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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