Tabell’s Market Letter – May 01, 1992

TABELL'S MARKET LETTER 5 VAUGHN DRIVE, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 …. – – May 1, 1992 The Ne\!YO!iimesJ in its market story on WedItesday, tookJt upon itself to pronounce the demise of the small-stock market (and found itself subject to the usuarpuiidit's embariassmenl wheiitheOTCrFdustrirunose twelve-points iliat a&Yr—Diliiy-m.rlCetSiOries – -.. must, by necessity, focus on the short term, ana it is indeed a fact that most OTC indices posted new lows for the year early this week, attaining levels not seen since last December. It is also true that the average holder of smaIler stocks over the psst, say, eighteen months, hss, even at today's prices, probably done rather well. The tables at left, while containing a lot of numbers, do, still, manage to afford some perspective as to the action of the NASDAQ Industrials vs. the DJlA and the S & p in recent markets. START DATE AVG OCT 1987 1738.74 JUL 1990 2999.73 OCT 1990 2365.10 DEC 1990 2637.13 JAN 1991 2470.30 APR 1991 3004.46 OCT 1991 3077.15 OEC 1991 2863.82 JAN 1992 3264.98 APR LOll 3181.35 . APR 29th 333318 DOW JONES INDUSTRIALS Percent Change To JUL OCT DEC JAN APR OCT DEC JAN APR 1990 1990 1990 1991 1991 1221 1991 1992 LOll 73 36 52 42 73 77 65 88 83 – — -21 -12 -18 0 3 -5 9 6 12 4 27 30 21 38 35 – — —– — — —- – – — – -6 14 17 9 24 21 —– – 2-2 — – 25 16 32 —2 – -5 —-7 9 6 1-4 – — 29 6 3 11 —3 APR 29TH 92 11 41 26 35 11 8 16 2 -5 The tables show, for the three averages, the percentsge changes between various key market dates since 1987. The starting date for each period is read down the rows and the ending date across the columns. Thus, between the 1987 bear- market bottom and Isst Wedoesday, the Dow Jones Industrials were up by some 92, from 1738.74 to 3333.18. The S & p 500 wss ahead by 83 , and the NASDAQ Industrials were the leader, but only modestly, among the trio, ahead by some 114. STANDARD AND POORS 500 Percent Change To Better performance by smaIler stocks, then, was a phenomenon that JUL OCT DEC JAN APR OCT DEC JAN APR APR began later in the bull market, in mid- START OATE AVG 1990 1990 1990 1991 1991 1991 1991 1992 LOll 29th cycle in October, 1990. The OTC Index OCT 1987 224.84 64 31 48 39 74 77 67 UL-368.95.,.—20—-.-10–J6682 -ocf 1990 295.46 – 12 5 32 35 27 87 73 83 e V . – -7- – , . . 1 2 . . , – – . — 42 34 39 dropped off a good deal more than the Olher tWo iii'the'Jiily'OCfOlier, 1990tieli! – -OEC 1990 331.73 – -6 18 20 13 27 19 24 market, but recovered more sharply, – – -JAN 1991 311.49 – 25 28 20 35 27 32 18 vs. 12 on the initial leg of the – – – -APR 1991 390.45 – 2 -4 8 1 6 upswing. Then, in the first eleven – – – – – -OCT 1991 397.41 '.-6 6 -1 4 – -DEC 1991 373.22 – – – – – 12 5 10 – – – -JAN 1992 420.77 – – – – -6 -2 months of 1991 the smaIler-stock index rocketed ahead by 83 vs. 30-35 for – – – – – -APR LOll 394.50 – — 4 the Dow and the S & P. 1991, indeed, – – -APR 29th 412.02 – – – – – – – wss the year of the over-the-counter stock. Start Date AVG OCT 1987 28830 JUL 1990 51060 OCT 1990 34410 OEC 1990 40610 JAN 1991 387.50 APR 1991 57370 OCT 1991 629.80 OEC 1991 586.20 JAN 1992 741.90 APR LOll 605.10 APR 29th 617.50 NASDACI INDUSTRiAlS Percent Change To JUL OCT OEC JAN APR OCT OEC JAN APR 1990 1990 1990 1991 1991 1991 1991 1992 LOll -77 19 41 34 100 118 103 157 110 -33 -20 -24 13 23 15 45 19 – — – 18 13 67 83 70 116 76 – -5 42 55 44 83 49 — – — – – — – — — — – — – — – 49 63 51 91 56 – 9 2 29 5 — -7 18 -4 – — – — — — 27 3 – –18 — APR 29th 114 21 79 52 59 7 -2 5 -17 -2 Between the November- December 1991 low and February of this year the NASDAQ issues continued to outperform. putting on a 27 rise, better than both the senior averages. At that point, however, a distinct shift in leadership took place. The.S & P peaked in January 1992 aod hss not been able to regain that peak. Likewise, the OTC Index reached its high in February. Interestingly, breadth indicators also reached their highs in mid-February and have been lagging ever since. The Dow. however, went on to a new high in mid-March and wss thus only 3 under its January peak at the low of Isst month. It is-also, therefore, close to an all-time high. The S& P underperformed the Dow on the January-April !ownswing. and the NASPAQ I, '- -Industri.us completely reversed theiifield. dropping off 18 in February-April duriog what was essentially a sideways performance by the other two averages. There is, therefore, no simple answer to the question of how secondary stocks have performed. Ovtr the long term, taking the current cycle ss a whole, they have been average performers. Over the intermediate term, approximately the last year, their action has been stellar. And over the short term-the past couple of months. they have undergone a serious correction. All this fits in, however, with the basic thesis regarding smaIler stocks which we have voiced in this space since early 1991- when secondary stock indices such the NASDAQ, Value Une aod Wilshire 5000 first began poking up their heada. That thesis is that, having unperfonned the market since 1983, those stocks, on a relative basis, are now rebasing. This process, by definition, requires a number of wide swings both up and down. The 1991 surge and the recent weakness can both be viewed as part of this process, one that could ultimately lead to another six to eight-year upswing the the relative streogth of smaIler stocks. ANTHONY W. TABElL, CMT Dow Jones Industrials (1200) 3354.87 DELAFIELD, HARVEY, TABElL Staodard & Poors 500 (1200) 413.90 Cumulative Index (4/30/92) 7304.88 No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed \0 be, directly or indirectly, an offer or the soliCitation of an offer to buy or sell any security referred to or men\loned The matter IS presented merely for the convenience of the subSCriber While we believe the sources 01 our Inlormallon 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 subscnber should be based on hiS own investigation and Informallon Delafield, Harvey, Tabellinc as a corporation and s officers or employees may now have, or may later take, pOSitions or trades In respect to any securities mentioned In thiS or any lulure Issue, and such pOSition may be different from any views now or hereafter expressed In Ihls or any other Issue Oelalreld, Harvey, Tabellinc , which IS registered With the SEC as an Investment adVISor, may give adVice to 115 Investment adVISOry and othE!r customers Independently of any statements made In thiS or In any 01her 1ssue Further Information on any security mentioned herein IS available on request