Viewing Month: July 1990

Tabell’s Market Letter – July 06, 1990

Tabell’s Market Letter – July 06, 1990

Tabell's Market Letter - July 06, 1990
View Text Version (OCR)

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609J 987-2300 July 6, 1990 – — . , -As -the -markebremain8ired -ina-sort-of4llini-doldTUaused-brthe-oecurrence-ofB. – – .. mid-week July 4th, it may be appropriate to review our thinking regarding technical action as it has evolved OVer the past few years. Such a review can just as well begin with a simple fact. That fact is that point-and-figure analysis of the Dow Jones Industrial Average has, since early 1989, suggested a long-term price target of 3400. A few comments on the figure are in order. It is derived from a measurement of the base pattern formed by the Dow subsequent to the October, 1987 break. After the meltdown-Monday low of 1738.74 was reached the average spent the remainder of 1987 and all of 1988 in an upwardly biased trading range which, In a series of successive highs, had probed as far as the mid-2100's by sutumn. The 1988-1989 year-end rally took the form of a decisive upside breakout from that base, reaching to almost the 2350 level In February before any sort of significant correction took place. The second factor which must be noted Is that the target is not all that exciting. Its importance will be exaggerated since, if attained, it will, along the way, involve the reaching of yet another level ending in three zeros. The date of this great event will thus achieve the same celebrity accorded January 18. 1966 and January 8. 1987, which occasioned the first penetrations of 1000 and 2000 respectively. With the Dow at around 2900, however, it would still involve an upward move of only 20 from current levels, and the advance would be less than a third of the total move from the 1987 lows. In any case, the objective exists and twenty-twenty hindsight suggests that it probably would have been appropriate to halt analysis at that elementary level last year. However, as the 1989 advance progressed, It became possible to raise a fairly crucial question, i.e. whether or not the target was due to be attained on the then-current cycle. Consider the situation as we approached the end of 1989. The bull market had, by ,—,.,——th-,e'Qt attained its seco.nd blr.thdaYJThis wasnot,..par.ticularlyancient,)ly-normal.,'e'……..——..o—I four-yearcycle, bul1mark-efBtaiuiards-but It certainly fell -Into the time frame within which a top might be foreseen. Meanwhile, the evidence of highly restricted leadership, the most widely noted feature of market action over the last nine months, was beginning to manifest Itself with a vengeance. There followed the mini-crash of October 13, 1989. Shortly thereafter, in contrast with what had taken place in 1988-89, the 1989 year-end rally aborted on the first day of the year, having achieved, on that day only, a new cycle (and all-time) high. There followed, in January 1990, the steepest correction of the bull market to date. ' We confess to then having questioned, under the Influence of the aforementioned factors, the viability of the upswing, and having harbored the suspicion that attainment of the Dow's ultimate price target would have to await a full-scale, bear-market correction. It was not, Immediately at any rate, to be. The January low held, the market moved sideways to April, and May featured a new upthrust, which ultimately moved above the 2950 level on June 5th. Close scrutiny of that rally's underpinnings suggested some improvement in technical action, but It was hardly decisive. It remains to ponder the meaning of action from June to date. The market was essentislly unable to better the June 5th high on a series of attempts through mid-June. The last week of that month saw a fall below the 2900 level and a series of closes In the 2860-2840 range. A rally back to the 2900's preceded the holiday, but this aborted, at least temporarily, yesterday. The bullish argument is buttressed, in our view, by the continued existence of the 3400 objective, still out there after a year and a half. This target is, Ironically, made more plausible by the weakest feature of the market, the ongoing narrow leadership, basically still confined to blue-chip, Dow-type Issues. The bearish case remains a potentlal one. 2820-2800 for the Dow would be significant on the downside, completing a putative top whose ultimate shape and target 'remain unclear. Currently, the worst that can be foreseen from such a top would be move back to support around 2700-2600 which could well be followed by a renewed thrust to new highs later in the summer. At the moment, It seems to us, no clear-cut signals are being given. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow Jones Industrials (12 00) 2895.54 S & P 500 (1200) 357.19 Cumulative Index (7/5/90) 5121.25 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 orthe soliCitation of an offer to buy or sell any secUrity referred to or mentioned The matter IS presented merely for the convemence of the subSCriber While we believe the sources of our Information to be rehable, 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 Investigation and InfOrmation Delafield, Harvey, Taben Inc, 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 different from any Views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabell Inc, 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 secunty mentioned herein IS available on request

Download PDF

Tabell’s Market Letter – July 20, 1990

Tabell’s Market Letter – July 20, 1990

Tabell's Market Letter - July 20, 1990
View Text Version (OCR)

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEM8ER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC 609) 987-2300 July 20, 1990 Wh-,,inthi.!'SRa9JLOyerthe'years, consistently complained about the media's fascination with round numbers. 'We were thusPreparedfor- an OlitbursCof Iiype as tfieDow liit 30000'–a,,'-' – extra-special round number, since it ends in three zeros rather than the usual two. The expected fireworks, however, turned out to be a fizzle, as the market, not surprisingly it turns out, indulged in some rather bizarre behavior. As a preliminary to this discussion, it is necessary to explain the various figures generated by the computation of a market average each day. There is, of course, the close, and there are also available intra-day high and low figures. These statistics, it should be noted, are arrived at by taking the daily highs and lows of each of the average's components and are thus purely theoretical, since those highs and lows never occur at the same time. More recently, with advanced monitoring equipment, tick-by-tick figures for the daily high and low are available, but the historical record for these is lacking. In any case, the Dow, which had moved ahead some 37 pOints on July 12, to 2970, extended that rally on Friday morning and, at around 2 p.m., first penetrated the 3000 level. It pulled back sharply at the close, however, to finish at 2980, having, in the process, achieved the first intra-day peak above 3000. Starting Monday morning, a solid upward progression began, and the magic mark was again breached by noon, with a level around 3008 attained at 3 o'clock. A sell-off ensued, however, and a last-minute rally fell short, producing a close of 2999.75, to date, at least, the average's highest closing figure. On Tuesday, the market moved ahead early and the intra-day figure of 3024.26 on that day stands, so far, as the record. There followed a pull-back and another last-minute rally which aborted in the final five minutes, leaving the Dow unchanged from the previous day, one-quarter of a point below 3000. Another approach was made late Thursday and, as this is written, a further flirtation with 3000 is taking place. It occurred to us, as all of this was going on, that we recalled similar hesitations at round-number levels in the past. Accordingly, we undertook a semi-recreational search of our data … – b ank–toobserve4he–Dow' s-4enavior-'9.s…..it-d'-irst–attained-each-even- h u ndI!edlevel …,B tarting .Lin 1946 .–li- (It had, of course, been as high as 386 in the 1920's, but we started our investigation post-World War ll.) It turned out that a fairly long gap between the aVerage's first attaining such a figure on intra-day basis and finally managing to close there was a not-uncommon occurrence. The following table lists the date of the first intra-day and the first closing high above each even-hundred level to date. In only three cases, in 1946 at 200, 1956 at 500, and 1987 at 2100, did both a high and closing penetration take place on the same day. Level First Rlgh First Close Level First High First Close Level Flrst Hlgh Fust Close 200 300 400 500 600 700 800 900 1000 1100 JAN 11 1946 MAR 51954 DEX 21 1954 MAR 12 1956 JAN 21 1959 APR 11 1961 ml 17 1964 JlIN 19 1965 JlIN IB 1966 JAN 12 1983 JAN 11 1946 MAR 11 1954 00 29 1954 MAR 12 1956 ml 20 1959 171961 ml 28 1964 Jl\N 28 1965 10114 1972 ml 24 1983 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 Am 2119B3 JAN 30 19B5 101 5 19B5 00 5 19B5 FEll 3 19B6 FEll 21 1986 MAR 18 1986 Jal 25 1986 JAN 7 1987 JAN 19 19B7 Am 26 19B3 20 19B5 101 6 19B5 00 11 19B5 FEll 6 1986 FEll 27 19B6 MAR 20 1986 JUL 1 1986 JAN B 19B7 JAN 19 19B7 2200 2300 2400 2500 2600 2700 2800 2900 3000 Jl\N 23 19B7 MAR 11 19B7 Am 3 19B7 JUL 15 19B7 1\00 6 1987 1\00 7 19B9 err 61989 30 1990 JUL 13 1990 ml 5 19B7 MAR 20 19B7 Am 6 19B7 JUL 17 19B7 1\00 10 19B7 1\00 10 1989 Jl\N 21990 JW 1 1990 11717177117 The most notable case of such a hesitation, of course. accompanied the Dow's first dalliance with the 1000 level. This event was, at the time, invested with an incredible amount of social significance. There was even a Broadway musical entitled, How Now. Dow Jones in which, as we recall, the hero could not wed the heroine until the 1000 level was attained, an event which duly took place in the grand finale. The intra-day figure for the DJIA was above 1000 on both January 18-19 and February 9-10, 1966. On each of these occasions, however, it failed to close above 1000, and the latter occasion proved to be the high of the 1962-1966 bull market. It was not until November 14, 1972 that the index was first able to actually close above the 1000 level, a gap of 6 1/2 years between the intra-day penetration and the closing one.. This, of course. is a consummation devoutly not to be wished for in the present case. There were other notable hesitations. As the table shows, an intra-day peak of 1300 was first attained in January, 1985, and a corresponding closing figure not until May. However, the Dow had been at the 1296 intra-day level as early as November 30, 1983, and the gap between that date and the first 1300-close was a year and a half. Now we are not sure any of the above has any significance, and we are certainly making no such claim for it here. Markets, however. result from the collective action of participants, and those participants are human beings with a normal fascination for easily remembered round numbers. In this light, the behavior of the market as such numbers have been attained seems moderately interesting. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow Jones Industrials 02 00) 2999.01 S & P 500 (12 00) 365.60 Cumulative Index (07/19/90) 5164.53 AWTebh No statement or expresslC1\ of opinion or any other matter herein contained IS, or IS to be deemed to be, directly 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 convenience of the subscnber While we beheve the sources of our Information 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. Tabel1 Inc, as a corporatIOn and Its officers or employees, may now have, or may later take, posrfrons or trades Ifl respect to any securitIeS mentioned In thiS or any luture Issue, and such POSlllOfl may be different Irom any views now or hereafter expressed In thiS or any other Issue Delalleld, Harvey, Tabe!llnc, which IS registered 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 herem IS available on request ….

Download PDF

Tabell’s Market Letter – July 27, 1990

Tabell’s Market Letter – July 27, 1990

Tabell's Market Letter - July 27, 1990
View Text Version (OCR)

U' / B I E n.n. ' S JRl Ct lEV n.1EU'''U'IE 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987 -2300 July 27, 1990 with the Dow's having spent the week bumping against the its failure close above that figure, the DJIA provided us with another round number, a Monday-mornirig decline which, at its worst level, exceeded 100 points. What was unusual about this action was not the extent of the decline, but its suddenness. along with the equally sudden recovery of half the loss on Monday afternoon. We would be tempted to call this volatility were we not assured by the academic community that volatility is only a figment of Qur imagination. As noted above. the extent of the decline was minor. The Dow was down 3.17 over four days and there have been, for the record. 23 larger declines since the bull market began in October, 1987 and 10 larger ones since the onset of its current' phase in November. 1988. The drop will assume importance only to the extent that it is part of a larger pattern. It is probably worthwhile, therefore, to view the recent market 3\0 pattern as it has been manifested on point-and-figure charts. The one at left. a 50-point chart of the Dow should be the favorite of the bulls. It illustrates perfectly the base formed between October. 1987 and fall. 1988. Measured across A-B. the upside objective of that base is 3400. IQOO The existence of this objective, as we have been notmg, has constituted the background for market analysis over the last year and a half. The 50-point chart, however, is too condensed to show the nearer-term picture on the Dow and for right. The chart encompasses action since the October. 1989 break. and its salient feature is the base at A-B. also indicating a higher intermedIate-term upside target at 3100. As can be seen, the recent decline, shown by the arrow on the chart, is insignificant. What is significant is the potential top formation, now 2100 limited to C-D, which, if a breakout were to 1000 take place immediately. would suggest a drop to 2680. a decline of a bit over 10—one of 8XJ intermediate-scale proportions. Pessimists, of course. will note that the pattern could broaden into the familiar head-and-shoulders and, eventually, wind up indicating a much lower objective, one which might move through the massive support at. approximately. the 2800-2600 level. Nothing like this. however. appears in the cards at the moment. The pattern for the S & P 500. shown at left. on a two-point basis. is similar. the A-B base suggesting 388. an upside move similar to one projected for the Dow The interesting difference in the two averages is in the recent IIIIi formation. 'The S &; P made only a marginal new 2'I1I!!!!IIIlIIII!l!!!!I 1 – higli on the June-upswing–;and' the 'formation has EE some of the characteristics of a potential double top. Again. hke the Dow. a downside breakout would bring the S & P mto strong support. the 334 objective being in the middle of the 340-322 support area. It would require an ultimate break of that support to cause major concern. A pattern for potential weakness does. indeed, exist, and Vigilance, as always, will be necessary. Last week's decline. though. did little to alter the basic market picture. ANTHONY W. TAB ELL DELAFIELD. HARVEY. TAB ELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (7/26/90) AWTebh 2915.10 354.42 4879.06 No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, directly or indirectly, an offeror the solicltallOn 01 an offer to buy or se1l any securIty referred to or mentioned The matter IS presented merely fOr the convenience of the subscnber 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 herein Any actIon 10 be taken by the subscrIber should be based on hiS own InvestIgation and InformatIon Delafield, Harvey, Tabell Inc, as a corporation and ItS officers or employees, may now have, or may later take, postllons Ot trades In respect to any securtlles menboned In thIS or any future Issue, and such poslilon may be dIfferent Irom any views now or herealter expressed In thiS or any other Issue Delafield, Harvey, Tabellinc , 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 securtty men1lOned herein IS avaIlable on request

Download PDF