market will be higher at year-end, but saying just how much higher constitutes sticking one's neck out. We have, in this space, been bandying about two numbers (without giving a time) for the Dow. These numbers are, first, an upside objective of 3400 and, secondly, a downside target of 2200, It may well occur to our readers that this spread is a contender for the all-time, world-class, championship hedge. We had, therefore, better explain ourselves a little further. The first figure is derived, quite simply, from the 50-point-unit chart on the Dow shown at left. A simple measurement of the 1987-1989 accumulation area across the 2100 line, standard practice wlth P & F charts, yields, as we have shown. a 3400 target. However, when we referred to this objective most recently, in our year-end forecast. we noted that. it is quite possible that the market top out before this objective is attained and, a bear market, reach it on the little formation on the side of the chart and the question of whether it is or is not a distributional top. For a closer analysis, let us shift both the scale and subject matter, looking at the two-point unit chart of the S & P 500 below. It, unfortunately, more so than the Dow, appears to be a completed top, with a downside breakout having duly taken place late last month. The downtrlde objective is 282, some 15 below current prices, as the Dow's comparable 2200 objective Is about the same percentage below its present level. The Dow, however, as we noted last week, has not yet posted a downside breakout. For the short term, both 340 averages have small bases, with upside targets of 340 for the S & P and 2700 for the Dow, at which levels 3'lo they would both run into fairly massive overhead '32D supply. Their behavior, as those figures are attained should afford some indication as to whether the market can rebase and attempt new highs, or 310 whether the distributional-top theory is the correct 300 one. A decline to 2200, it must be noted, although a drop of cycle-bear-market scale, would simply 2.90 constitute a return to support While the spread between 3400 and 2200 is huge, it remains necessary, in an imperfect world, to keep both numbers in mind when trying to formulate a market scenario. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) S & P 500 (12 00) Cumulative Index (02/08/90) AWTebh 2643.69 332.58 4794.66 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 or the soliCitation of an offerlo buy or sell any security referred to or mentioned The matter IS presented merely for the convenience of the subSCriber While we believe Ihe sources of our Information to be reliable, we In no way represent or guaranlee the accuracy thereof nor of the statements made herein Any acMn to be taken by the subSCriber should be based on hiS own investigation and Information Delafield, Harvey, Tabel! Inc. as a corporation and Its afllcers or employees, may now have, or may later lake, pOSitions or trades In respect 10 any secuntles mentioned In thiS or any future Issue, Bnd such position may be different from 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 other Issue Further Informa\!on on any secunty menliOned herein IS available on request

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Tabell’s Market Letter – February 16, 1990

Tabell’s Market Letter – February 16, 1990

Tabell's Market Letter - February 16, 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 ,.,..-,Thi weX, th'L toc '!LaJ-keLand, the bo!l'LmAJlo;!sllrJ!gg!'LofLthe sell'l.ational J'!!lLollapse of the already-wounded ,Drexel Burnham Lambert, putting'to resCthi' rise and fan of one of tb most -influential financial institutions in the 1980's. Rest in Peace' Investor are again left to deal with the ongoing task of addressing an uncertain stock market within a framework that is asking some difficult, short-term questions— Is the 9.5 decline since the first of the year in the Dow Jones Industrial Average over If so, will the DJIA be able to break through its old high of 2810.15, made just O trading days ago on January 2 If not, will the DJIA penetrate the 2542.24 low made on January 30 Market changes are often accompanied by shifts in sector and group leadership, and there is some indication that this is gradually taking place. The table below compares the period from January 1989 to date with the most recent six-week changes for S&P industrial groups as of this Wednesday. The start of the six-week period is coincident with the DJIA record high of 2810.15. The figures on the left show the 30 best-performing groups ou t of a total of 95 from 1989 to date and is ranked in that order. The table on the right is ranked on six-week changes and shows the best-performing groups for that timeframe. SP INDUSTRY GROUP PRICE \ CHANGES PERCENTAGe CHANGes THRU reb 14 1990 GROUP NAME ,OIL & GAS DRILLING ENGINEERING' CONSTRUCTION GOLD – OIL WELL EQufpMEN AND SERVICE FROM Jan 3 1990 RANK 1; CHG 7 051 1 12 5.. 20 …216 5 2 042 ENTERTAINMENT 63 -9 814 SOFT DRINKS TOBACCO POLLUTION CONTROL COMMUNICATION EQUIP/MFRS -10 645 60 -9.683 61 -9 754 -.20 167 TOYS 19 -3 893 HOUSEHOLD PRODUCTS 43 -7.869 SHOes 78 -12 043 HOSPITAL MANAGEMENT COMPANIES 92 -15 927 OIL INTEGRATED DOMESTIC PROPERTY-CASUALITY INSURANCE -,8 1 051 25 650 COSMETICS DRUGS -9 790 4J -8 281 NA'I'URAL GAS 41 -7 589 HELTH CARE-COMPOSITE RESTAURANTS TELEPHONE (NEW) -8 042 39 as -7 266 -13.535 ELI;CTRICAL EQUIPMEUT 33 -5 951 BROADCAST MEDIA HEALTH CARE-MISC -7 905 3 8 010 LIFE INSURANCE 89 -15 675 HEALTH CARE-DIVERSIIED or t COMPOSITE ,RETAIL STORES DEPARTMENT SAVINGS LOAN COMPANIES -7 '29 11 -0 74. -8 36. 18 -3 547 COAL 74 -11 557 ,fROM Jan 1989 SiP INDUSTRY GROUP PRICE \ CHANGES PERCENTAGE CHANGES THRU Feb 14 1990 FROJ't Jan 3 1990 RANK 1; CHG. GROUP NAME RANK \ CHG 1 85.543 ENGINEERING & CONSTRUCTION 1 12 594 ,2 73.821 GOLD 3..-59 -994–flEAf,TM-'-GARE-JIII-5C 51 044 OIL & GAS DRILLING ,2 10 216 3.-…….a–l-Q 7.051 5 50 965 COJ'tPUTER SYSTEMS 5 2 298 6 6 645 OIL WELL EQUIPJ'tENT AND SERVICe 6 2 042 7 45.182 COJIIPUTER SOFTWARE , SERVICES 7 1. 7'2 8 44 714 OIL INTEGRATED DOMESTIC 8 1 051 9 43 125 MACHINERY-DIVERSIFIED 9 0.292 10 41 749 ELECTRONICS SEJ'tICONDUCTORS 10 0.097 11 41 073 OIL COJ'tPOSITE 11 -0 740 ' 12 37 781 OIL. INTEGRATED INTERNATIONAL 12 -1 739 13 36 916 EXCLUDING I.B.M 13 -2 183 14 36 009 REAL ESTATE INVESTJ'tENT TRUSTS 14 -3.125 15 35 578 CONGLOMERATES 15 -3.155 16 35 280 AUTOMOBILE 16 -3. 532 17 35 200 ELECTRONICSINSTRUJ'tENTATION 17 -3. 543 16 34 176 SAVINGS & LOAN COMPAN1ES 18 -3. 547 19 32 395 TOYS 19 -3.893 20 31 67 COMJ'tUNICATION EQUIP/MFRS 20 -4.167 21 31 286 CONTAINER METAL , GLASS 21 -4.228 22 31.062 EXCLUDING GEN MOTORS 22 -4.251 23 31 002 RAILROADS 30 390 INSURANCE BROKERS 25 28 978 PROPERTY-CASUALITY INSURANCE 26 28 621 MANUFACTURINGfOIV IND. ) Z7 28 1. CTRIC COMPANIES 23 -4.402 -. -4.455 25 650 26 661 –..Z7 758 28 27 530 MACHINE TOOLS 28 -5 029 29 26 516 PERSONAL LOANS 29 -5 173 30 26 128 CHEMICALS-DIV '30 -5 FROM Jan 1989 RANK \ CHG. 2 73.821 3 59 994 2—-10;390- as -1 543 86 -14 749 , 51 044 42 16 792 14 36 009 44 18.367 31 25.239 ..27 28.144 32 24 134 87 -13.787 -22.284 os 18.230 81 -8.589 86 -13.180 ,29 26 518 10 41.749 43.125 57 10.758 93 -17.726 35 20.622 72 0.000 15 35.578 61 5.226 ., ,47 17 824 9S -26.774 107 59 9 .214 The obvious observation gaineil by looking at the left-hand.table is that it is dominated by the energy and consumer goods sectors of the market.- Substantial percentage gains in groups related to food and oil were registered from 1999 to date, well above the Standard & Poor's 500 Average. However, a number of these groups. which have ranked in the top 30 in performance since January 1989. have dropped in rank when measured over the most recent six-week period. The right-hand table. while still favoring the energy sector, shows a number of interesting new names. These include computers. electronics, automobiles, and machine tools. Many of these groups were among the worst performers last year, but have, in the last six weeks. moved into the top third of the hst. This group rotation is important to monitor in order to identify internal changes occurring within the stock market. It is these changes that could give us supporting evidence in determining the short-term direction of the market, currently contained by the benchmark high of January 2 at 2810.15 and the recent low posted at 2542.24 on January 30. ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY. TABELL INC. Dow .Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (2/15/90) RJS ebh 2654.50 335.48 4783.97 No statement or expression of opInion or any other matter herein contained IS, or IS to be deemed 10 be, directly or Indlreclly, an ofter orthe soliCitation of an after to buy or sell any secunty relerred to or menlloned The mailer IS presented merely for the convemence of the subSCriber While we believe the sources of our InformallOn to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements made herein Any aCllO,n to be taken by the subSCriber should be based on hiS own InvestlgattDn and information Delafield, Harvey, Tabell Inc, as a co(poralon and rls offICers or employees. may now have, or may later take, POSIIOOS or trades In respect to any securities mentioned In thiS or any Iulure ISSue, and such poSitIOn may be dlfterentfrom any views now or hereafter expressed In thiS or any other Issue Delaheld, Harvey, Tabell Inc, which IS registered With the SEC asan Investment adViSor, may give adVIce to ItS westment adVISOry and other customers Independently of any statements made In thiS or m any other ISsue Further Informallan on any seCUrity menllOned herem IS available on request

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Tabell’s Market Letter – February 23, 1990

Tabell’s Market Letter – February 23, 1990

Tabell's Market Letter - February 23, 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 (6091 987-2300 February 23, 1990 –'—O;;fWi;;thdtshl;rt;mai-;!.;i!letended – – — to feature anthropomorphic bulls and bears, This week's featured Michael Milken, and the cover article's subject was the bankruptcy of Drexel Burnham Lambert. I1A new era had arrived, the story proclaimed, replacing. we were told. the old era of the Roaring Eighties, If this is so, it is appropriate that the old era's demise should be announced in a mass-circulation magazine. for the salient characteristic of the 80's. as an era in securities markets. was that the decade's financial excesses. as never before in our view, took place under the glare of the media spotlight- This aspect is somewhat at variance with the way market historians tend to think about economic boom-and-bust cycles. For us, the seminal work on past manias has always been Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds. Published in 1841, it records the history of such events as the Mississippi Scheme, the South-Sea Bubble, and the Holland-Tulip-Bulb Mania Extraordinary the 1980's may indeed have been, but we are not sure the words popular and delusion are precisely applicable to the present case. The former adjective seems inappropriate since public participation in the decade's financial debauchery was conspicuous by its absence. Individuals, by and large, have continued to be net sellers of common stock, and they are estimated to own directly less than 5 of all outstanding junk bonds. Nor can it be said that the public at large was deluded about what was going on. In the 1920's, by all accounts, Wall Street leadership was generally admired prior to the crash, while. this time around, the purveyors of corporate America's mountain of debt found themselves regularly being excoriated on the nation's editorial pages. The editorial-writers had, in short, seemingly for the first time, discovered greed—not the most attractive of human characteristics but nonetheless one that has often emerged, both in the financial community and elsewhere. hh….-,…..—ene;Coul-d-';–indeedtnot—even-go….to–the-movie8thout -being…informed…of…..the-;iniquities-,….,.,..,,–…..,.)– of Wall Street—the movie of that title presenting Michael Somebody-Or;Other (Why do all Hollywood leading men these days seem to be named Michael) portraying the slimiest villain since the era of Peter Lorre and Sydney Greenstreet. Publishers, too, joined in the furor, in which slots on the best-seller lists were regularly occupied by tomes exploring the seamier aspects of the financial community7 ranging from The Predators' Ball to Liar's Poker. The best of these. unsurprisingly, was fiction—The Bonfire of the Vanities 7 in which Tom Wolfe presented us with the bond salesman as tragic hero, Oedipus Rex on Wall Street. It is certainly not our intention here to justify the assorted outbursts of financial lunacy which came to characterize much of the industry over the past ten years. Our readers are aware that we have, with some regularity, been critical of a good many of them. We offer the thought, however, that the denouements of past boom-bust cycles have tended to be quick, with the publicity coming after the peak, while. in this instance, much of the media hype took place on the upside. Likewise, present difficulties will probably take time to resolve. The resolution of the junk bond situation, for example, will. of necessity. take place over many years, as we learn what the actual default rate on the 200 billion of paper outstanding will turn out to be, This protracted process is unlikely to be the sort of thing which produces front-page news. All of this may explain why the stock market reacted to the Drexel collapse with, essentially. a yawn. Markets. it seems. were already discounting the news that Time breathlessly reported. We, ourselves, after more than two years of rising prices. are, as readers know, less than sanguine about the market's immediate prospects. Nonetheless, our worst-case scenario does not envision anything more than a routine cycle bear-market. The new era, in other words, may well include the welcome retirement of the securities industry from front-page status. – …..- . . – – – – ANTHONY W, TABELL DELAFIELD, HARVEY, TABELL INC, Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (2/22/90) 2554.73 324 42 4733,26 AWTebh No statement or expression 01 opinion or any other matter herein contained,s, or 15 to be deemed to be, directly or indirectly, an offer orthe soliCitation 01 an offer to buy or sell any security reterred to or menlloned The matter IS presented merety for the Convenience of the subSCriber While we believe the sources of our Information to be reliable, we ,n no way represent or guarantee the accuracy thereof nor olthe 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 Its officers or employees, may now have, or may later lake, positions or trades In respect to any securities mentioned In thiS or any luture Issue, and such position may be different from any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabelllnc, which IS registered with Ihe SEC as an Inveslmentadvlsor, may give adVice to lis Investment adVISOry and olher customers Independently 01 any statements made In thiS or In any other Issue Further Information on any security menlloned herein IS available on request

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