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