Viewing Month: October 1990

Tabell’s Market Letter – October 05, 1990

Tabell’s Market Letter – October 05, 1990

Tabell's Market Letter - October 05, 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 ——- ———————'– October 5, 1990 The expected rally earlier this week from a short-term oversold condition has done little to change the longer term outlook of the stock market. After breaking the August 23 low of 2483.42, the DJIA has rallied ninety points (3.68) and, lacking conviction, now appears to be in the process of testing the recent low of 2427.48 posted just one week ago. The stock market continues to search for a level necessary to establish a major market low. However, improvement in many underlining components needed for such a market bottom still seems to be missing, and it is becoming increasingly apparent that evidence for such a search may be found at lower levels. DOW JONES INDUSTRIAl. VERA Two of these important components, daily advanceldecline data and daily NYSE volume, have done little to support the thesis that conditions for a major market low are at hand. Daily breadth continues to deteriorate. As the chart above shows, the stock market high on July 17 at 2999.75 was clearly not confirmed by a corresponding high in market breadth, the center line in the chart. In fact, going back to the October, 1989 high in the DJIA, the daily advanceldecline line also failed to confirm this high in the market. These non-confirmations have been mentioned often, ad nauseam, by this letter over the past few months, and there still appears to be no improvement in sight. Assuming volume Is a function for the demand for stocks, a sustained rise in the market should be supported by a comparable rise In volume. This is shown by utilizing a 100-day moving average of daily volume, the lower, thicker line on the chart, which reflects the current position of this series. For the 100 days ended December 18, 1987, volume averaged over 205 million shares, an ail-time record. Since then, as the chart shows, it has turned down reaching a low level of 142 million shares in January, 1989 and heince then recovered te 11 current level of 160 million shares. With daily volume under 100 million shares in early September, it is hard to see anything approaching the climatic volume levels of 400 million that were experienced in October, 1987 and October, 1989. Because it would be improbable for a major bull market to commence against a declining trend in volume, it becomes important to watch for improving daily volume. RJScg Dow Jones Industrials 02 00) S P 500 (1200) Cumulative Index (014190) 2502.23 309.73 4370.76 ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL INC. 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 secunty referred to or mentioned The matler IS presented merely for the convenience of the subscriber While we beheve Ihe sources of our informatIOn to be reliable, we In no way represent or guarantee the accuracy thereof nor oltha statements made herein Any acllon to be taken by the subSCriber should be based on hiS own investigation and In'ormatlon Delafield, Harvey TabeUlnc ,as a corporation and ItS officers Of employees, may now have, or may later take, pOSItions or trades In respect to any securilles mentIOned In this or any future Issue, and suph position may be different from any views now or hereafter e)(preSsed In this or any other Issue Delafield, Harvey, Tabelllnc, which IS regIStered wrth the SEC as an Investment advisor, may gIVe adVice to ItS If\vestment advIsory and other customers Independently of any statements made In this or In any other Issue Further Information on any security mentioned herein 15 available on request

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Tabell’s Market Letter – October 12, 1990

Tabell’s Market Letter – October 12, 1990

Tabell's Market Letter - October 12, 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 October 12, 1990 The -Dow J6nes-Imiustriai-Avera-ge,- sinc1!reaching -its-high -on-July -17 – at -2999.75, has, in- the relatively short period of 61 trading days, corrected Itself 21.16 through Thursday of this week. The correction has been done in identifiable stages and is, perhaps. instructive to review. The initial decline of 17.21 to the August 23 low of 2483.42 (27 trading days) was followed by a 6 advance (4 trading days). A second decline, which penetrated the August low, of 7.79 to the September 27 low of 2427.48 (20 trading days) was followed by an advance of 3.97 (7 trading days). This in turn was followed by a third correction, which penetrated the September low, of 6.29 to the October 11 low of 2365.10 (3 trading days to date). What is apparent from this process is the inability of this event-driven stock market to sustain any meaningful rally from short-term oversold conditions that were present at the time each low was reached. In other words, every time the market attempts to reverse the present downtrend, selling pressure reappears, and the downtrend continues. At what level will this decline finally reach a major-cycle bear market low A logical long-term downside objective, with which this letter has been comfortable, continues to be the 2200-1950 area of the DJIA. This figure is derived from the 50-paint-unit chart on the DJIA shown on the —right.– B tional top area of 1989-summer 1990, the above-mentioned objectives can be determined. COincidentally, these objectives are also in the strong support area from the previous base formed between 101 InULl lAiI .'. !I) POtU IIIIll October 1987 and fall 1988. Analysis of the five-point-unit chart on the below of the Standard 10 Poor's 425 confirms the extent of the potential correction in the stock market. The recent downside breakout indicating an objective of 270 would bring the SloP 425 into strong support in the middle of a comparable 300-250 area. The scenario outlined above is, of course, very logical to us. It should not be entirely unexpected for a market that has risen 72.52 over a two-and-a-half year period to correct itself within the framework of the '00 suggested correction to the 2200-1950 area in the DJIA, a un … .. . potential decline of approximately 25-33. But logic does not always apply to the stock market, and what we must still allow for is the possibility of an eventual break of the major support areas in these two market averages, an unnoticed event that has already taken place in the Japanese NIKKEI Average and The Value Line Composite. ROBERT J, SIMPKINS, JR. Dow Jones Industrials 0200) S & P 500 (1200) Cumulative Index (10/11/90) RJS ebh 2400.99 295.73 4158.02 DELAFIELD, HARVEY, TAB ELL INC. No stalementor expression 01 Opinion or any other matter herein contained IS, or IS to be deemed to be, directly or mdlrectly, an offer or the solicitation of an offerto buy or sell any security referred to or mentioned The matter IS presented merely for the convenience of the subSCriber While we believe the sources of our mformaliOn to be reliable, we mno way represent or guarantee the accuracy thereof nor of the statements made herein Any action to be laken by the subSCriber should be based on hiS own IIwestlgalion and InformaliOn Delafield, Harvey, Tabell Inc, as a corporation and ItS officers or employees, may now have, or may later take, pOSitions or trades In respecllo any seCUrities mentioned In thiS or any future Issue, and such pOSition may be dlffersnl 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 mdependently of any statements made In thiS Of In any other Issue Further Information on any S8cunty menboned herein IS available on request

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Tabell’s Market Letter – October 19, 1990

Tabell’s Market Letter – October 19, 1990

Tabell's Market Letter - October 19, 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 JI October 19. 1990 We have absolutely no apologies for having spent the last month on vacation in Australia. First of all. watching the stock market decline is neVer a pleasant experience. and we escaped such an experience by being away over the past four weeks. Secondly. absence often involves surprise. unexpected market behavior. This was' not tl'\ieiTItiitr!present case;–howevel;-since the 'aeterioFation -.- that occurred prior to our departure led to the expectation that the market would be lower on our return—as. indeed, it was. Among the events that took place on our holiday was the Dow's exceeding the 20 threshold we have normally used to measure cycle-magnitude bear markets. Thus. July 17. 1990 can now officially be noted as the ending date of the bull-phase which began in October 1987. and the technician's current task will be to identify the low of the bear phase of that cycle. For comparison purposes. we are listing the eleven completed market cycles from World War 11 together with the statistics for the current decline to date. There is nothing in these numbers. it must be admitted. that suggests that the current downswing is oVer. As the table shows. the decline in the downswing to date is just 21. and every bear market since 1961 has been deeper than that figure. Secondly. it STARTDJIAENDDJIA7.CHG DAYS has consumed so far only 61 trading days. a timespan which Ma'J 2'1 1'146 212. 50 act '1 1946 163 12 -23 24 '13 Jun 15 1948 1'13.16 Jun 13 1'14'1 161 60 -16 34 281 must be considered inordinately Jan 5 1953 293.79 Sop 14 1953 255 49 -13 04 176 short. There exists a natural Jut 12 1'157 520 77 act 22 1957 419 7'1 -19 39 71 tendency on the part of investors Dec 13 1'101 734 '11 Jun 26 1962 535 76 -27 10 134 to remember the most recent cycle Fe. '1 1966 '19 1 Oc t 7 1'166 744. 32 -2. 21 167 with the most clarity. and as Dec 3 1'168 985 21 Ma 26 1970 631 16 -35 '14 367 precipitous, the bear market of August – October 1987 may have ; ; .; 2 ; g . 481 362 Apr 27 1'181 1024.05 Aug 121'182 77692 -24 13 328 been. it was pleasantly short. Aug 25 1'187 2722.42 act 19 1'187 1738.74 -36 13 38 completing itself in. just 38-,.;J;U.;tI.;7,.1.;9..;'1..0,…2;'19'17..;5….0;C,.t-I..1—19'10 2365 10 -21 16 61 trading -. – – – . – – days-; .—-.— The table quite clearly shows this type of action is highly unusual. as most downswings have tended to consume more time than the 61 days the present one has occupied. Even the relative shortness of the 1957 decline is misleading since the real top can be said to have occurred over a year before. in April 1956. Absent reversal evidence. therefore. there is little reason to expect the present downswing to be over anywhere in the near term. and there is a fairly strong likelihood that it may continue some time into 1991. Reversal evidence. as Bob Simpkins noted in this space over the past four weeks. has been conspicuous by its absence. There have been to date three distinct declining phases. since the July 17 high of 2999.75. The first ended on August 23 with the Dow at 2483.42. The next important low was on September 27 at 2427.48. and after an early October rally. another new low was posted on October 11 at 2365.10. This has been the lowest figure reached to date. None of these three bottoms can be said to have demonstrated action resembling a selling climax. Only on the first of the three. back in August. was an oversold condition reached and on none of them has there taken place the kind of increased volume which one would associate with a climax decline. At best. there has been some indication. in recent market action. that the decline has lost some of its momentum. It has been pointed out. for example. that the August 23 market low market saw 707 new daily 52-week lows. while the two SUbsequent bottoms reflected new low figures less than this. 407 on September 27 and 375 on October 11. Unfortunately. a glance at the record suggests that this action is less bullish than it might appear. Indeed. in most cases. the peak number of new lows is achieved well before the average's bottom both in terms of time and of percentage drop. A notable example is the 1973-1974 decline where the highest daily new low figure achieved was 858 on May 21, 1973. The final bottom in the market occurred almost a year and a half later in December 1974. Admittedly. there were only 297 lows on that date. but the Dow had declined to 577.60. Inve'stor's also-tend -to remember-th— 1981198Ybottom as characterized by a decreasing downside momentum and fewer and fewer lows. This is indeed true. the peak new low figure having been 590 on September 28. 1981. However. the Dow was at 842.56 and did not bottom until 211 trading days later in August 1982 at 776.92. Thus. eVen if August's new low figure is never exceeded on this downswing, the market is not immune against further decline. As Bob noted last week. the most plausible downside targets are in the 2200-1950 area. which would produce an ultimate decline in the 26 to 35 range. This. as the table above shows. would be a totally conventional bear market. As these levels are approached. it would be normal to expect market comment to become more and more apocalyptic. The most plausible reason for such comment would be the structural weakness of the U.S. financial system. and it must be recalled that there is. in almost all bear markets. a plausible reason for the market to be going down. this plausibility being the most obvious at just about the time the market is reaching its low. However unpleasant they may be though. history suggests that bear markets are a perfectly normal part of cycle-market behaVior and present. at their lows. unique buying opportunities. Such will be the eventual case with the current downswing. Dow Jones Industrials (1200) 2478.96 ANTHONY W. TABELL S P 500 (1200) CumulatiVe Index Cl 0 /J 8/90) 309.39 4187 42 DELAFIELD. HARVEY. TABELL INC. 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 soliCitation of an offer to buy or sell any secUrity referred 10 or mentioned The matter IS presented merely lor the convenience of the subscnber While we believe the sources of our Informallon to be reliable, we In no way represent or guarantee the accuracy thereof nor olthe statements made herein Any acllon to be taken by the subscriber 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 securttles mentioned In thiS or any future Issue, and such posilion may be different from any views now or hereaiter 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 mformalton on any secunty mentioned herein IS available on request

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Tabell’s Market Letter – October 26, 1990

Tabell’s Market Letter – October 26, 1990

Tabell's Market Letter - October 26, 1990
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———- TABELL'S MARKET LETTER I ——————————- 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 October 26, 1990 The sharp rally of last Thursday and Friday, which moved the Dow Industrials up some 200 points on an.intra-day basis, failedto follow. through.in thiswp;ek's .trading ,which. could .. aLbest , be '. . described as mixed. There was, in the week's action, little to suggest that the bear market, for which the low so far is 2365.10 on October 11, does not remain intact. One lonely bright spot, however, shines out on the current dreary market scene. This is the action of utility stocks, which have been dramatically outperforming the rest of the market since late last summer. The DJIA, as we noted last week, has posted 8 series of three consecutive lower lows. in late August, late September, and mid-October. There exist three corresponding lows for the Dow Utilities, but these lows show an obvious uptrend—187.94 on August 24, 195.55 on September 28, and 201.02 on October 11. On October 22, the Utility Average closed at 210.89, a level 10.44 above its August low. —-'-' ,0 2I ,,I 2 b I, I ,7, I . DOW J1JJJJIURU …..,…' IJ , ,I .J I ,., .. II II II II II II , II DOW JONES I, I ! It4DU. RI 6,L VERAbE ,-..,.-,—-1 It — 1,I '— I;1,- -.. – – I I'I,.1.. ! ., 4// I ' NV ( II 11 I II I r l' I I II II II liy II ; I !, I II II II II II I I ,I ,, , I ,I I, I, It has been suggested by many commentators that this action is builish, and it cannot be denied that it has some positive implications. These derive from the fact that, in bear markets, the Utility Average often bottoms well before the Industrials, and current utility action is, therefore, consistent with October 11 having been a bear-market low. The solid lines on the chart above show all Dow Jones Utility low points since 1949, using a 10 filter to define highs and lows, and it can readily be seen that these lows have often occurred well in advance of DJIA bottoms. There exists, however, a practical difficulty in using the Utility Average as a forecaster for the rest of the market. This Ues in the difficulty of recognizing when a low has actually occurred. We know, for exsmple, that the most recent low for the DJUA occurred in August, but it is entirely conceivable thatthis J!lW may later. 11,, exceeded. along with, presumably, low.erlevels. for the Industrials. One solution to this problem is to recognize a Utility low as having occurred only after the average has advanced by 10. This, of course, is what has occurred in the present case, and past such occurrences are noted by the dotted lines on the chart. Again, there are a significant number of cases when this action occurred in the early stages of bull markets. There have, however, been some false indications. n January, 1970, for example. the utilities had fallen 25 from their 1968 high. They then posted a rally which exceeded 10 on March 2, 1970, at which time the Dow was at 780.23. It, of course, later reached a low almost 20 lower at 631.16 the following May. A similar utility rally took place in early 1974, and the market declined throughout that year, ultimately reaching much lower levels. Good utility action at the moment. then, is basically positive, but we would await more definite evidence of market strength before relying on it in the present instance. ANTHONY W. TAIlELL Dow Jones Industrials (1200) 2468.07 DELAFIELD, HARVEY, TABELL INC. S & P 500 (1200) 307.07 Cumulative Index (10/25/90) 4250.84 AWTebh 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 security referred to or mentioned The matter IS presented 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 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, posliions or trades In respect to any securities menl10ned 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, Tabellinc , which IS registered With the SEC as an Investment adVisor, may give adVice 10 rts Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further information on any security menlloned herein IS available on request

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