, – – – – – — TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NAT/ONAl ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 May 4. 1990 …. —–'-Wehave'alwaysgatdedour 'licenseto -publish..tinclude ….nadmonishment,t9 .,stick to.thee…..,.'''…,.,., ….,…, only subject on which we can claim any expertise—the behavior of financial markets. We do permit, ourselves, however. the occasional foray into social comment, and we take this liberty to discuss the saga of Mr. Michael Milken. The New York Times attempted a summary in the initial sentence of their initial editorial—Michael Milken is a crook. It noted that Mr. Milken had. himself. admitted. in his plea, that he committed a number of acts which were clearly in violation of federal law. He will. therefore. forfeit a large sum of money and. in all probability. spend some time in jail. Period. End of story. This denouement, however, seems strangely unsatisfying. Paradoxically, it must be equally unsatisfying to Milken's most fervent admirers and to his most avid detractors. The former have already begun to view their hero as the protagonist In a kind of Greek tragedy. a great man brought down by hubris. His derogators. on the other hand. must feel the same way observers did in the 1930's when Al Capone was finally indicted for income-tax evasion. It seems obvious even at this stage that Mr. Milken's name will go down in financial histol'Y. as associated with a single phrase—Junk Bonds. It is striking, therefore that there is almost no reference to these instruments in Milken's admission of guilt. If the junk bond market provides the catalyst for the sort of financial crisis that many analysts foresee. then 6.00 million plus a jail term will not come close to repaying society for the damage caused. If this collapse fails to occur. Mr. Milken may be vindicated as the Sir Galahad (or at least the Robin Hood) that his supporters claim him to be. lt is impossible, in our view, to separate the creator from his creation. We are thus forced to consider the junk bond. As an aside, one must note that, the very name – constitutes an example of the refreshing candor often found on Wall Street. The euphemism. ,,high-yield bond. indeed exists. but it is almost never used. The more raffish title is the one alofust unIversally used by market participants. But we digress. What is to be said about junk bonds beyond the fact that there are some 200 billion of them out there They are instruments entirely compatible with much modern financial theory. This theory denigrates the classical separation of capital gain and income. treating both as part of a total return. It argues. additionally. that above average return is achievable only by the assumption of additional risk. The junk bond. furnishing both high yield and high risk. is the perfect embodiment of this theory. Even the Times. in a follow-on editorial. came down firmly on the side of junk paper. It raised the familiar argument that such paper constitutes a means of obtaining financing for the 95 of American companies which do not enjoy high credit ratings. It sees such debt as being the savior of the entrepeneurial spirit. threatened by suffocation brought on by stodgy lending practices. Still, critics are entitled to ask, what are the consequences However noble the original intent might have been. did not junk ultimately come to be used as the fuel for takeovers and thus dissipate the energy of the financial community in paper shuffling at the cost of new investment in growth What of the failed S & Us. some of whose portfolios were loaded with high-yield paper Surely. it is argued. junk bonds are the invention of the devil and his name is Michael Milken. How will financial history treat the junk bond However uncomfortable it may be for those who favor portentious pronouncements, the answer is that we simply do not know. There exists, as noted above, largely in the hands of quasi-fiduciary investors, an enormous pile of such paper. Some has defaulted. More will default. Some will ultimately pay interest and principal on schedule. It will be years, nay decades, before we know What the ultimate return to investors in junk may be. One recalls a gentleman named Edgar Lawrence Smith Who; many years ago, penned a tome entitled. Common Stocks as Long-term Investments. Mr. Smith had the bad luck to write this piece in 1923 after which it was used for six years as an intellectual justification for ever-rising stock prices. The seol'n aimed at Smith's 81'gument after 1932 can easily be imagined. The long night of the stock market lasted 20 years. but. ironically. Smith was ultimately proved correct. Common stocks did turn out to be superior long-term investments. Whether the same will be true of junk bonds. only history will tell us. ANTHONY W. TAB ELL DELAFIELD. HARVEY. TAB ELL INC. Dow Jones Industrials (12 00) S & P 500 (12 00) Cumulative Index (5/3/90) 2695.95 336.05 4737.00 AWTebh No statement or expression of opinion or any other maner herein contained IS, or 1 to be deemed to be, directly or IndIrectly, an offer or the sollCltal!on of an offer to buy or sell any security referred to or mentIOned The matter IS presented merely fOr the convenience of the subscnber While we beheve the sources at our Information to be rehable, we In no way represent or guarantee the accuracy thereof nor clthe statements made herem Any action to be taken by the subSCriber should be based on hiS own Investigation and Information Delafield, Harvey, Tabell Inc, as a corporation and liS officers or employees, may now have, or may later take, poSitIons or trades In respeCI\O any seCUrltles mentioned In thts or any future Issue, and such pOSItion may be different /rom any Views now or hereafter expressed In thiS or any other Issue Dela/leld, Harvey, Tabellinc , whdt tS registered With the SEC as an Investment adVisor, may give adVice 10 lis Investment adVISOry and other customers Independently of any statements made In thiS or In any other ISSue Further in/ormation on any security mentioned herein IS available on request

TABELL'S MARKET LETTER ., 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY '08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609 987-2300 , May 11, 1990 –e- – -c–A-n–occasional occupationBLh8zardof-1.he….Jechniciais a sense of frustration.. This the urge at-the Quotronfeeling has been known to–produe to scre;m ,machfne;-Please do—- something—anything! . Such frustration has been building for almost four months now; It was back in the cold days of January that the Dow achieved a newall-time high (2810.15) on the first trading day of the year. Following this, it underwent a 9 1/2 correction, the low being reached at 2543.24 on January's next-to-Iast trading day. It is now May, the dogwoods are in bloom in Princeton, New Jersey, yet those two levels have confined the market ever since. Following the January 30 low, the following earthshaking events have taken place. The Dow rose some 4 to mid-February, but by February 23 had given up three-quarters of the ground gained. A more substantial rise, to 2765.77, not that far removed from the old high, carried to April 17. Then a 4.36 decline broke the 2700 level, reaching 2645.05 on April 27. From that point, the market has been able to mount a modest rally. Of this, more later. Throughout the ,dreariness that has characterized the year so far, we have tried to point out to our readers the fact of continually weakening technical action, weakness partially masked by the relative strength for the Dow in particular and for large-capitalization companies in general. This technical deterioration, as we have noted, antedates 1990, being traceable back to August, 1989 or, at the very least, to October. It was back on August 8 that our daily breadth index scored its bull-market high. That high has not been exceeded since and the divergence—which by this time must be considered permanent—is now 190 days long. Breadth's October peak was just under that of August and its January, 1990 high significantly lower. January's low, which has held in the case of the averages, was penetrated in February by our breadth index. and a new low in that index was again scored in April. Weekly breadth, meanwhile, has more or less paralleled the daily series. Its high to date was reached during the last week of August, and both lower highs and lows have been 1.,..–…..,p-b's'tea()lrm1norwing–since. ' ' , w , On August I, 1989, there occurred 306 daily new highs, the high for the upswing from 1987. The subsequent October peak for new highs was 151, followed by a January high of 111. Yesterday's level was 46. A moderately redeeming feature is the fact that new lows—227' occurred on October 16—have. ever since. been able to hold above their levels of last fall. lt is indeed possible to recite a whole litany of statistics suggesting the narrowness of recent market leadership. t can be noted, for instance, that the Value Line Composite is down 17 from its OctOber high, the same high that was later exceeded by the Dow and one which is only a few points above where the market finds itself tOday. Thus the market climate at the end of April. Has the ensuing rally (3.53 through yesterday) improved the technical picture any The answer can only be a rather weak r'Somewhat. There has occurred, through yesterday. a string of eight days on which advances exceeded declines. True. on only one of these days did advances barely manage to exceed 1000, but let us be thankful for small favors. Indeed it should be noted that a similar string of updays has managed to occur in every stock-market year since breadth figures have been compiled. However, this is the first time the market has been able to do it in 1990 so far. Little comfort. as noted above, can be derived from new-high statistics. but new lows have essentially dried up since May began. The market has thus been able to manage a fairly decent short-term rally, one which has thrust well into the overhead supply at the 2700-2760 area. The prospects for the rally's continuance appear to be mixed. On the plus side, it must be noted that the market's late weakness has been accompanied by highly bullish readings m indicators of market sentiment. Bearish market letter writers abound. and mutual funds find themselves sitting on record amounts of cash. Despite the narrow leadership, specialists have been increasingly reluctant to short stock into strength. A by-product of a rally at this stage, especially if it carries to new highs, might'be weJl accompanied by an increase in bullish sentiment and a decline in institutional cash to levels more characteristic of a market top. Given the ongoing long-term technical weakness. it is difficult at this paint to envision an advance of major proportions. Dow Jones Industrials 02 00) S & P 500 (1200) Cumulative Index (5/10/90) AWTebh 2763.29 345.59 4801.74 ANTHONY W TABELL DELAFIELD, HARVEY, TABELL INC. Nostatementor expressIon 01 op!nton or any other matter hereIn contaIned IS, or IS to bedeemed to be, directly or mdlrectly, an offeror the soliCItation of an offer to buy or sell any secuflly referred to or mentioned The matter IS presented merely for the convenienCe of the subscnbet While we beheve the sources of our mformallon to be reliable, we In no way represenl or guarantee the accuracy thereof nor of the statements made herem Any acllOn to be taken by the subSCriber should be based on hIS own mvestlgallOn Bnd mformatlon Delafield, Harvey, Tabel! Inc, as a corporation and liS officers or employees, may now have, or may later take, poSitions or trades In respect to any secunbes menlloned 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, Tabell tnc , 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 security mentioned hereIn IS available on request

TABELL'S MARKET LETTER 600 ALEXANDER ROAD. CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 May 18. 1990 Please do something—anything!. Anthony W. Tabell. May 11. 1990. 12 noon. …..1- – -l'his,statement-wriHefl…last-'week-has-. .nq' fro; 'H' .1. market for most of the year …. As we know, the Dow Jones Industrial Average 'reached a new all-time high of 2810.15 on the first trading day of this year and was followed by a correction of 9.50 in the short period of 20 trading days. reaching a low of 2543.24 on January 30. Since that low. the DJIA had, been contained within this trading range. Contained, that is, until last Friday afternoon when, in fact, the market began to do somethinglt The enthusiasm of bond prices surging and interest rates falling for most of the past two weeks. suggesting the economy and/or inflation is not as strong as it might be. spilled over into the stock market. and it took flight. The DJIA closed up 63.07 points on increased volume of 234 million shares. This was followed on Monday by an advance of 19.95 points to a new. all-time high in the Dow of 2821.53. breaking out on the upside of the consolidation area that has contained the market since the first part of the year. Utilizing point-and-figure analysis. it is possible to project an upside objective on the DJIA of 3100. or approximately 10. Both the New York Stock Exchange Industrials and the Standard & Poor's Industrials reflect similar percentage moves. Having waited for approximately four months for this event to occur, however, we should not assume that. by breaking out on the upside from this trading area. all of our problems are solved. What. in fact. has changed' Short-term volume and breadth have shown improvement. but it is still too early to justify a major transformation in these series. Another problem that continues to be with us is the narrowness of the recent leadership. While the DJIA has gone on to a new. all-time high. the Value Line Composite is down 13.2 from its October 9 high of 278.98 and 6.38 since the first of the year. reflecting poor relative strength. 1 Year SaP 500 Return – 1 Year Value lIne Return An interesting way to show this disparity is to compare the Standard & Poor's 500. a capital-weighted Bverage.of.500.stocks. to the Value.Line Composite. an unweighted !'verage of 1700 stocks. The chart above shows the12-mOlith return of the S & P 500 minus the 12-month return of the Value Line Composite. In simplest terms, when the difference in returns is above the zero line. the S & P 500 is acting relatively better than the Value Line Composite. What is interesting to observe is that since 1984 there has been a significant shift in return of stocks. There are a number of possible reasons for the concentration of positive returns in the S 8& P 500—institutionalization of the market. index funds. and, more recently, program trading. Regardless of the reasons, there still exists a concentration in large-capitalization, high- quality stocks (S & P 500) versus the broader sector of the stock market (Value Line). Has there been a major fundamental change in the stock market and will this continue. or will the broader sector of the stock market begin to again participate The answer will help us determine the importance of recent improved market action. ROBERT J. SIMPKINS. JR. DELAFIELD. HARVEY. TAB ELL INC. Dow Jones Industrials (1200) 2816.44 S & P 500 (1200) 352.84 Cumulative Index (5/17/90) 4877.75 No statementor expression of opinion or any other matter herein contained IS, or IS to be deemed 10 be, dlrectty or rndrrectly, an olferorthe soltcrtabon 01 an offer to buy or selt any secllnty referred to or menlloned The matter rs presented merely for the convenience of the subscnOOr Whrle we beheve the SOUfces of our rnformabon to be reltable, we In no way represent Of guarantee the accuracy thereof nor of the statements made herein Any action to be taken by the subscnber shOUld be based On hrs own tfwestrgatlon and information Delafreld, Harvey, TaOOIt Inc, as a corporatron and liS offrcers Or employees, may now have, or may tater take, pOSllrons or trades rn respect to any secuntles mentroned In thrs or any future rssue, and such posrtlon may be different from any VIews now or hereafter expressed In thrs or any other Issue Delafreld, Hatvey, Tabelllflc , whrch rs regrstered wtfh the SEC as an Inveslmefll adVisor, may give adVice 10 Its Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further Information on any securrty menboned herein IS available on request

– – – – – – – – ———— TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC 1609) 987-2300 May 25, 1990 1—-'letterAsexopurrescSolilnelaCgtulei,OhRoopbee-rttn Sritmfipekimnasr. KentotweoduJlaasato-wsoemeket. nwfnegheaXdC,itsiefvtegndaOyns tpnraiotvr,e written ry a … -I afternoon, it did, the Dow rising 60 points on the highest volume of 1990 so far. The following Monday saw a newall-time high, and this high was repeatedly extended through the 2856.26 peak achieved on Wednesday. We had, frankly, not expected this outcome. We had been drawing attention to the paradoxical situation in which market momentum was demonstrably poor. yet indicators of sentiment were highly bullish and investable cash abounded. The latter forces prevailed over the former. and the result is now history. It is tempting to call the past fortnight's action a buying panic and to compare it to similar manifestations in August 1982 and August 1984, Technical action was indeed similar in the prior instances—a long period of dullness, a week of slight improvement, and then the upside explosion. However, we think the comparison is facile. Technical events must be judged in context, and the aforementioned two cases occurred after protracted downswings. The current instance takes place following a two-and-a-ha1f-year bull market. The present situation may, we think, be placed in context by noting that, following a two-year upswing, there was an interval, or gap, of 91 trading days between the high of January 2 and the one of May 14. Gaps of this length or longer in the context of an ongoing bull market are fairly rare occurrences, having occurred only 19 times in the past 65 years. The 19 instances are outlined in the table below. FIRST HIGH SUBSEOUENT DROP O.te OJ1A End Oate , NEXT HIGH Dote Gap DJIA ULTIMATE HIGH Date Days DJIA I FEB 11 1926 162.31 MAR 30 1926 -17 AU, 3 1926 140 163.40 SEP 3 1929 919 361.17 133 AUG 14 1926 166.64 OCT 19 1926 -13 APR 21 1927 203 166.66 SEP 3 1929 705 3Bl.17 129 ..,……,…-….,..-1- I-..,…,………,,S EP..,.719J2709.-93,NO V,-.,.j-,j.9 32,,,27…MA Yd O,o-193191-6-c-76HARI09.a71-14-7-J.9 440-t\ 40..,.. JUL 16 133 106.67 OCT 21 1933 -23 JAN 30 1934 155 106.99 MAR 10 1937 934 194.40 76 FEB 5 1934 110.74 JUL 20 1934 27 MA, 4 1935 373 110.63 MAR 10 1937 555 194.40 75 JUL 14 1943 145.62 NOV 30 1943 -11 JUN 15 1944 277 145.66 MAY 29 1946 '566 212.50' 46 JUL 10 1944 150,50 SEP 14 1944 – 5 DEC 9 1944 122 151.31 MAY 29 1946 425 212.50 40 FEB 6 1947 164.49 HAi 17 1947 -12 JUL 11 1947 119 164.77 JUN 15 1946 264 193.16 5 JUL 24 1947 166.85 MAR 16 1948 -11 MAl 14 1948 231 186.60 JUN 15 1946 23 193.16 2 SEP 13 1951 276.37 NOV 24 1951 . 7 JUL 15 1952 240 276.76 JAN 5 1953 117 293.79' 6 AUG 3 1959 676.10 SEP 22 1959 . 9 DEC 31 1959 103 679.36 DEC 13 1961 491 734.91 6 JAN 5 1960 665.47 OCT 25 1960 -17 APR 10 1961 317 692.06 OEC 13 1961 171 734.91 6 MAY 14 1965 939.62 JUN 2& 1965 -II ocr 11 1965 102 942.65 FEB 9 1966 64 995.15 6 SEP 25 1967 943.06 MAR 21 1966 -12 OCT 3 1966 240 949.47 DEC 3 1966 35 965.21 4 APR 2B 1971 950.62 NOV 23 1971 16 APR 5 1972 237 954.55 JAN 11 1973 193 1051.70 10 JUL 15 1975 661.61 OCT 1 1975 11 JAN 6 1976 120 690.62 SEP 21 1976 160 1014.79 14 SEP 6 1976 907.74 APR 21 1980 -16 JUL 17 1960 466 915.10 APR 27 19&1 195 1024.05 12 NOV 29 1963 1267.20 JUL 24 1964 -16 JAN 29 1965 294 1292.62 AUG 25 1967 649 2722.42 111 JAN 2 19902810.15 JAN 30 1990 10 HAY 14 1990 91 2821.53 1 1 1 1 1 11 11 Some explanation is probably required. The first two columns show the new bull-market high which preceded the long gap. The next two show the date of the subsequent low and the percentage decline to that low. Following this is the date of the subsequent new high, the number of days in the gap between the two highs, and the closing 'Dow on that date. Finally, the last three columns give the date of the ultimate bull-market high, the number of days later it occurred, the final Dow, and the percentage advance of the terminal move. Some obvious facts can be noted. It was, first of all, common throughout the 1920's and 1930's for long gaps between highs to take place at the mid-stages of bull markets, and these gaps were regularly. followed ,bysubstantial,…advances.Simi1ar . action ..occurred inAhe last case of such a gap where, following the 1983-84 hiatus, the Dow posted a 111 adVance. The common pattern for the 1950's, howeve1, was quite different. For the ten cases between February 1947 and April 1981, the average rise in the Dow from the new high after the gap, the date analogous to May 18, was 7.3. Some of these rises were of long duration, but their percentage advance tended to be quite short. Our inclination is to believe that this pattern will hold in the present case. An upside objective of 3100 is readable, this being a rise of about 10 from the most recent high. Such an outcome would be consistent with most of the history of the post-World War II period. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (5/24190) AWTebh 2833.02 355.92 4918.31 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL INC. No slatement or expression 01 oplmon Or any other matter herein ccntalned IS, or IS to be deemed to be, directly or Indirectly, an offer or the solicitation of an offer to buy or sell any security referred to or mentioned The matter IS presenlM 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 of the statements made herem Any action to be taken by the subscriber should be based on hiS own Invesllgal10n and Information De!alield, Harvey, Tabelllnc, as a corporation and lIs officers or employees, may now have, or may later take, poslllons or trades In respect to any securlbes menlloned In thiS or any future Issue, and such position may be different from any views now or hereafter expressed m 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 mdependently of any statements made In thiS or '1'1 any other Issue Further mformatlOn on any secuflty menllOned herem IS available on request