Tabell’s Market Letter – June 22, 1990

Tabell’s Market Letter – June 22, 1990

Tabell's Market Letter - June 22, 1990
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…-. – 'U'IIHED.D.' S IRlcIE'U' D.1E'U''U'1E1Rl 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 June 22. 1990 Two positive statements can be made about recent market action. They are as follows -' — —-,- 1.-The–Dow-is-(or-wasonJ.une.J.5.bya.,marginof7/10,ofa,pDint mT.er JuneA)aLa new. all-time high. . -. . — ,. – — — 2. The rally that got it to that pOint—which began on January 30 and whose current phase started on April 27—is probably the strongest and broadest of the last ten months. These two admissions having been made. the search for further signs of market strength becomes somewhat difficult. Let us consider the question of breadth, 8 subject we, certainly not alone among our technical colleagues. have been alluding to monotonously over the past year. The table below shows the high and low points of each discernible swing in the Dow since last August. when our breadth index reached its peak. giving for each date. the closing level for both the Dow and our computation of NYSE breadth. Date HI GHS DJIA Breadth Date LOW 5 DJIA Breadth Aug 10 1989 2712.63 Sep 1 1989 oct 9 1989 2752.09 2791.41 Oct 20 1989 2689.14 Dec 13 1989 2761.09 Jan 2 1990 2810.15 Feb 15 1990 2649.55 Mar 19 1990 2755.63 Apr 17 1990 2765.77 Jun 4 1990 2935.19- W. Jun 15 1990 2935.89 New High for Dow 1000.00 999.80 997.43 989.73 986.57 988.38 973.55 974.25 970.31 975.11 973.53 Aug 21 1987 sep 25 1989 Oct 13 1989 Nov 6 1989 Dec 20 1989 Jan 30 1990 Feb 23 1990 Ma, 22 1990 Apr 27 1990 Jun 6 1990 Jun 20 1990 2647.00 2659.19 2569.26 2582.17 2687.93 2543.24 2564.19 2695.72 2645.05 2862.38 2895.30 996.51 994.09 988.89 982.07 981. 37 969.99 969.27 971. 06 963.06 973.12 971. 43 There are, in the table, eleven rallies, six of which, including the last two, produced new bull-market peaks for the Dow. Scanning down the list for similar highs for breadth shows that. for I-Ir—t''h''I'e-must-paI t, the pea-k fur -each-rally–has'-been-'-lowerthan-the-pefor–the-'-previous-one..–T-he-,,same – has been true for lows in breadth. the nadir for this figure having been attained at the end of April. Now there has been some modest improvement in the first half of 1990. The March breadth peak was indeed better than that of February. and. more importantly. that March peak was exceeded. although only slightly. in June—hardly an astonishing achievement since the Dow by that time was 180 points higher. Although improvement has been noticeable, breadth action, considered on an absolute basis, continues to be sub-par. Indeed. another mini-divergence has begun with the failure of breadth to confirm the new peak in the averages on June 15. Individual-stock, new-high figures, another indicator of narrow leadership, have been likewise abysmal. Over the last dozen trading days, a period when the averages were straining at the leash on the upside, new highs have been restricted, for the most part. to the 20-30 range. and on four of those days there actually took place more daily lows than highs. There do, however, remain areas of potential improvement. One is the Transportation Average (1178) which. it is worth reminding ourselves. has shown action wildly different from that of the Industrials. Its peak was achieved back in September at 1532.01. The Friday-the-13th break in October was coincident with the coming apart of the UAL buyout. and. by the end of October. the DJTA was below 1200. (In the process a gap was created. the October 13th low of 1425 being 65 points above the high of the following Monday. One of the hoariest of technical chestnuts is the theory that such a gap must be filled.) In any case. by January's end. the transports had managed to post a closing low of 1031.83. a rather astonishing fall of 32. Many major bear markets have been of lesser dimension. After posting that low. the Transports returned to the 1125-1225 range. and there now exists a potential head-and-shoulders base whose upside breakout would be 1230. Were this level to be achieved, a testing of the old high would be the minimum expectation, and the implications for the -market'would'be highlYbullish. – – – — The DJ Utilities (209) find themselves showing much more tentative improvement. Since January. reflecting the bond market. this average has fallen sharply (a 14 total drop) with an especially severe downthrust in late April, since largely erased. For this indicator it would be important that the April low (around 201) hold and that continued basing take place in. roughly. the 208-220 area with, one would hope, an ultimate upside breakout. Despite strength in the major averages, the improvement for the broader market, then, can be seen, has not been all that great. It would, thus, be encouraging for such areas as the transports and utilities to demonstrate renewed strength. ANTHONY W. TABELL DELAFIELD. HARVEY. TAB ELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (6f21/90) AWTebh 2909.16 360.94 5135.95 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 offer to buy or sell any secunty referred to or mentioned The matter IS presented merely for the convenience of the subscnber 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 action to be taken by the subSCriber should be based on hiS own Invesllgatlon and information Delafield, Harvey, Tabel! Inc, as a oorporalIOn and lIS officers or employees, may now have, 01 may lalellake, POSitionS or lTades In respecl to any seWTllIes mentIoned In fhlS OT any future Issue, and such poSllion 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 lis Investment adVISOry and other customers Independently of any statements mace In thiS or In any other Issue Further Information on any security menllOned herein IS available on request \

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