Viewing Month: April 1991

Tabell’s Market Letter – April 05, 1991

Tabell’s Market Letter – April 05, 1991

Tabell's Market Letter - April 05, 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 , April 5, 1991 It can hardly be news to anyone that the stock market has been moving upward sharply since the anuary 15. invasion ..-of Jraq ….!What .. is .. unusual..,.about this .. strength, .though is thE diersity .. among various market sectors which can 'be illustrah,d in the table at left, showing the January 14-April 4 percentage change in ten representative averages. The table raises some interesting pOints. First is the Average , Change amazing performance of the OTC Industrials and, to a lesser degree, the Value Line index, suggesting that the renaissance of OJ Industrial OJ Transport OJ Utilities S&P Indust. SOP 500 S&P Financial ASE Index OTC Indust. Value Line Wilshire 5000 17.74\ 24.19 7.17\ 22.54\ 21. 53\ 37.98\ 23.05\ 45.34 28.46 23.66\ the small stock may, after 10, these many years, finally be upon us. Interesting also is the sharp recovery demonstrated by the financial sector which, as we shall see, has for some years been the one of the worst performing market areas. Finally, we have the factor, noted In this space in the past, of the significant outperformance Of the Dow by the S & P Industrials and the 500-Stock Composite. Varying performance among the averages. is, however, not 8 new phenomenon. The following table traces 3 112 years of history for the same ten averages. All, of course, reached peaks in August 1987, prior to the October 1987 market crash. They all then recovered, slowly at first, then more quickly, reaching highs in October, 1989. In all cases except the OTC and Value Line, 1987 highs were modestly exceeded at that peint. Average Aug 87 Oct 89 Jul 90 Change Apr 91 Change \ Change High High High 1989-1990 High 1997-0ate 1989/90-0ate OJ Industrial 2722.42 2791. 41 2999.75 6.95\ 2973.271 9.211 – 0.681 OJ Transport 1101.16 1518.49 1208.76 -25.621 1166.26\ 5.91\ -23.201 – -OJ Utili ties SOP Indust. S&'–500 227.83' 236.23 212.09 -11. 381 216.30 5.061 – 8.44\ 393,1 410.49 437.37 6. 7tl.t'l9.4J.t.41.1t2,-651 336.77 359.80 368.95 2.481- – 379.77 –12.77\ 2.9n ….,,—— SOP Financial 32.56 35.24 29.20 -20.68 30.37 – 6.73\ -13 .841 ASE Index 365.01 397.03 365.56 – 8.601 365.11 0.031 – 8.041 OTC lndust. 484.50 472.40 510.60 7.481 563. 91 16.39\ 10.44\ Value Line 289.02 278.98 250.56 -11. 341 241.92 -16.301 -Wilshire 5000 3299.44 3523.47 3516.32 0.151 3634.61 10.11\ January, 1987 January, 1990 I March, 1991 -13.28\ 3.15\ It was in the fall of 1989 that divergence began to manifest itself. Most of us have the impression that the bull market continued through last summer. This was indeed true for the popular averages. The Dow and both S & P averages moved above their October 1989 peaks last July. However, many areas totally failed to participate in that last stage of the bull market. The OJ Transports, at last summers high, were 25 below their October figures, and the S & P Financials were 20 lower. Neither the Utilities, AMEX, Value Line or Wilshire were able to post new peaks. In any case, following the July-October downswing, the market has, once again, recovered, as the final column of the table shows. That recovery, in a number of cnses, has carried to new aU-time peaks. The S & P Industrial and 500 are now both above their 1989-90 highs as are the OTC Industrials and the Wilshire 5000. The other averages, though, remain well below their peaks of one to two years ago. The Transports are well below their 1989 figure, and the financial sector, despite its recent outstanding performance, is also below 18-month-ago levels. Recent improvement has also failed to bring the Value Line anywhere near its 1989 peak. Finally, it is worth noting that the Utility, Financial, and Value Line Indicators still remain below their 1987 highs. — It is also interesting that all the averages in the table posted new highs this week except for the Dow Jones Industrials and Transports. The S & P 500 first moved above its July 1990 high on February 13.and has been posting successive new .. peaksever since. The Dow of course. remains well below that high. This is a reversal of action seen in the first half of 1990, when the Dow reached a bull-market high on January 2, a peak which was not confirmed by the S & P 500 until May 29. New highs in the S & P unaccompanied by similar action in the Dow are not all that rare, however. In August 1979, the S & P reached a new high for the move from March, 1978. It continued to move ahead. on a regular basis. for a year without confirming new highs for the Dow. New peak levels for the DJIA were not reached until July 17, 1980, an interval of 232 trading days. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (4/4/91) AWTjb 2903.96 380.72 6021.36 \ \ \ 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 oHer to buy or sell any secUrity referred to Of mentioned The matter 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 01 the statements made herein Any action to be taken by the subscnber should be based on hiS own Investigation and information Delafield, Harvey, Tabelllnc, as a corporation and I\S officers or employees, may now have, or may laler lake, pOSitions or trades In respect to any securlbes mentioned tn 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, TabeU 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 InformaMn on any security mentioned herein IS available on request

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Tabell’s Market Letter – April 12, 1991

Tabell’s Market Letter – April 12, 1991

Tabell's Market Letter - April 12, 1991
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 085435209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC 1609) 9872300 April 12, 1991 It OC;lUrred \L-Us.l'Ce!ltly lhat w.enow. find. orsel…es .just oer0 18 monthsaway from an election, yet there has been precious little media-coinmellt regarding presidential politics, a phenomenon not unrelated, we suppose, to President Bush's standing in the polls. As time goes on, there will, undoubtedly, emerge much discourse on the stock marker s behavior in election years, so we are, with this discussion, getting our licks in early. The table at left shows the percentage change in the DJIA for each election year, and Years/ o 1 2 3 the three years follOWing it, in this century. An apparent upward bias in the third year after an 1900 7.00 -8.71 -0.40 -23.61 election (such as 1991) and in the election year 1904 41.72 38.20 -1.92 -37.73 itself (such as 1992) has been noted. Indeed, 1908 1912 1916 1920 1924 1928 1932 46.63 7.57 -4.19 -32.90 26.16 48.22 -23.07 14.97 -10.35 -21.71 12.72 30.00 -17.17 66.69 -17.86 -5.42 10.51 21.74 0.34 -33.77 4.14 0.40 81.66 30.45 -3.25 28.75 -52.67 38.53 the Dow has been up in 17 of 22 pre-election years and in 16 of 23 election years. The mean change has been 9.3 in election years and 10.5 in pre-election years, well above the overall mean of 6.96. When standard tests of statistical 1936 24.82 -32.82 28.06 -2.92 significance are applied, though, these results 1940 -12.72 -15.38 7.61 13.81 are less than surprising. It must be remembered 1944 12.09 26.65 -8.14 2.23 that, of the 91 years in the table, 56 have been 1948 -2.13 12.88 17.63 14.37 up and only 35 down. There exists, therefore, a 1952 8.42 -3.77 43.96 20.77 fair degree of probability, well over 10, as a 1956 2.27 -12.77 33.54 16.76 matter of fact, of selecting from this group, a 1960 -9.34 18.71 -10.81 17.00 17-up, 5-down sample. Likewise, since the 1199668 –.144….2577 1-1051898-!B.49.4821,5-6-.101,a.fta;ft;;IJH of-t..h- a-..'.;…u-eoI's\..'d. -(The-ntandard– . 1972 14.58 -16.58 -27.57 38.32 deVIation, for thoe mterested m sch thmgs, is 1976 17.86 -17.27 -3.15 4.19 22.6), the selection of a sample WIth a 10.5 1980 14.93 -9.23 19.60 20.27 mean is not at all improbable. 1984 -3.74 27.66 22.58 2.26 There Is more significance, although a great 1988 11.85 26.96 -4.34 deal less apparent justification, for the pattern —— —— —— shown in the table below, the so-cslled decennial Average 9.34 4.58 3.57 10. SO pattern first noted by Edgar Lawrence Smith. The Years Up 16 11 12 17 table shows the changes for years ending in each Years Down 7 12 11 5 of the digits zero through nine, and the fact that all years in this century ending in five have been up, usually by substantial amounts, has been often remarked. There is a less than 2 probability that this could have occurred purely by chance, and a probability of less than 0.1 that a sample of nine items with a mean of 34.74, almost five times the population mean, could have been drawn. There also appears to be some minor significance attached to an upward bias for years Year/ o 1 2 3 4 5 6 1 6 9 1900 1.00 -6.71 -0.40 -23.61 41. 72 38.20 -1. 92 -37.13 1910 -17.86 0.40 7.51 -10.35 -5.42 61. 66 -4.19 -21. 71 1920 -32.90 12.72 21. 74 -3.25 26.16 30.00 0.34 28.75 1930 -33.77 -52.61 -23.07 66.69 4.14 36.53 24.62 -32.82 1940 -12.72 -15.36 1.61 13 .61 12.09 26.65 -8.14 2.23 1950 11.63 14.37 8.42 -3.11 43.96 20.71 2.27 -12.11 -1960 1970 1980 -9.34 18.71 -10.61 11.00 14.51 10.66 -16.94 15.20 . 4.82 6.11,. 14.58 -16.58 -27.57 ,38.32 ,11.66 -11.7.7 14.93 -9.23 19.60 20.21 -3.74 27.66 22.56 2.26 1990 -4.34 —— —— Average -6.65 -3.74 5.03 6.69 11.17 34.14 3.65 -6.21 Years Up 4 5 64 6 95 4 Years Down 6 4 35 3 04 5 46.63 14.91 10.51 30.45 46.22 -17.11 26.06 -2.92 -2.13 12.88 33.54 16.16 4.21 -15.19 -3.),5 'lo9 11. 65 26.96 19.16 7 2 7.88 6 3 ending in eight, and a downward bias for those years ending in zero. Since 1990 has Just passed, however, and 1995 is a ways away, these figures are, at the moment, only of academic interest. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (4111191) 2901.48 377.58 6045.08 AWTjb No statement or expression of opinion or any other matter herein contained IS, or IS 10 be deemed 10be, directly or indirectly, an offer or the solicl1atlon of an offer to buy or sell any security referred 10 or mentioned The matter IS presented merely for the convemence of the subscnber While we believe 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 Delalleld, Harvey, Tabellinc ,as a corporation and Its officers or employees, may now have, or may later take, posl1lons or trades In respect to any secuntJes mentIOned In thiS or any future Issue, and such posltlon 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 to I1s Investment adVISory and other customers Independently of any statements made In thiS or In any other Issue Further Information on any secufl\y mentioned herein IS available on request

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Tabell’s Market Letter – April 19, 1991

Tabell’s Market Letter – April 19, 1991

Tabell's Market Letter - April 19, 1991
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 085435209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC 1609) 987-2300 April 19, 1991 The subject of thIS week's letter is foreordained. It is our business to comment on flnancial numbers. and on Wednesday, as the entire world is now aware, the granddaddy of such numbers, the Dow Jones.lndus.tr;ial.Av.e.ragefin'!-lly postecl.a ,,-lose.above 3000. The press recounted the entire- saga in tender lovin-Ii detaH—-Therewere; first, those six ….- ,- days in mId-July last year when the average's intra-day peak probed above the 3000 level, but it was able to do no better than close at 2999.75. accomplishing this on two consecutive days, July 16 and 17, from which level the 1990 downswing began. By February 13, 1991 the S & P 500 and a number of other averages had recovered to above their mid-1990 peaks. 8y mid-March. they were well above those levels, but the best the Dow could do was put on another couple of mtra-day figures above 3000, never managing to close abOVe 2973. Finally, on Tuesday, that figure was exceeded. followed by the attainment of the I1 magic lev!')l the next day. There are a number of aspects of the event that are worth comment. The first is that it is all, of course, absolutely Irrational. The accidental attainment of a numbel ending in thlee zeros by an average whose construction has been widely subject to cnticlsm is. of course, of no intrinsic importance whatsoever. It made headlines. though. because the market. thank goodness. is made up of people, and people are, again thank goodness, often less than totally rational. It is the collective action of indivlduals in the marketplace that constitutes the techniclan's field of study. If those indiViduals tend to become obsessed with a particular number. as they obviously have been since last July. 50 be it. The hoopla underscores another point that We have often made. the fact that the unscienhflc DJIA is unfairly criticized. It remains the primary piece of shorthand Which those of us concerned with equity markets can use to commurucate to each other a summary of those markets' action. The simple fact is that everyone knows that the Dow has been flirting with 3000 for almost a year. We are willing to venture that few know the S & P Composite is within a couple of percentage points of the round figure of 400, and we would also guess that it will not be front-page news when it attains that figure. The Dow's nine-month dalliance with 3000 pales by comparison with the first time that 1ndics tor reacheathefolrr—-dip t leVel-The–i OOO.tevel-;-it—may -be remembered .-exerclsed…. some-sor-Lt I .. , of fatal attraction for the market for something over 17 years. On October 19, 1965, the average f,rst managed an intra-day peak within 5 of the 1000 level. Four months later, it actually attained that goal on an intra-day basis, reaching 1001.11 on February 9, 1966 (much like the attainment of 3000 in July, 1990). The peak close, however, was 995.15, marking the high of the 1962-66 bull market. By October, 1966, the Dow was in the low 700's, and it was two more years, Fan 1968, before 1000 was again approached. An approach was the best it could do, since the 1968-70 bear market intervened. A recovery toward 1000 in April, 1971 was turned back, followed by a couple of more attempts in the spring and summer of 1972. It was finally in November, 1972, six years and five months after the first attainment of 1000 intra-day, that the Dow managed to close there. The epic. however. was by no means over. The general vicinity of 1000 was to remaIn an effective ceiling for the next ten years. The 1970-73 bull market topped out at 1051.70, and the 1974-76 upswing peaked at 1014.79. The April, 1981 peak was 1024.05, and it was not until January, 1983, on the way to 1287 the following November, that the index bid good-bye to the general area of 1000 for the last hme. Recalling that Whole episode reminds us that, although its behavior may have been quite Similar, the Dow was quite different back in that era. Eight stocks (American Brands, Anaconda, Chrysler, Esmark, General Foods, Manville Corp., and Owens lllnois) are no longer in the index, having been replaced by American Express, Boeing, Coca-Cola, IBM, McDonalds, Merck, Minnesota Mining, and Philip Morris. When 1000 was first touched in February, 1966. the heaviest weighted portion of the average, at 16.67, was steel and metals, an area whose weight is now 7.85. Chemicals accounted for 15 of the Dow in 1956 and now account for 6. The weight of the auto industry. almost 10 percent in 1966. has been cut in half. There was. a quarter of a century ago. no representation of the computer. and healthcare industries in the average, whereas IBM and Merck are now its two largest components. Despite a totally changed market environment. though. the public'S fascination with round numbers persists. The questIOn at the moment. is whether the pull of a round number wlli hold the index In the 3000 Vicinity over the next decade as was the case in the 1970's. Luckily. 2000 revealed no such attraction, as the average crashed through it on the way to its 1987 high and had left it permanently behind by late 1988. How soon we wIll be able to devote thls space to a discussion of the 4000 level remains an unanswered question. Dow Jones Industrials 0200) S & P 500 (1200) Cumulative Index (4/l7/9) AWTjb 2979.70 386.36 6161.32 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL lNC. 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 sohcrtabon of an offer to buy orsell any security relerred to or mentioned The matter IS presented merely for the convenience of the subscnber While we beheve the sources of our Informabon to be reliable, we In no way represent or guarantee the accuracy Ihereof 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, Tabell tnc, as a corporation and Its officers or employees, may now have, or may tater take, posrtlons or trades In respect to any secuntteS mentioned 'n 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 to LtS Investment adVISOry and other customers independently 01 any statements made In thiS or In any other Issue Further Information on any secunty menltoned herein ts available on request — – …..

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Tabell’s Market Letter – April 26, 1991

Tabell’s Market Letter – April 26, 1991

Tabell's Market Letter - April 26, 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 (6091 987-2300 April 26, 1991 The chart below should not produce any great aurprlse for the majority of our readers. Financial commenttors havebeen regularly pointing out that the major averages are, at the moment, selling at at'relatively high levels in-relation to currenfearniiigs and-dIVidends. -TobespeciflC;- its closing high, achieved on April 17, the S P 500 was at 390.45. A reasonable estimate for the average's earnings for the year ending this quarter is 20.62. This results in a PIE of 18.94. Dividends. anticipating a mUd dropoff in payout, should be around 11.80, resulting in a yield, at the high, of 3.02. 20 S&P 500 – ',– ——-I-'7'\——–, The chart shows the history, since 1926, of the S P yield (on an inverted scale) and the price/earnings ratio, along with the price action of the S P 500 itself. It can be noted that, when these figures have reached their current levels in the past, they have, on most occasions, pulled back sharply. Most recently, the Index sold for over 21 times earnings in 1987, and the yield dropped close to 2 112. It required the 1987 market break to bring them back into line. Similar levels, as the chart shows, were reached In 1971, 1968, and 1966. It Is necessary to square this recognition of the currently full price level with the fact that, from a technical point of view, the market Is behaving impeccably. New highs are being confirmed by breadth and by secondary averages, and momentum stUdies remain highly positive. It is, fortunately, not too difficult to resolve the conflict. There will be no argument from this quarter with the principle that stock prices, over the long term, are determined by earning power and dividend-paying abillty. Over the Intermediate term, however, they are determined by the sorts of supply-demand factors which are the market technician's concern. It must, additionally, be noted that above-average price levels can persist for some time. The price-earnings ratio for the S P, for example, reached almost 20 in the first quarter of 1987, and the ultimste market break did not occur until the fall. Earlier, the ratio first moved above 18 in June, 1963 and remcincd -there until the, third. quarter of 1965. During this period, the market itself advanced some 35. Furthermore, as the chart shows, PE's around the 18 level and yields in the 3 area were characteristic of just about the entire decade of the 1960's. It is trite to say that the market is currently anticipating an earnings recovery, but this is unquestionably the case. Presently, estimates call for the S & P to earn something over 22 in 1991, slightly up from the 21.60 of 1990 despite the fact that the first-quarter earnings were down 8 112 and second-quarter figures will undoubtedly be down by a similar amount, perhaps even more. Obviously, a fairly sharp earnings rebound is anticipated for the third and fourth quarters. Current estimates for 1992 are around 25.50, up 18 from 1990 levels. Such figures would be sufficient to support current prices. It cannot be argued, though, that valuation levels place an effective ceiling on upside potential. When one looks at the history of the price/earnings ratio based on earnings a year ahead, rather than a year past, the usual high is around 16. ApplYing this to anticipated 1992 results affords a projected price of 408 for the composite. This is above current levels by approximately 7, not a terribly exciting prospect. Dow Jones Industrials 02 00) 2921.29 ANTHONY W. TABELL S P 500 02 00) 377.73 DELAFIELD, HARVEY, TABELL INC. Cumulative Index (04/25/9il 6070.43 No statement or expressIon of opinion or any other matter herem contained IS, or IS to be deemed to be, directly or Indirectly, an oHer or the sohcltallon of an offer to buy or sell any secUrity referred to or mentioned The maner 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 Of 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 corporallon and lis officers or employees, may now have, or may later take, poslons or trades In respect to any securrtles 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, Tabelllnc, which IS registered wrth the SEC as an Investment adVISor, may give adVice to rts Investment adviSOry and other customers Independently of any statements made In thIS or In any other Issue Further Information on any secUrity mentioned herein IS available on request

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