Viewing Month: December 1990

Tabell’s Market Letter – December 07, 1990

Tabell’s Market Letter – December 07, 1990

Tabell's Market Letter - December 07, 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 December 7, 1990 We are not impressed. We would dearlylove to find, in the stock markers current behavior, some evidence that it had, in October, tak-en a -meaningfuf turn-to the upside; – Instead the -peace rally, whiGh -brought-most -, averages to new post-october highs in late-Wednesday and early-Thursday trading, fizzled out after yesterdays first half-hour. The whole affair gave one the impression of a market that might have been being manipulated by Saddam Hussein. It seems to us obligatory, after almost two months. to either fish or cut bait as regards the question of whether October 11, 1990, with the Dow at 2365.10, was a major cycle low. A meaningful bear-market rally is, as we have noted in the past, largely a mythical beast. The current move, a 10.4 advance for the Dow covering 38 trading days, is about as long and extensive as these things get. We may find ourselves dragged to the optimistic side by future evidence of an important turn having occurred in October, but we are not convinced by the evidence shown to date. Assessment of the markers current mood reveals, it seems to us, a nagging fear that a bull market may somehow sneak up on us. This fear runs counter to past experience, which suggests that bull markets do not arrive quietly, but announce themselves, early in the game, with rolls of drums and blares of trumpets, It may, in this connection, be constructive to examine the arrival of the last three major upswings—in 1982, 1984, and 1987. Following the August 12, 1982 low, three days of moderate firmness produced an advance of 4.9 on August 17. This is equiValent, at today's level, to an approximately-127-point rise for the DJIA. There were, on that day, 1564 advancing issues, and the 92 million shares of volume, approximately twice previous normal levels, were followed by 132 million shares changing hands on August 18. Some 96 of the 17th's volume was on the upside and, despite the fact that the market had been going down all year, 108 new highs for the year were achieved, foilowed by 208 on the 18th and tailies in excess of 200 for four straight days the following week. New lows became non-existent, this figure dropping under ten and remaining there for five months foilowing August 23. — Sometwo years later,JnJuly,,-nd August 1984, what has variously been described as a premature bear market and a major intermediate-term decline, came–to an -end-. l'he-low- tooKpiace-.oil-July- 24. –.. –.. at 1086.57 for the Dow. The first major rally, on August 2, saw a 2.8 rise for the average (72 points in today's terms) and 1490 advancing issues. Volume, which had, through July, regularly been under the 100 -million-share level, reached 236 million shares the following day, 88 of it on the upside. By August 3, daily new highs had reached over 100 and total daily new lows remained under 20 from August through December. , We all, of course, remember October 19, 1987 since it was, of course, the largest one-day decline in stock market history. We tend to remember October 21, 1987 (the largest advance in 54 years) less clearly. The Dow, on that day, rose 186 points or 10.2. An astounding 1756 issues advanced, and there were 1611 advances a week or so later. Volume on the day of the rally, while under the record setting levels of the two prior days, was almost 450 million shares, a figure that has not been equaled Since, and 94 of it was on the upside. Due to the extended steepness and breadth of the decline, new-high-Iow figures did not improve, in this case, until well into 1988. Contrast these markets' fireworks with what October and November 1990 have been able to bring forth so far. The largest percentage change posted since October 11 has been 2.78 achieved by the 51-pOint rise on November 12. That was also the best day for breadth, so far, with 1163 advancing iSBues. and there have been. since October, only eight instances of advancing stocks reaching double digits. There were just 1087 advancing issues (with almost 500 declines) this Wednesday. Volume has indeed improved someWhat, of late, having attained 205 million shares on Wednesday and increased to 256 million shares on Thursday. This constitutes about a 50 increase over the roughly 160 million shares that daily volume has been running. At no time during the two months foilowing October 11 have we seen upside volume running in excess of 81 of the total. Until Thursday there had been oniy one day since October when daily new highs exceeded new lows, and even yesterday there were 33 new lows. These mediocre numbers are simply not the sort of thing that nurm6.11y characterhcs turni1b' pointe.. Now there has. of course. been the rare case of a bull market arriving stealthily and unannounced, the most recent example having occurred in February-March 1978. That advance, however. was unusual in a number of ways, in that. in the first two years of its life. it. managed. at best. to move a bare 22 off its low and had returned to within a couple of percentage points of that low in March, 1980. None of this is to say that market action has not improved somewhat. The point -and -figure charts are producing upside breakouts, but one is forced to question these breakouts in light of the fact that. at the week's high level. most indices were encountering heavy overhead supply. This supply will. of course, eventually be penetrated. Our question is whether this prospect is a likelihood for the near future. ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL INC. Dow Jones Industrials (12 00) 2589.36 S l P 500 (12 00) 328.25 Cumulative Index (12/06/90) 4537.17 AWTth No statement or expression of opinion or any other matter herein contained IS, or is to be deemed to be, dlrectiy or Indirectly, an oHer or the sollcltauon 01 an oHer to buy or sell any seCUrity referred to or mentioned The matter IS presented merely lor the convenience 01 the subscnber While we beheve the sources of our Information to be rehable, we In no way represent or guaranlee the accuracy thereof nor of the statements made herein Any action to be taken by the subSCriber shoufd be based on hiS own Investigation and Information Delafield, Harvey, Tabell Inc , as a corporation and ItS officers or employees, may now have, or may later take, posrtlons or trades In respect 10 any secunlles mentioned In thiS or any future ,;,sue, and such position may be dlNerent 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 rts Investment adVISOry and other customers Independentiy of any statements made In thiS or In any other Issue Fur1her Information on any secUrity mentIOned herein IS available on request

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Tabell’s Market Letter – December 14, 1990

Tabell’s Market Letter – December 14, 1990

Tabell's Market Letter - December 14, 1990
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TABELL'S MARKET LETTER 1 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 December 14. 1990 Long-time readers are well aware of the fact that this letter tends to be a slave to tradition. For more year.s thanl!e cal'e to count. the lasLth!,eesus.oL.!!acb.year have..consistedof (1) a review of the year just passed. (2) a forecast for the upcoming -year. and (3) a discussion -o( (h seasonal phenomenon of the year-end really. In accordance with this tradition. the subject of this week's piece will be an overview of the stock market year. 1990. To begin with. it was a down year. At its current level. around 2600. the Dow was below its December 29. 1989 close of 2753.20. although. admittedly. not by all that much. It has arrived at its present level. however. by a somewhat circuitous route. 1990's year-end rally ended on the first trading day of the year. when the average posted an almost 60-point gain to close at 2810.15. The entire month of January was occupied by the steepest decline in over two years. an intermediate-term correction of 9 1/2. which dropped the index to 2543.24. However. by mid-July all the ground lost and then some was regained. In one of those numerological quirks beloved of market historians. the Dow's close was 2999.75 on two successive days. July 16 and July 17. the average reaching above the magic 3000 level on an Intra-day basis. but never managing to clos,e there. It has still not done so. The slide which followed produced a 20 decline in the major averages. with the low. 2365.10. reached on October U. The two months since that date have seen a rather desultory recovery. the Dow having recouped some 40 of the ground lost as of this week's high. This less-than-startling 1990 action needs. of course. to be put into context. It came following what had been. in 1988 and 1989. two rather good years. Essentially. the last three years of market action consisted of a 72 advance from October 19. 1987. to July 17. 1990. followed by a correction from July to October. What needs to be stressed about this pattern is just how boringly conventional it is. The percentage advance of 72 is almost identical to that of March. 1978 to November. 1980 (62). October. 1974 to September. 1976 (73). and May. 1970 to January. 1973 (74). Bull markets ending in 1961 and 1966 posted similar advances. Likewise. the 33-month length of the upswing. – – – Our- teaaltdhaorueghares-liwgehltllyawoanrethtehasfh-owret side. is not all that unlike previous upward cycles. are -rir-rit6elievers inlliepremise thattfie sfook–'–market ;—— – exhibits cyclical behavior. We have been able to identify some 25 completed cycles since the Dow was first computed in 1886. These cycles. measured from low to low. have averaged 46 months in length and have thus been given the common appellation four year cycle. It is only necessary to repeat the dates of major market lows in the modern era—June 1949. September 1953. December 1957. June 1962. October'1966. May 1970. December 1974. March 1978. Auust 1982—to see how ubiquitous this particular pattern has been. Admittedly. there has been of late. some difficulty in interpretation. As recently as August 1982. it will be recalled. the Dow was as low as 776. By August 1987. it had advanced 250 over 5 years. after which It declined 36 in two months. It is hard to know whether to term this a 62-month. abnormally long market cycle. or to break it up into two unusually short cycles. calling the 16 drop of November 1983 to July 1984 a cycle bear market. It does not really matter. It is patently obvious that October 1987 constituted a major low point. 38 months have passed since that date. 1990. In other words. fits precisely into the four-year-cycle pattern. The first six months of the year capped a 2 1/2-year-long advance. and the decline so far has produced the 20 drop qualifying it as a bear market. The only thing that remains to complete the context is the question of whether the bear market ended two months ago. or whether it might continue into next year. Both the extent and the length of the decline so far remain somewhat below average. but the hypothesis of a low's having occurred in mid-October is not that wildly out of line with past behavior. It must be also noted that a still further decline into early 1991 would be even less out of line with market history. but that is a proper subject for next week's letter. We would be remiss were we not to include, in this review of the past few years, some discussion of the behavior of secondary stocks. The Value Line Composite. as good a proxy as any for these stocks. was. in June 1983. at 208.51. The Dow at that time was in the mid 1200's. The Value Line is now around 196, lower than it was over seven years ago. The DJIA has, oVer the same period, more than dOUbled. The past year. and indeed a large part of the last decade. have constituted of a major bear market for smaller stocks. especially if this action is considered relative to that of the larger companies included in the Dow and the S & P 500. This statistic !l'ay be as important to a year-end review as is the action of the averages discussed above. This. then. will be the context for our forecast next week. a bull market completed in mid-1990. a subsequent bear market which mayor may not be over, and ongoing inferior price action for secondary stocks. Whether these particular attributes will remain or disappear in 1991 will be the subject of next week's letter. ANTHONY W. TAB ELL DELAFIELD. HARVEY. TABELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (12/13/90) AWTjb 2587.38 326.11 4546.18 No statement or expressIon of oplmon or any other matter hereIn contaIned IS, or IS to be deemed to be, dIrectly or Indirectly, an offer or the sohcltatlOn of an offer to buy or sell any secunty relerred to or mentIOned The matter IS presented merely for the convemence of the subscnber While we beheve the sources of our InlormatlOn to be rehable, we 10 no way represent or guarantee the accuracy thereof nor of the statements made hereIn Any aCllOn to be taken by the subSCriber should be based on hIS own InvestlgallOn and mformallOn 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 securitIes mentioned In thIS or any future Issue, and such pOSlllon may be dJfferent from any vIews now or hereafter expressed 10 thiS or any other Issue Delafield, Harvey, Tabellinc , which IS regIstered WIth the SEC as an Investment adVIsor, may gIve adVIce to Its mvestment adviSOry and other customers mdependently of any statements made 10 thIS or In any other Issue Further informatIon on any security mentioned herein IS avallable on request

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Tabell’s Market Letter – December 21, 1990

Tabell’s Market Letter – December 21, 1990

Tabell's Market Letter - December 21, 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 – – — – —-. – – -' – – . –December 21, 1990-;, Our 1991 forecast should hardly be surprising to regular readers of this letter, since we have, essentially, been reiterating it for the past two months. Essentially, that forecast calls for the market to move lower in the early part of 1991, at least testing and, in all probability, breaking the October 1990 low. Once this unpleasantness is out of the way, we would look for a major bottom and the inception of a cycle bull market that should carry, not only through the latter half of 1991, but well beyond. Asked for the time and level of this bottom, we would hazard an educated guess, subject to revision, of sometime in the first quarter at approximately 2150 on the Dow. Let us briefly enumerate some of the factors which argue in favor of this forecast. It should be noted, first of all, that the drop from July through October of 1990 lasted for only 61 trading days, barely 2 1/2 months. With the sole exception of 1987, every bear market in this century has lasted longer. Additionally, such markets have involved a decline greater than the 20 the Dow has dropped so far. Moreover, as we have pointed out almost weekly in this space, there has been an almost total lack so far of the sort of selling-climax or takeoff-rally type of behavior which has, historically, characterized the transition from bear to bull markets. Finally, the point-and-figure pattern for the average suggests the strong possibility of the 2150 downside objective referred to above. Other reasons exist, but these will suffice. There exist, of course, alternative scenarios. The most obvious such alternative is the bullish one, this, unsurprisingly being the one that most investors would like to see turn out to be correct. This interpretation holds that the market did, indeed, bottom on October 11, and that a new bull market, of which the 11.18 advance through December 20 is a part, began at that time. If such is the case, of course, 1991 should turn out to be an entire rising year with an eventual move to well above the 3000 level. – – !!!-his vicw-is …\Je ….tllink ,-excce1ivc–!J-7'ctimictic. wcdocurr.nted- ccmc-!easone-fc! ocur-feeling- — —— – – thus in the technical factors noted above. There are, in addition, some economic arguments. It is now almost universally agreed (although not yet officially announced) that the U.S. economy is in a recession. We have, as technicians, been pointing out for years that the market leads the economy rather than the other way around, and we would expect the present market to bottom well before the end of the current economic contraction is reached. It would be unusual, however, for the market to reach its low almost at the outset of the recession. which would be the case were October 11 to turn out to have been a bear-market bottom. By early next year, though, the market, always prescient, should be able to see around the corner of what will then be a widely publicized recession. Thus our forecast. Yet another alternative outcome for 1991 would be a further extension of the bear market to lower levels with the decline occupying most of the upcoming year. We are willing to concede this one as a possibility. (The most bearish possible downside objective for the Dow is 1850, and we have noted that the market's failure to bottom in the first quarter would suggest the downswing's extension to year-end.) We are, however, unable to see any convincing reason why almost all of the advance from 1987 should be wiped out. There exists still a fourth possible scenario and, paradoxically, this is the one we find the most worrisome. This is the prospect of a sort of mini-upswing, approaching the 3000 level but exceeding it marginally, if at all. The point-and-figure pattern for the S & P 500, indeed, suggests just such an outcome, although the heavy overhead supply just above current levels diminishes its credibility. Such an eventuality could produce a major top significantly larger than the one which now exists. We may be forced, reluctantly, to pay more attention to this possibility at a later date, but it should at this point, we think, be regarded only as a tiny storm cloud on a distant horizon. It must be emphasized that our preferred forecast is. ree.lly. a bullish cne. probably the most bullish for the long term of all the alternatives discussed above. It calls for lower prices over the near term to be sure, but the prices we forecast are not all that different from lows already attained. It contrasts with disaster scenarios involving a major credit contraction and looks only for the continuation of a highly conventional bear market that should, fairly soon, reach a low, undoubtedly at the time the gloom-and-doom predictions become most visible. That low should constitute a major buying opportunity for common stocks. ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (1200) S & P 500 (1200) Cumulative Index (12/20/90) 2638.86 330.61 4845.72 AWTjb No statement or expression 01 opInion or any other mailer herem contained IS, or Is to be deemed to be, directly or mdlrectly, an offer or the sohcltallon of an offer to buy or sell any security relerred 10 or menllOned The mailer IS presented merely for the convenience of the subscnber While we beheve the sources of our Informallon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements made herem Any action to be taken by the subSCriber should be based on hiS own Investigation and Information Delafield, Harvey, Tabe!! tnc as a corporation and ItS officers or employees, may now have, or may later lake, POSitIOns or trades In respect to any securlbes mentioned In thiS or any future Issue, and such POSition may be dlfferentlrom any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabelllnc, which IS registered With Ihe 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 informatIOn on any secuflty mentioned herein IS available on request

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Tabell’s Market Letter – December 28, 1990

Tabell’s Market Letter – December 28, 1990

Tabell's Market Letter - December 28, 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 1609) 987-2300 , . D,ecember 8, 1990 For some years now, we have studieu'tlle famlliar seasonal tendency of the stock market-to stage a year-end rally, and It has been the custom of tllis letter to point out some of the conclusions that can be derived from a study of this phenomenon. Since 1897, wilen the Dow Jones Industrial Average was first computed, a rally, however small. Ilas begun In December and continued Into the new year In 91 of 93 cases. the two exceptions occurring In the mid 1970's. The following facts about the year-end rally may be noted. 1. The year-end rally often Ilas been of great magnitude. occasionally continuing througll tile entire sUbsequent year without a 5 correction being recorded. It has frequently continued. with only minor Interruptions. for as long as six months Into the new year. In many cases. the rally continued into February, March or beyond. However, on otller occasions. it Ilas been of only a few day's duration. reaching a top extremely early. This was especially true in 1990, with tile rally peaking on tile very first day of the year. In the bear-market years of 1960. 1970, 1973. 1974. 1981. and 1982, the rally reached a peak by the first week In January, and. as noted above, tile 1976 and 1977 year-end rallies did not carry Into January at all, the only two In market Ilistory so to fall. 2. There has been a persistent tendency for tile rally to begin early In years when the market has been up. and late In years when the market has been down. In recent upward years, 1967, 1975, 1979, 1980, and 1985 are examples. the rally commenced from early December. In recent downward years, 1962. 1966, 1969. 1977, and 1981, the rally began late In tile year. 1986 was an exception. an upward year where the year-end rally started on December 31. The 1987-88 year-end rally started on December 4. (1987 was an up year), and the 1988-89 rally saw its December Iowan the second day of tile month-.-This years rally proved an ex.cep!ion in that all of Decemberwas an up mOnth despite–1990's being -Ii -bear markeCyear.- –;- – – ,—- -. 3. The Important thing to watch in connection with the market action in the early months of the new year Is the December low. This low has been broken In 53 years out of the past 90. However. in 31 of these 53 cases. it was broken in January and February. For example. in 1970. 1973. 1977. 1978. 1981, 1982. and this year. the December low was broken In early January. Since 1937. it has never been broken later than mid-March with four exceptions 1965. 1974. 1981. and. of course. 1987. Thus. if the market is able to hold above its December low for the first 2 1/2 months of the year. chances become good that this low wlll not be penetrated. 4. In years when the December low has been broken. the subsequent trend has been downward two-thirds of the time. 1962. 1966. 1969. 1973. 1974. 1977. 1984. are typical cases. 1965. 1978. 1980. and. most recently. 1982 are exceptions. This year conformed to the rule. 5. The magnitude of the rally Is an important clue as to the years market trend. For example. an advance of 10 or more from the December low has been followed by an upward or neutral market in 41 of the 47 years that such an advance has occurred. An advance of less than 10 from the December low before an identifiable correction takes place has been followed by a downward market in 31 of 43 years. From 1985 to 1989. the year-end rally has been well in excess of 10. In the 1990 bear-market year. it was less. 6. The length of time for which the rally continues into the new year Is Important. For example. In 28 years. the rally continued Into March or later. In 24 of these 28 years. the eventual trend was upward. In 1964. 1972. 1975, 1976. 1985. 1986, and 1989. the year-end rally continued into March and In 1961, 1967. 1971. and 1980. into February. This year so far. the advance from the December low of 2565.59 has been less than 3. If the rally extends itself to 10 (approximately 2822) in the early new year, it would be a bullish sign. Likewise. continuation of the advance into February-March would be a positive indication. Dow Jones Industrials (1200) S P 500 (1200) Cumulative Index (12/27/90) AWTjb 2621.29 328.16 4832.28 ANTHONY W. TABELL DELAFIELD, HARVEY. TAB ELL INC. No statement or expreSSion 01 opinion or any ather matter herein contained IS, or IS to be deemed to be, directly or Indirectly, an afferor the soliCitation of an offer ta buy or sell any secUrity referred to or mentioned The matter IS presented merety for the convenience of the subscriber While we beheve the sources of our tnformatlOn to be rehable, we In no way represent or guarantee the accuracy thereof nor of the statements made herein Any action to be taken by the subSCriber shoutd be based on hiS own InvestlgaliOn and Information Delafield, Harvey, Tabelllnc, as a corporation and Its officers or employees, may now have, or may later take, positions ar trades In respect to any seCUrities mentioned 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 en Investment adVisor, may give adVice to ItS IIlvestment adVISOry and other customers IIldependently of any statements made In thIs or In any other Issue Further Informallon on any secUrily menllOned herein IS available on request

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