Viewing Month: August 1990

Tabell’s Market Letter – August 03, 1990

Tabell’s Market Letter – August 03, 1990

Tabell's Market Letter - August 03, 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 August 3. 1990 . – -..—-FriClay morfling'S-a'Cti(m'–Cl1n-be-interpr'etea.-as-'-a– dowITsrCle brealtour'from early' summer'sO-to'-p-;;If – . confirmed. it would suggest, as we noted last week. the first intermediate-term correction of the bull market. It is difficult so far to envision a worse scenario. J The date on this letter has. for us at least. some degree of significance. It has been 20 years, to the day, since Monday, August 3, 1970, on which date Delafield, Harvey, Tabell first opened its doors. We assure our readers that this letter is not going to be a history of our firm, a saga. we fully realize. of highly parochial interest. The anniversary. however, did stimulate us to think about some of the changes in financial markets that have taken place over what is. in historical terms, a relatively short timespan. This rumination concluded that things had both changed and stayed the same. an observation true for both financial markets and the world at large. One thing that has. of course, changed over 20 years is the level of stock prices. On the Friday prior to DHT's first day, the Dow had closed at 734.12. That figure was—when 100 points meant something—up just over that amount from what we now know to have been the low of the 1968-70 bear market. The average, propitiously, was to tack on another 200 paints in the ensuing nine months. and the bull market would continue through January. 1973. Another figure for which 1970 levels seem incredibly low by today's standards is NYSE volume. The final volume on our opening day was 7,650.000 shares and had. throughout the summer, been under 10 million on most days. (We were about to have only the sixth 20 million-share day in history a month later.) As noted above, some things do not change. One such phenomenon is the emergence of cries of woe from the financial community as volume enters a declining phase. A headline in The New York Times over our pre-opening weekend read Tape Watchers Dwindle as Prices Sagll , and Sunday's business section announced Most Brokers Face Financial Trouble. Although this pessimism soon evaporated as the bull market got underway, there was some degree of prescience in it. Next to the ad noting Delafield. Harvey. Tabell's formation in the Times. there appeared a tombstone annouUllin snme CRlifnrniR municiPllls. It-listed 18 underwriters drawn from among the be6.t..nll!rul,,-S-t. – in the-industry. Of-the 18. 6 remaln–in business today. . – – –….. -. That 20-year-old newspaper had some headlines that could have appeared currently. They -'ieoussed Middle East peace talks and noted that these talks were being stalled by Iraqi intransigence. Other items would appear out of place. such as the many store ads for Gimbels. E. J. Korvette, and B. Altman. So would the real estate classified ad offering a four-bedroom colonial home in the heart of Princeton for 52,500. A scan of the financial section for that 1970 day shows a number of items missing. It begins with the familiar tables showing prices on the New York and American Stock Exchanges. Following this, there was a fairly extensive list of OTe quotations—quotations, not prices, NASDAQ's ability to report actual sales being well out in the future. Missing was the page-full of options prices. The small section devoted to commodities trading was restricted to—surprise—commodities, with no mention of index futures and similar instruments. Action In foreign stock markets, now a closely watched indicator, was given short shrift. One sentence was devoted to the Tokyo market. (The Nikkei was around 2100.) There was, interestingly. in Sunday's Times an edltorial envisioning all the wonderful things that the United States could do with its 466 million trade surplus. ;'.lrther reflection recalls many other alterations to the financial climate since our debUt. T'ixed commssions were. at that time, still in effect, and Mayday. 1975 was still five years into the future. 1970 was the heyday of the professional investor and those of us who served him. fAdam Smith's' The Money Game was the Bonfire of the Vanities of its day, and the excitement on the l'all Street scene had not yet moved to the investment banking area. this arena, as we noted a few weeks ago, still being populated by well-dressed. well-bred gentlemen who tended to take long lunches. Junk bonds were as yet unheard of. Not only the industry as a whole but the subject of this letter. technical analysis, has changed in many ways since )97(). Many.indicators that today are widely followed did not ,-then eXIst. The opposite is, of course, also the case. Remember the attention devoted to odd-lot statistics Yet for all of this, there remain constants. Technical analysis is the study of markets, and markets are made by human beings. Today. just as 20 years ago or 20 decades ago. human emotions have remained the same. We expect that they will continue to do so and that technical analysis will still be useful in future markets. which, undoubtedly, will change dramatically In somw aspect but in many ways remain as they always have been. ANTHONY W. TAB ELL DELAFIELD. HARVEY. TABELL INC. Dow Jones Industrials (12 00) 2808.17 S & P 500 (1200) 345.44 Cumulative Index (812190) 5014.02 AWTebh No statement or expression 01 opinIOn or any other matter herem contained IS, or IS to be deemed to be, directly or indirectly, an offer or the sollClfallOn 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 reliable, we In no way represent or guarantee the accuracy thereof nor of the statements made herem Any aellOn to be taken by the subSCriber should be based on hIS own Investigation and mformatlon Delafield, Harvey, Tabelllnc, as a corporation and Its officers or employees, may now have, or may tater take, poSitions or trades 10 respect \0 any seCUrities mentioned In thiS or any future Issue, and such pOSlllOn may be drtferentfrom any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, labelllnc, which IS registered With the SEC as an Investment adVisor, may give advice to ItS IOvestmenl adVISOry and other customers IOdependenlly of any statemenls made 10 thiS or m any other Issue Further mformallon on any security menllOned herem IS available on request

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Tabell’s Market Letter – August 10, 1990

Tabell’s Market Letter – August 10, 1990

Tabell's Market Letter - August 10, 1990
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TABELL9 S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 trc'!'O- …, We.. p,resell August 10, 1990 thsl'ace, tw9ees ago.,apoll)t-and-figure-charJ of th!, Dow along,. with-the- 7 – following comment thereon. What is 'signIficant is the potential top formation which, if a breakout were to take place immediately, would suggest a drop to 2680 one of ' intermediate-scale proportions. Pessimists, of course, will note thst the pattern could broaden and, eventually, wind up indicating a much lower objective, Nothing like this, however, appears in the cards at the moment. The top had broadened a little before, last week, it became actual rather than potential, but it did not broaden all that much. There now exists a worst-case downside objective of 2620, but at that level, the Dow would be deep in strong support, and we would expect that support to hold for the moment at least. We are much happier, in the present instance, being a technician talking about top formations as opposed to an analyst expected to comment on the meaning of the Middle East crisis. Before that crisis occurred, it seemed that most financial comment was centering on supposed massive amounts of institutional cash available and the unlikelihood of immediate severe recession. Suddenly, we are talking about the Inevitability of renewed inflation, coupled with rising interest rates and enhanced recessionary prospects. It is a reasonable suggestion that higher oil prices are bullish for oil stocks, and those Issues, contra market, moved ahead—almost as fast as gasoline prices at the pump. It is harder to explaln the sharp declines in institutional favorites, i.e. Philip Morris falling from 51 1/2 to 42 3/4 over a two-week period or Wal-Mart Stores from 36 3/4 to 28. We were not aware that the Arabs were heavy consumers of Miller beer or regular shoppers in rural American stores. The fact is, of course, that nobody knows just exactly what the meaning of possible military Involvement in the Middle East might be. The reasoning over the past fortnight seemed to be that, In the face of uncertainty, stocks should be sold, and It was most convenient to sell those holdings that had one up-1he most. , ———,——————I- – The sudden and-unexpected' emergence of military action has a precedent. Between June 12 and July 17, 1950, the Dow, in response to the outbreak of the Korean war, dropped 13.55 over 22 trading days. By October it had recovered all of the ground lost and was to move ahead for another two and a half years. However, to return to the technical picture, let us, first of all, assess the damage so far. To date, at least, the Dow, as of Tuesday, was down 9.64, marginally the largest decline since December, 1987. It was certainly not a great deal more severe than the 9.5 drop in January of this year or the four-day drop of just over 8 last October. Such sharp declines are typical of the late stages of bull markets, a description Which, we have repeatedly suggested, can be applied to the present. Nor would we wish to bet against the possibility that, following yesterday's recovery, there might occur another leg down to the more pessimistic downside target of 2620 mentioned above. Such action would produce a 13 correction, surpassing the 10 benchmark for an intermediate-term decline. Such declines are likewise typical of mature bull markets, June 1965 being an example which readily comes to mind. The existing top, in other words, has not, to date, had a chance to broaden further and indicate lower levels than the mid 2600's, and the massive support from late 1989 and early 1990 trading remains, between current prices and the 2520 level on the Dow and the 320 level for the S P 500. Were this support to be broken, the outlook would admittedly be unpleasant, possibly involving erasure of the entire 1982-1990 advance. While this possibility must be recognized, it is not implied by the pattern as it currently stands. Allowing for the possibility of another very short-term downleg, as noted above, we would suggest that another upside attempt is then likely. Such an upswing should bring us to the vicinity, at least, of the mid-July highs, and the character of such a rally would give us a better reading than we now possess as to intermediate-term market prospects. It is, of course, possible that the 2999.75 peak reached on July 16 and 17 will turn out to be the bull-market high. The Dow's failure to penetrate 3000 may become as notorious as its 6 1/2 year failure to better 1000 after closing at 995.15 onjFebruary 9, 1966. However, even assuming this to be the case, it is worth recalling that bull markets tend to remain in the vicinity of their highs for quite some time before the worst part of a bear market occurs. 1987 was, of course, an exception, but we do not, at this point, see a pattern similar to that one. The current downswing can, of course, be seen as yet another link in the chain of evidence indicating market deterioration, and we would not disagree agree with this view. it is less certain, however, that the bull market had, with last month's rally, breathed its last. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (1200) 2732.18 S P 500 (1200) 338.30 Cumulative Index (8/09/90) AWTebh . 4965.11 No statement or expressIon of Oplnton Of any other matter herern contained 1, or IS to be deemed to be, directly or IndIrectly, an offer or the sohcrtatJon of an offer to buyer sell any securrty referred to or mentioned The matter IS presented merely lor 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 01 the statements made herein Any action to be taken by the subscnber should be based on hiS own Investigation and Information Delafield, Harvey, Tabell tnc, as a corporahon and lis officers or employees, may now have, or may later take, posItions or trades tn respect to any secunbes mentIOned In thiS or any future Issue, and such post!lOn may be different from any views now or hereafter expressed to thiS or any other Issue Delafield, Harvey. Tabell tnc. which IS registered With the SEC as an Investment adVisor, maygrve adVice to ItS Investment adVISOry and other customers Independently of any statements made In thiS or m any other Issue Further mlormatlon on any sec\;.mty mentioned herein IS available on request

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Tabell’s Market Letter – August 17, 1990

Tabell’s Market Letter – August 17, 1990

Tabell's Market Letter - August 17, 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 – August 17, 1990 ner.spendingtwo.!,,,eks.hQ!!IiIlg. aroJlndt!! 6!!.i!le,,I,,!he D9WbJoke.shaply–.-below that area on–,, Thursday afternoon and extended its decline on Friday- morning in response to the apparent escalation of the Middle East crisis. The current drop, which is worldwide, is clearly event-driven, reflecting the dependence of the world economy on Arab oil. Similar events, which took the market, and the general public, entirely by surprise, would include the outbreak of the Korean War in June 1950, the Eisenhower heart attack, and the Kennedy assassination. Strangely, declines of this nature are often not too surprising to the technician. In a great many cases, the market, in an event-driven decline, tends to do precisely what had been suggested prior to the eVent, the outside occurrence merely providing a trigger. In the present case, the top foreshadowing the current decline was complete prior to the Kuwait invasion. That event brought about the downside breakout from that July-August formation. We noted last week that the downside target established by that top was 2620, and that level was being approached as we went to press. The market has now returned to massive support, support centering on the 2600-2700 area for the Dow. It would break below that support were it to move below the 2520 level, thus indicating a considerably lower objective. It is the present task of the technician to assess the likelihood of such a break. Before venturing on to the hazardous ground of market forecasting, it is best to start off with incontrovertible fact. The most important such fact is that the Dow closed on Monday, July 16, and again on July 17, precisely at 2999.75, a number under the 3000 level by an amount equivalent to 1/8 of a point on one of the 30 components. At that point, it was up by 72 from its level two years and nine months previous in October, 1987. Subsequent to the test of that low, in December, 1987, there occurred no intervening correction of as much as 10. What took place, simply and unequivocally, is a bull market. We state this obvious fact because it leads us to frame the proper question. Either the bull market-iinlfestlonenae-d on -JtllY-17-;-I99ll-.-or- it -did not. 'Tile -Clit-rent decline-, 'now iii tlie- vic-imty of 12, was either the beginning of a much more serious downswing, or it will turn out to have been simply an interruption in an ongoing cycle upswing. There exist persuasive arguments favoring the former alternative. The most telling of these centers around the abysmal breadth shown by the market for what is, by now, more than a year, The high for our own breadth index was scored on August 8, 1989. At that point the Dow was at 2700, slightly above its level at this moment. Breadth, of course, is markedly below its peak. During the past year, In other words, the majority of stocks in the universe available to individual investors has been moving down, masked by strength in the widely-followed market averages, This is the sort of action which, historically, has been the precursor of bear markets. The problem is, though, that the lead time of breadth on market peaks has, In the past, varied widely, having often extended to well over a year. The start of the breadth divergence which will come to be associated with the end of the 1987-199 bull market almost certainly took place a year ago. Whether that peak was foreshadowing a high in mid-July 1990, or one to occur at a later date, Is another question. Paradoxically, the fact that the Dow has now fallen by more than 10, a drop which, by standard measurements, must be considered intermediate-term, is not an argument in favor of a bear market's having begun, There have been nine identifiable bull markets since World War II, and every single one of these experienced, somewhere during its upward course, an intermediate-term correction of greater than 10. Indeed two of the bull markets, 1953-7 and 1978-81. produced no fewer than three 10-or-greater corrections before finally topping out. In many cases, corrections of this nature occurred late in the bull markets' life cycle, I.e. January-October 1960 and May-June 1965. In other cases they have occurred fairly early (November 1983-July 1984). Since there has been no previous correction in the current advance exceeding 10, it is arguable, in other words, that we are simply- experienCing the normal intermediate-term correction preceding the peak of a'bull – — market, Likewise, as we noted last week, even the hypothesis of a high having been reached in mid-July is not necessarily all that bearish. In most cases, the market, once having attained what turns out to be its peak, returns to an area relatively close to that peak before a serious break takes place. The one exception to this rule, which may give us some pause, is 1987, but that bear market does constitute a unique occurrence in the fact of an otherwise consistent historical record. Our long-term view of the cycle framework remains unchanged, and we continue to feel that the bulk of the advance from 1987 levels is behind us. It remains to be seen, though, whether the Iraqi, military incursion is necessarily Signaling the bull market's end. ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL INC. Dow Jones Industrials (12 00) 2640.59 S P 500 (1200) 328.22 Cumulative Index (8/16/90) 4891.57 AWTebh No statement or expression 01 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 security referred 10 or mentioned The matter IS presented merely lor the convemence 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 action to be taken by the subscnber should be based on hiS own investigation and Informallon 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 securl\les menboned 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 SECas 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 menlloned herein IS available on request

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Tabell’s Market Letter – August 24, 1990

Tabell’s Market Letter – August 24, 1990

Tabell's Market Letter - August 24, 1990
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TABELL-S MARKET LETTER ……- 600 ALEXANDER ROAD, eN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMIlEn NAIIONAL ASSOCIAllON or Sl'CUnIlIES DEALEI1S, INC 160919U7-2JOO r– August 24. 1990 As its writer ages. this letter has. we freely admit, tended to assume an increasingly avuncular tone. We cannot. therefore, resist pointing out that we have, in 36 years of obqerving the stock market I managE(f to live th'0ugh P fpir numbr I)f lNecks r!Jh like the 19ftt one. Experience, we regret to inform our younger readers. does not make them any more pleasant. At Thursday's close. following a three-day. 170-point decline. the Dow found itself down 17.21 from an all-time high which had occurred only 27 tradmg days ago. It had. at that level. not yet reached the standard threshold we have used to test for bear markets. a 20 drop. but there exists. at this writing. little eVIdence that it will not shortly do so. No decline of the post-World-War 11 period has reached the 17 level without ultimately coming to be recognized as a major-cycle bear market. This interpretation is reinforced by the fact that the decline has taken place following a major breadth divergence. a patently false upside breakout which featured even narrower leaderhip and other assorted signs of technical weakness. Thus. the 2999.75 close on July 17 is likely to assume major-cycle significance. Having said this. It must be reiterated that. as pointed out above. we are on familiar ground. The sort of downside momentum which has developed since the onset of the Middle East crisis has not occurred many times in the past and is thus easy to identify. It has generally tended first to manifest itself at a point when the market was fairly close to its low in terms of time. Historically. though. it has first appeared considerably above the ultimate low. What we are saying. in other words. is not that the next few stock-market weeks are likely to be enjoyable. Indeed. just the opposite is the case. What we are suggesting Is that the current downswing. whatever level it may ultimately reach. will. before too long. have run its course. We are not attempting to be flippant in noting that it is possible to characterize severe market breaks as periods Including a large number of days when the market goes down a lot. It is not hard to quantify thIS notion. There have been. for example. no fewer than eight days over the last trading month in which the Dow ha. declined oy m')re thAn I 112. A. onp looks at the past history of cases where the number of such down days has exceeded five. one finds that they have tended to occur at points very close in time to what have come to be recognized as major market bottoms. Examples are June 4. 1962. with the Dow at 593.68 versus a June 26 low of 535.76. May 19. 1970 at 691.40 versus 631.16 on May 26. or August 23. 1974 at 686.80 versus an effective low of 587.61 on October 3. In all of these cases. the market eventually moved lower by a significant alnount. However, it did so within a relatively short tlmeframe. In the current case. the fifth 1 112 drop occurred on August 16. We are, in other words. reaching what is often known, imprecisely. as oversold territory. It is necessary. though. to amplify this comment by saying that. by many measures. we have reached such territory only lately and by other measures not yet at all. Many oversold gauges are dependent on by the breadth of market drops. and yesterday was the first day on which there occurred the number of declining issues typical of climactic action—1640 being the largest figure attained since October. 1987. It should be noted that the delay in attaining this level may be due to the fact that not until recently had oil stocks joined in the general weakness. We have not yet seen anythIng even approaching climactic volume. It has been our practice to define such volume as cases in which tradIng on a given day reaches twice its 25-day moving average. Yesterday's 250 million shares compared to an average of 180 mtllion. A volume climax would be identifiable only were activity to approach the 400-million-share level. On top of the abysmal short-term outlook. it is necessary to point to the disturbing fact of the Dow's breaking below the 2520 level. a fIgure first attalfled in October 1989 and tested in January 1990. We have been noting the Importance of this trading range. which goes back to summer a year ago. for the past two weeks. suggesting. to he honpgt, that the support it provided was likely to hold. I t has. obviously. not done so I thus raising at least the possibility that a major portion of the advance from the 1987 lows may be retraced. If this is to be the case, however, it would, in our view, most likely occur in 8 two-part bear market such as 1973-1974. This will. at least. give us a chance to assess the possibility on any rally that may occur following short-term reversal evidence. The forecast above is, necessarily. pessimistic but. it must be noted, we have been talking about the current market in terms of past major cycle bottoms and have found that, by some measures, at least, the present is quite comparable. We now know these bottoms to have been singular buying opportunities. difficult as thls was to recognize amid the gloom whlch prevailed at the time. ANTHONY W. TAJ3ELL DELAFIELD. HARVEY. TABELL INC. Dow Jones Industrials (12 00) 2509.65 S & P 500 (1200) 319.43 Cumulative Index (08123190) 4510.83 AWTebh No talomenl Of ClIPfOSSlon ot opinion Of any olllel maUOf herelll contatned IS or IS 10 he cJeullicillo 1m, (hrecUy Ot looueclly, an oUel 01 the whcllallon at In allt;r to buy or SLit ,my secuflly reflllwd to or menlloned 1 hlj mailer rs pfCsc(lled mercly for Ih(, coovemence of Ihc' sutJsClrl)(!r Whrle we beheve Ihe source of ourmformahon to te reliable, we 111 no way leprnsfinl or guararltee tllC accuracy Ihereul 1101 01 the talemcnts made heleln Any Clellan to bel tacn bv 1110 subscrrlof'f h()uhj Lou IJ(sed orr lils own uwesllgalron amlmformatron Delalluld, Harvey, 1 ,!Jelt Inc a, a COJPOldliGIl and lIt- ullrcCf!. 01 employeet-, nMy now Imvc, 01 mal' IWr 1,)18 pOt-illorlS or Iratlc..III ,epecl tu lny securrtles IIlt'nllorll'l1 U\ II11S 01 flOy !tllulO Issue CUI(I SUI II pOSlllon may IIC (Iltfc.enIIIOnl any views now or he(ealler expresed In this 01 ,lilY olher rsue Dulnhchl 1t.uvey 1 abell Inc whrch I iOilrteled wrth Ihe SEC as ,In tnVLtmellt mivrsOl, iliaI' give dcivlce In rls Investment advrOIy and lliller customers IncJepenrlenlly 01 any tatelllem! mncle rn IhlS 01 rn any othcr t!uc Further rnlornlllron orl any spcwrly mC!llinnLd he. ern r!. aV'IIIbl, on reqllC!1

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Tabell’s Market Letter – August 31, 1990

Tabell’s Market Letter – August 31, 1990

Tabell's Market Letter - August 31, 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 (6091987-2300 August 31. 1990 — The -messagewe,attemptedto,deliver-inlast week's-Ietter wasthatfor better. or , worse, -the, , stock market found itself in familiar territory. The sort of oversold condition that was at least being approached last Thursday constituted a fairly rare occurrence. The record of market action following such occurrences led us to suggest that. in terms of time although not of level. the market might be approaching a low of some importance. We did not allow for the possibility that the time in question might be measured in minutes. since. as we went to press on Friday. the Dow was under 2500. testing its low of the previous day. Following this test. the market rallied sharply. and. Monday. following less-than-disastrous news from the Middle East. brought sharply higher opening prices. At day's end. an almost eighty-point advance had taken place. By Thursday's close. the DJIA was ahead 6 from its August 23 low and had retraced almost 150 of the 516 points it had declined in July-August. 29 of the ground lost. , If nothing else. the bounceback from the lows provides opportunity to stand back and try to place the rather strange market behavior of summer 1990 within its proper cyclical framework. With the average's having reached an all-time high less than seven weeks ago and having declined from that high by no less than 17. there are only two possible interpretations of the current cycle environment The first is that July 17 saw the high of a 1987-90 buli market and that a bear-market correction. involving the penetration of last week's lows by an unspecified but not insignificant amount wili shortly ensue. The second is that July-August constitutes simply an event-driven interruption to an ongoing advance resulting an a severe intermediate-term downswing. the aftermath of which wili ultimately be new highs for the averages. This latter eventuality appears more and more tenuous. but Its possibility is worth examining. Let us take a look at the July-August drop. It involved a 17.21 fall in the Dow over 27 trading days. dropping off fairly steadily with no interruption of as much as 2. It needs to be noted that. while 17 declines are not uncommon and downswings 18sing27d8Ssoclessare -Irequent; a 17- decline' compressed'into 27 -trading days is oi rare bird. indeed. The final phase of the 1987 drop took the average down 34 in just 11 trading days. 1946 also saw the major portion of a bear market compressed into a short period with a 19.4 fall in 25 days. 1974 produced a 21.4 drop over 26 days. and December 1973 a 20.1 fall in the same 27 days that this one has occupied. Other than those four. there have been no declines of comparable steepness since 1940. One moderately plausible argument consists of the assertion that all this is nothing more than a sample of the way things are going to be from now on. It is possible to contend that. if we can produce a 36 major bear market covering 38 days as was the case in 1987. or an 8 short-term drop within four days as In October. 1989. a 17. 27-day intermediate-term drop is certainly not out of the question. Thus. the optimist would argue. last Thursday may well have seen the downswing's low. We are inclined to think that it is far too early to advance such a suggestion. We noted in last week's letter the fact that. by last Thursday. we had entered the sort of oversold territory characteristic of past major bottoms. This is true. but the technician's life would indeed be a happy one if picking bottoms could be equated to simply measuring oversold conditions. Such conditions. unfortunately. tend to occur repeatedly on the way down during the course of major downswings as well as at the ultimate lows. and assessing the differences is the difficult part of the task. One tool for such assessment is analysis of the rebound following the market's attainment of oversold territory. By one measure. the advance from Thursday's low passes with flying colors. A rise of as much as 6 following a low indeed tends to be more characteristic of bottoms than of bear-market interruptions. Unfortunately. by most other standards. last week fails the test. Monday's 1453 advancing issues. 73 of those traded. fell short of providing reversal evidence. and volume action was. of course. abysmal. If volume is the friend of the bull.-as our colleague. Alan Shaw. has noted. the bull was certainly lonely this week. The 79-point-recovery day saw only 160 million shares traded. and the subsequent three days saw volume tail off to even lower levels. True reversal volume at this stage would be in excess of 250 million shares. and a great deal more certainly would apply if volume should approach the 400 million-share level. It would indeed be encouraging if such reversal evidence could manifest itself. preferably following a successful test of last week's bottoms. Until this takes place. though. caution should be the order of the day. ANTHONY W. TABELL DELAFIELD. HARVEY. TAB ELL INC. Dow Jones Industrials (1200) S & P 500 (1200) Cumulative Index (8/30/90) AWTebh 2592.57 317.59 4679.55 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 solicrtatlon of an offer to buy or sell any secUrity referred to or mentIOned The matter IS presented merely for the convenience of the subSCriber While we beheve the sources of our Informallon 10 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, posilions or trades In respect to any securities 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, Taben 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 mformatlon on any secunty menlloned herein IS available on request

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