Viewing Month: February 1991

Tabell’s Market Letter – February 01, 1991

Tabell’s Market Letter – February 01, 1991

Tabell's Market Letter - February 01, 1991
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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 February I, 1991 — – Wediscussedf in..-our… prevJous …two-issues, theignificance .. oL. theJ.OO-point-ILralJ-Y-….which – occurred a fortnight ago, pointing out that seven of the eight last bear-market bottoms had been characterized by similar rames. Wednesday and Thursday's followthrough, with the Dow up another 74 points, reinforces the original message and suggests, that, though the market is obviously overbought for the short-term, the path of least resistance is upward. Problems exist, however, when one tries to gauge the extent of any potential upmove. This can be documented by inspection of individual technical patterns for any representative set of investment -grade stocks. In the table below, we present some technical statistics on one such representative set, the 30 components of the Dow Jones Industrial Average. — — stock ———————– Allied-Signal Corp Alumlnu Co of Arner ,American Express American Tel Tel Bethlehem Steel Corp Boeing Co Chevron Corp Coca Cola Co Du Pont De Nemours Eastman Kodak Co Exxon corp ,General Electric Co General Motors Corp Goodyear Tlre Rubber – —- -InteITBnati-ona-i-'–Paper ,Mcdonalds Corp Merck Co Inc Minnesota Mlnlng Mfg Navistar lnt'l Phllip Mords Cos Pnmerica Corp Procter & Gamble Sears Roebuck Co Texaco Inc u S X Corp Union Carblde Corp United Technolo9ies Westinghouse Elect Woolworth Corporatlon Price -B–r-e-a-k-o-ut Supply 29 34-36 65 64-70 22 24 30-37 32 40-44 14 17-18 48 50 55-60 70 76-78 48 37 39 38-41 42 44 46-50 52 63 66-70 35 36-40 20 127 135 150-165 60 28 31 30-l4 91 84 3 4-4 1/2 56 26 27-29 77 82-86 29 34-37 58 62 60-65 29 ll-34 19 20 21-23 48 50 54-60 28 30 33-38 31 30-34 Objective ——–33-40 66 33 34 15 53-72 82 60-66 50 70 66 80 39 25 260 61 46 100 98-150 3 1/2 60 25 100 38 73 21 68 34 potj!ntial Gain ————-13.8\-37.9\ 0.0- 7.7\ 4.5\-68.2\ 6.3\-37.5\ 7.1\-28.6\ 2.1\-50.0\ 8.6-17.1\ 25.0-37.5 2.7\-35.1 2.4\-66.7\ 26.9 4.8-27.0\ 2.9\-11.4\ 25.0\ 5.5\-104.7\ 1-7\ 7.1-64.3 9.9\ 16.7-78.6 16 7\-50.0 7.1 0.0\- l.8 6.5\-29.9\ 17.2-31.0\ 3.4-25.9\ 6.9-17.2 0.0-52.6 2.1-41.'1\ 3.6-17.9\ 0.0- 9.7\ .- – The first problem is that while almost all the Dow components have formed some sort of base since last fall, 10 of the 30 have not yet broken out of these bases. The point at which these ten would post upside breakouts is shown in the second column above. Those stocks with no figure shown have already broken out on the upside. There exist two technical factors Which, given current market conditions, are relevant to the assessment of a stock's intermediate-term potential. The first of these is overhead supply. Such supply, from 1989 -90 tops, exists in all but six of the issues, and its level is shown in the third column. In some cases the supply is massive. In others, it is relatively small. The second factor is the extent to which a base has formed. In a few cases. there now exists a sufficiently wide base to'suggest that .he supply may be penetrated. in many, the upside targets and the supply coincide. The final column attempts to assess the potential percentage gain for each stock, using first conserV'ative, and then optimistic, interpretations. Under the conservative interpretation, it is assumed that breakouts will not occur and the lowest figure for the supply or the upside objective will be attained. The bullish projection assumes breakouts by all issues and uses the widest possible objective. It is possible, using the figures shown, to project upside targets for the Dow. Using the less optimistic scenario yields a possible target of 2,955. The more optimistic one yields an upside potential a good deal higher—as much as 3,700. Experience, however, shows such longer-term projections should be discounted by about 10, Which would produce a target in the 3,300' s. Analysis of upside momentum as the advance continues should give some idea of the ultimate projection. ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) 2728.46 S & P 500 (12 00) 341.36 Cumulative Index (1/31/91) 4968.26 No stalementar expression of opinion or any other matter herem contained IS, or IS to be deemed to be, directly or Indirectly, an offeror the soliCitation of an offerlo buy or sell any security referred to or menlJOned The matler IS presented merely for the convenience of the subsCriber While we beheve the sources of our information 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 should be based on hiS own Investigation and informatIOn Delafield, Harvey, labell Inc, as a corporation and Its officers or employees. may now have, or may later lake, posrl1ons or trades In respect to any securities mentioned In thiS or any future Issue, and such poSItion may be different from any views nowor hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabell Inc, 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 Information on any secunty mentloned herein IS available on request

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Tabell’s Market Letter – February 08, 1991

Tabell’s Market Letter – February 08, 1991

Tabell's Market Letter - February 08, 1991
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-r—————————————————————————————————————— TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC 1609) 987-2300 February 8. 1991 Achetez sux canons, vendez aux clairons – -frerlchProvei'b- We suggested in this space on December 7 that there was little pOInt in worrying about a bull market sneaking up on us. Such markets, we noted, generally announce themselves. early in the game. with rolls of drums and blares of trumpets. This the current stock market did on January 17. with a 114-point rally. 1,500 advancing stocks and 300.000.000 shares of volume. It has been repeating that announcement loud and clear ever since. It has. really. been quite an amazing three weeks. The Dow was. on Wednesday. up 14.6 from its low of early January and an astonishing 19.7 from the October bottom. Since the January 9 low. the market has been up on 15 of 21 days and. perhaps even more unusual, there have now been some 13 consecutive days. and 16 days out of the last 17. on which daily advances exceeded declines. While all this was going on. trading activity boomed. with volume well over 200.000.000 shares on the past 7 trading days. To find anything in the way of a correction during the upside explosion. one needs to look at half-hourly figures. There have been. from January through just this Wednesday. three downswings lasting longer than an hour and a half, the worst case being January 28 -29. when the Dow was off 26 points between 330 on Monday and 1030 on Tuesday. It seems obvious to us that there can be only one factor cited to account for all this—the Persian Gulf War. Consider the market's position the day prior to the war's breakout. A 20 decline had bottomed just three months previous and had been followed by an unimpressive 11.5 rally. More than half the ground gained by that rally had been lost by January 9. and the December low had been broken, historically a bearish indication. Then came the war. and. almost immediately. the achievements of high-tech weaponry began to suggest a successful conclusion. The market has never looked back since. – – – – – . Why we must.a.ash-ourselvest should-this'be so!On6 reasonA-is,-essentiaHy-non-quar..tifiable- , , – . – but. we are convinced after 37 years of observing the stock market. none the less real. This IS the tendency of the American people to rally behind its leaders whenever a catastrophe or crisis takes place. One thinks of what this letter called the uJohnson confidence boom, following the assassination of President Kennedy. The polls suggest. so far at least. that the majority of Americans support the action taken by their government. The nOW-Ubiquitous flags and yellow ribbons are not, we think, unrelated to the stock market euphoria. The war, however, is likely to have a more tanglble effect. It was just six weeks ago that the majority of economists reached the consensus that we were, by then, in a recession. Now. before that recession has even been officially recognized, we are beginning to ,hear from seers that, given the stimulus of war production on economic activity. the recession may be short. possibly over by mid-summer, and relatively painless. Since the prognosis of a recession was the major fuel for bearish scenarios in the second half of 1990. the prospect of that recession's end has improved the market outlook dramatically. The quotation at the top of this page. translated. means Buy on the cannons; sell on the bugles. The axiom. not a bad piece of folk wisdom. suggests purchase of stocks on the outbreak of war and their sale when the sound of bugles heralds Victory. The first part of the advice has certainly proved true. Technical factors. however. would suggest that a fair amount of both time and upside action remains before we can test the validity of the second part. The chart pattern for the Dow indicates. minimally. a test of the previous highs with the most plausible upside targets centering around the 3.100 level. The reading. as we noted last week. can be confirmed by inspection of the individual pattern for the Dow components. Indications are, in other words, that the old high for the Dow. achieved just under 3.000 last summer. could well be exceeded. although not by very much. This suggestion )8 J interestingly, confirmed by .the study of previous long runs of days showing positive breadth. The present instance constitutes the 16th case since 1926 when there have occurred more than 12 such successive days. Such periods seem to have a tendency to occur not at the outset of a bull market. but following more or less severe declines taking place in the advanced stages of bull markets prior to those market's ultimate highs. August. 1960 and August-September. 1965 are cases in point. In summary. the evidence points toward a continuation of the markets upward course, but there is some likelihood that the advance, while worthwhile, may turn out to be relatively limited. There is also the suggestion that we may have to rethink the meaning of the August-october downswing of last year. That. however. is the subject for another letter and we feel that the market will afford us plenty of time to undertake such a reassessment. ANTHONY W. TAB ELL DELAFIELD. HARVEY. TAB ELL INC. Dow Jones Industrials (12 00) 2820.54 S & P 500 (1200) 375.03 Cumulative Index (2/7/91) 5259.78 AWTjb No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, directly or Inditectly, an offer or the solicltatlon of an offer to buy or sell any security re1erred to or mentioned The mailer IS presented merely for the convenience of the subscnber While we beheve the sources of our Information to be rehable, we In 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 mvesllgatlon and Information Delafield, Harvey, Tabelllnc, as a corporation and ItS officers or emptoyees, may now have, or may later take, posrtlons or trades In respect to any secunlles mentioned In thiS or any future Issue, and such poSition may be drlferent from any views now or hereafter expressed In thiS or any other Issue Detafletd, Harvey, Tabellinc , which IS registered With the SEC as an Investment adVisor, may gIVe adVIce 10 Its investment adviSOry and other customers Independently of any statements made In thiS or In any other ISsue Further mformabon on any security menlloned herein IS available on request

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Tabell’s Market Letter – February 15, 1991

Tabell’s Market Letter – February 15, 1991

Tabell's Market Letter - February 15, 1991
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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 February IS, 1991 This week saw the confirmation of a new bun market, or, at least. the extension of an old one, if, that is, one is willing to believe the S P 500 That particular indicator closed on ' Wedne.say 369.01,, whi,ch flgtl!!,c()ntit!eLa,!ew all-;tllI!e,high. pennie.,-above the ,pevious, closing high of 368.95 achieved on July 16, 1990, The Dow Jones Industrials, which, we all remember, were, in mid-July, just a quarter of a point under the 3,000 level, remain considerably below their historic peak. This outperformance of the Dow by the S & P is a relatively new phenomenon. From shortly after the 1987 crash to the high of July last year, the DJIA had been the better performer. In early 1988, the Dow was sell!ng for around 7.6 times the S P, and by last July that figure had increased to 8.2 times. The ratio is now 7.86, suggesting distinct deterioration in the DJIA's relative strength. What has excited the most furor, however, is not the Dow or the S & P. These indices, over long periods of time, tend to be highly correlated in any case. The interesting development is the newly improved action on the part of secondary stocks which, as every investor must now be aware, have dismally underperformed their large-capitalization brethren for years. The Value Line Composite, an equally weighted index constituting a good proxy for smaller issues, is now up almost 22 percent from its January low versus 17 and 18 percent respectively for the Dow and the S & P. It is necessary. however, to put this performance in perspective, which we attempt to do with the chart below. The two lower lines trace the action of the S P and the Value Line since 1962, and the upper line is a ratio of the two. RATIO (v….. uE LINE I S&f' 500) 5&P '500 VALUE LDE CCWOl1l1 The long term underperformance of the Value Line is striking. At this week's high of 227.75, it remained well below its summer-1990 peak of 250.56, which was, in turn, lower than the ,1989 J—- high at 278.98 and even-the pre-crash-1987 peak'of'289.02. Astoundingly enough, the Value Line was, just three months ago, under its 1968 high of around 189. The ratio, or relative-strength line, shown at the top of the chart tells the true story. The S P clearly outperformed the Value Line from 1968 through the end of 1974. Essentially, be- tween 1973 and 1976, the performance of the two indicators was about the same, indicated by the fact that the ratio line was relatively nat over this period. There then occurred an interval lasting some 12 years, through mid-1983, during which smaller stocks achieved much superior gains. This superiority is even more noticeable if one looks at a typical over-the-counter index. The point is that the last period of secondary stock outperformance was preceded by a three-year period where small and large stocks performed alike. The final turn in the trend lasted for more than a decade. A comparison of what the Value Line-S & P ratio has done so far versus the mid-1970's strongly suggests that a lot more work needs to be done before we can be certain that the ratio has turned upward. ANTHONY W. TABELL Dow Jones Industrials )12 00) 2893.07 DELAFIELD, HARVEY, TAB ELL INC. S & P 500 (1200) 365.98 Cumulative Index (2/14/91) 5429.23 No slalemenlor expression 01 opinion or any other matter herein contained IS, or IS to be deemed to be, directly or Indlreclly, an oHer orthe soliCitatIOn of an oHer to buy or sell any security referred to or mentlooed The maner IS presented merely for the convenience 01 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 herem Any aclton to be taken by the subSCriber should be based on hiS own Investigation and information Oelafield, Harvey, Tabelllnc, as a corporatlOO and ItS oHlcers or employees, may now have, or may later take, posrtlons or trades In respect to any securrtles mentIOned m thIS or any future Issue, and such posrtlon may be different from any vIews now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabe!! Inc, which IS registered wrth 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 mformal!oo on any secunty mentlooed herem IS available on request

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Tabell’s Market Letter – February 22, 1991

Tabell’s Market Letter – February 22, 1991

Tabell's Market Letter - February 22, 1991
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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 February 22, 1991 The stock market fireworks, almost as spectacular as those provided by a Patriot missile, – -have.-for-the time'being-at -least.subsided-,-after-havingacheiving'Cnew high- for the -move (an all-time high in the case of the S P 500). After three lackluster days, the Dow, at yesterday's close, had pulled back forty-odd points. This affords us our first chance in a number of weeks to sit back and take stock of what has been going on. Those goings-on, it must be admitted, were fairly impressive. After reaching a low at 2365.10 on October 11, the Dow formed a small base and then posted a modest recovery to 2637.13 on the day after Christmas. It had given up close to half the gain in early January and appeared to be headed lower when the Iraqi War began. It then spurted 18.9 in just 27 trading days. Effectively the market has, as measured by the averages, recovered all the ground lost last summer and fall. It is at this point, in our view, that taxonomy becomes fairly crucial. There can be no disputing the fact that we have had, since October and especially since January, an unusually dynamic stock market rally. Since such rallies generally take some time to lose momentum, we have no hesitation in suggesting that it is likely to continue for a while. The question that needs to be answered, is whether this rally—what has already taken place and whatever remains of it—constitutes a new bull market or simply the continuation of a bull market that began in October, 1987 and was briefly Interrupted in July – October 1990. A -rast gulf in expectations exists between the two alternatives. The average bull market in the twentieth century has involved a rise of 81. Applying this to the 1990 low suggests an ultimate target close to 4,300. A simple extension of an existing bull market could involve, as we will develop below, an ultimate high not too different from today's prices. In order to classify the recent upswing, we need to categorize the downswing which preceded it. It began on July 16, 1990, and, after 62 trading days, had produced a drop of 19.9 in the S P 500 and 21.1 percent in the DJIA. It would be useful to know, it seems to us, whether to 1 classifythatdropasamajorcyclebear-makp.t,or'etertoLcall-itan-intermediate-term– – – – – decline occurring within the context of a bull market that was 33 months old at its outset. The latter sort of occurrence is relatively rare, but not unheard of. By January 1960, the Dow had advanced to 679 versus 420 in October 1957. Between January and October, a decline to 566 ensued before an ultimate top at 735, 8 above the January 1960 high, was attained in December 1961. A shorter but steeper drop, around 10 percent in 31 trading days, interrupted the 1962-1966 advance in May – June 1965. The Dow's ultimate peak in February 1966 was just 6 over the May 1965 peak. The arguments against the intermediate-term decline theory involve, in addition to the phenomenon's rarity, the extent of the July-october decline. At roughly 20 percent it would. be deeper than any bull-market correction since the 1930's, and would exceed a great many declines which we have come to call major bear markets. There exists, however, a compelling case to be made in its favor. First of all, the 62 trading days of the July – October decline would make it the shortest bear market in history, excepting only 1929 and 1987, which could, certainly, be argued to be exceptional cases. Additionally, as we noted here two weeks ago, essentially uninterrupted rallies tend to be more characteristic of a bull markes later stages than its early ones, often taking place after intermediate-term drops. Most persuasively though, it is difficult to interpret existing chart patterns as suggesting the imminence of a major upswing. Higher prices are indeed indicated. The short base formed last fall affords an upside objective of 3100 and if we are to go back to the 1987 -88 base, proper if we are dealing with a single bull market, there remains a target of 3400 which has, of course, not yet been reached. Neither figure is really of major bull-market proportions. We are perfectly willing to admit that we are, at this stage, unwilling to come down firmly on the side of either interpretation of the cycle picture, nor do we see ,sny immediate need to do so, since, over the short term, the market is, in all probability, headed higher. We also freely admit that, While the 1990 decline was going on, we were persuaded by the bear-market theory, expecting that downswing to continue longer and fall lower than it actually did. Since its failure to do so, we are less certain. In any case. we think keeping in mind the two opposing arguments regarding the cyclical background will be useful as we attempt to interpret market developments in the months ahead. ANTHONY W. TAlIELL DELAFIELD, HARVEY, TAB ELL JNC. Dow Jones Industrials (1200) S & P 500 (12 00) Cumulative Index (2122/91) 2921.04 367.43 5478.43 AWTjb No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, dlrectlyor Indlrectty, an offeror the solicltallOn of an offerio buy or sell any secunty referred to or mentIOned The matter IS presented merely for the convenience of the subscnber While we beheve the sources of our Informatron to be rehable, we In no way represent or guarantee the accuracy thereol nor 01 the statements made herein Any acllon to be taken by the subscnber should be based on hiS own Investlgahon and information Delafield, Harvey, Tabelllnc, as a corporation and Its olltcers or employees, may now have, or may later take, pOSitions or trades In respect to any secuntles mentioned In Ihls or any future Issue, and such POSition may be different from any views now Of 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 Independently of any statements made In thiS or In any other Issue Further Informalton on any SecUfity mentioned herem IS available on request

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