Tabell’s Market Letter – October 18, 1991

Tabell’s Market Letter – October 18, 1991

Tabell's Market Letter - October 18, 1991
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TABELL'S MARKET LETTER 5 VAUGHN DRIVE, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 October 18. 1991 Wednesday's new high on the Dow. widely hailed in the press as evidence of newfound financial strength. was. 10 actuality. reaUYDothing.more than a.contInuation oLthesorLof-action themarkethas been exhibiting all-ye.ar. -It-was, in fact, the fifth in-a series of new Dow peaks. -;;ch oe a bit-high'; -;-h;' th;It. -Unfortunately. this new high was not all that different from the first of the series, scored on March 6th at 2973.27, a number that is a bare 2.89 lower than the one achieved this week. Typically, there was, on Thursday, no follow-through as the market, under the mfluence of disappointing inflation figures, retreated from its latest effort to move out of the 1991 trading range. There are a fair number of kmd words which can be said of the market's latest foray into all-lime high ground. Breadth failed to confirm. but only marglOally. and any future strength would undoubtedly produce new breadth peaks to go along with those m the Dow. As was widely mentioned m the press. all of the widely-followed indices of smaller stocks attamed new highs. This IS encouraging, in that it represents a distinct change from the small-stock underperformance of a year ago, but It was, in reality, nothing more than normally expected action given smaller issues' greater market volatility. The Dow Transports were also regularly mentioned. Although. unlike its more familiar counterpart. that average is not in new all-time high temtory. it has been outperforming the Industrials all year. having risen 43.5 from its January bottom as contrasted with only a 23.9 advance for the DnA. 1991 action for the DJTA. morecver. is taking on more and more of the characteristics of the right shoulder of a head-and-shoulders base a formation which goes back to the initial decline from the IOdicator's 1989 high. f such an mterpretation is correct, the upside implications are Impressive indeed. With aU the poSitive action on the part of a wide variety of market averages, it is. we suppose. churlish to note that the S & P 5()() (along with the S & P Industrials) failed to attain new peaks on Wednesday. remaining. at 392.80. about one percent under its August peak of 396.64. Following thIs lengthy discourse on the action of various, assorted market averages, it is well to renund ourselves that most investors at least (in what we cannot help referring to as the good old days. we could have said all investors). do not buy averages but indiVidual stocks. There is no substitute, in our view, for the exhaustive analysis of individual technical patterns as a means of amving at a market opinion. Unfortunately, at the moment, analysis of individual patterns leaves one considerably less euphoric regarding the market, than does inspection of general indicators. –.- The -Dow;,we remind curselves;-founditself-at-a-new-alltime-high-ast -Wedcesday,Inspection-of-the-new-high-list-for that- day. interestmgly enough. reveals only three DnA issues. Goodyear. International Paper. and McDonalds as reaching new indiVidual 52-week peaks. Seven more stocks are reasonably close. This. however. means that no fewer than two thirds of individual Dow stocks were. on the day that the average scored new peaks. significantly below their highs for the past year. Furthermore, we noted above that the Dow is at an all-tune high. When one compares current levels against the all-time peaks of individual stocks. the diversity is striking. as noted in the table below. stock ALLIED-SIGNAL INC ALUMINUM CO OF AMER AMERICAN EXPRESS AMERICAN TEL &TEL BETHLEHEM STEEL CORP BOEING CO CATERPILLAR TRACTOR CHEVRON CORP COCA COLA CO DISNEY WALT PROD DU PONT DE NEMOURS EASTMAN KODAK CO EXXON CORP Oct 16, 1991 High Date High 40.500 MAR 1987 49.250 63.875 OCT 1989 79.625 21.500 MAR 1987 40.625 39.125 DEC 1989 47.000 15.750 JAN 1984 29.500 50.000 JUL 1990 61.875 46.125 SEP 1987 74.750 76.625 AUG 1990 81.625 62.875 SEP 1991 66.500 117.500 JUL 1990 136.500 46.000 AUG 1991 50.000 45.625 OCT 1987 70.667 60.500 APR 1991 61.375 X Diff -17.77 -19.78 -47.08 -16.76 -46.61 -19.19 -38.29 -6.13 -5.45 -13.92 -8.00 -35,44 -1.43 Stock Oct 16 1 1991 High Date High GOODYEAR TIRE & RUBBER 44.750 AUG 1987 76.500 IBM 101.625 AUG 1987 175.875 INTERNATIONAL PAPER 75 .625 OCT 1991 76.000 MCDONALDS CORP 36.125 JUL 1990 38.500 MERCK &CO INC 130.750 SEP 1991 133.250 MINNESOTA MINING MFG 92.375 JUN 1991 97.500 MORGAN JP CO 64.750 OCT 1991 65.500 PHILIP MORRIS COS 73.500 AUG 1991 74.625 PROCTER &GAMBLE 82.875 JUL 1990 91.250 SEARS ROEBUCK CO 39.125 AUG 1987 59.500 TEXACO INC 65.375 APR 1991 70.000 UNION CARBIDE CORP 20.500 FEB 1989 33.250 UNITED TECHNOLOGIES 43.000 JUL 1990 62.500 X Diff -41.50 -42.22 -0.49 -6.17 -1.88 -5.26 -1.15 -1 .51 -9.18 -34.24 -6.61 -38.35 -31.20 Only two issues in the Dow. the table reveals. actually reached their all-time peaks in October of 1991. Only ten of the stocks reached all-time highs in 1991 at all Another seven scored their record peaks in July of 1990. back prior to the downswing which followed the gulf war Seven issues are still below their pre-1987-crash highs. What is more. only thirteen of the Dow stocks. at today's levels fiiid themselves within 10 of their record peaks. – Another ten are down from 10 to 40 percent and seven issues are 40 or more below all time highs. It is this sort of thing, we suspect. that causes the wide diversity in individual patterns. We have passed, It seems to us, the stage of the bull market where a rising tide lifts all boats. Action will. we think become increasingly selective. ANTiiONY W TABELL DELAAELD.HARVEY.TABELL Dow Jones Industrials (1130 AM) 3067.53 Standard & Poors 5()() (11 30 AM) 392.56 Cumulative Index (Oct 17, 1991) 6461.47 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 sollcltatlon 01 an offer \0 buy or sell any security referred to or mentioned The matter IS presented merely for the convemence of the subscnber While we believe Ihe sources of our Information to be reliable, we In no way represenl or guaranlee the accuracythareof nor 01 the statements made herem Anv action 10 be taken by the subscriber should be based on hiS own InvestlgaliOn and Information Delafield, Harvey, Tabell Inc , as a corporation and Its officers or employees, may now have, or may later lake, positions or trades In respect 10 any seCUrities mentioned In thiS or any future Issue, and such pOSition may be dMerent from any views now or hereafter expressed m 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 mdependently of any statements made In thiS or In any olher Issue Further Information on any secunty mentioned herem IS avadable on request

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