Tabell’s Market Letter – November 16, 1990

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 November 16, 1990 The essential stock market conundrum remains the same one that has existed for more than a month now —whether or not we have seen the lows of the bear market which began on July 17'at Dow 3090-and,-eofer-at-least,-hss-scored-its-Iowat-2365.1Oon.October II. We have two basic figures which enable us to compare the hiatus of the current downswing to previous interruptions of major declines. First, the Dow, through Wednesday's high, h.ad advanced 8.2 from its October low over 24 trading days and, correspondingly, there have been, through yesterday, 25 days since the averages last posted a new low. No. of Longest No.of Bear Market \ No.of Largest No.of Rally. Interval 20-0ay Start -D-e-c-l-in-e- Days \Rally Days 8\ Set.Lows —— ——– ——— Intervals ——— Sep 3 1929 47.9 56 18.9 2 2 11 0 Apr 17 1930 86.0 665 35.1 28 15 103 8 liar 10 1937 49.1 317 14.8 51 5 98 1 Nov 12 1938 41. 3 1040 23.5 127 5 450 6 lIay 29 1946 23.2 93 4.2 4 2 24 2 Jun 15 1948 16.3 281 8.1 22 1 77 4 Jan 5 1953 13.0 176 5.3 42 0 53 3 Apr 6 1956 19.5 389 14.5 104 2 163 4 Dec 13 1961 27.1 134 15.0 41 0 51 1 Feb 9 1966 25.2 167 6.2 13 0 46 3 Dec 3 1968 35.9 367 7.7 54 0 87 5 Jan 11 1973 45.0 481 15.9 46 4 146 5 Sep 21 1976 26.9 362 8.7 35 1 96 4 Apr 27 1981 24.1 328 9.3 43 2 101 4 Nov 29 1983 15.6 164 5.0 18 0 30 4 Au9 25 1987 36.1 38 5.9 9 0 13 0 Ju1 17 1990 21. 2 61 8.2 24 1 25 2 . – .— – The above table provides some statistics for 17 bear markets, beginning back in 1929 and including the current one to date. It shows, for each downswing, the start day, the extent of the decline, and the number of trading days it lasted. There have, as the table shows, been declines considerably less extensive than the current one, but, it is important to note, not many have been shorter. This is part of the reason we have felt that the downswing has longer to run. The Dow's ability to pose a 8.2 rise is, we must admit however, impressive. We have often remarked that the oft-cited bear-market rally is, largely, a mythical beast, and the table shows that a large number of the declines, since World War II at least, have never posted bear-market rallies as great or as long as this one. Furthermore, in many cases, raliies of this extent have often occured not during the course of the bear market, but in the process of base formation which followed. These figures tend to buttress the contention that the Dow could well have hit its low back in October. The lack of a new low for 25 days is less decisively bullish. The table demonstrates that many bear markets have had much longer interruptions, including five of longer than 100 trading days in length. Most past bear markets have had multiple interruptions of 20 days or longer, thus suggesting that the present decline has a bit more downside probing to do. In addition, as we noted lust week, the rally has fai!.ad to demonstrate the breadth and volume characteristics normally shown at major reversals. This action continued in this week's trading. Wednesday's rise to the rally high of 2559 produced only modestly above-average volume and fewer than 1000 advancing stocks. The rally of October-November is, then, a fairly impressive phenomenon, but, in the absence of confirming statistics, we continue to feel that 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 (11/15/90) 2535.39 317.17 4356.75 AWTth No statement or expression of opinion or any o1her mailer herem contained IS, or IS to be deemed to be, directly or Indirectly, an offer or the sohCltatlOnof an oHerto buy or sel! any secUrity referred to or mentioned The mailer IS presented merely for the convenience of the subSCriber While we beheve Ihe sources of our Information 10 be rehable, we In no way represent or guarantee the accuracy thereof nor of the statements made herem Any acllon to be taken by the subSCriber should be based on hiS own Invesllgatlon and Information Delafield, Harvey, Tabel! Inc, as a corporalion and Its oHlcers or employees, may now have, or may later take, positions or trades m respect to any securities menMned In thiS or any future Issue, and such pOSI\!on may be dlRerent 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 to ItS Investment adViSOry and other customers Independently of any statements made ' thiS or m any other Issue Further InformaMn on any secUrity mentioned herein IS available on requesl