Viewing Month: July 1992

Tabell’s Market Letter – July 02, 1992

Tabell’s Market Letter – July 02, 1992

Tabell's Market Letter - July 02, 1992
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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 (6091 987-2300 lillY 2, 1992 . . . ' – . ' . . .- Wednesday's nilly pushed the averages deeper into the overhead supply than we would have aoticipated but did not, by itself, chaoge the technical market outlook very much. Two days (Monday and Wednesday) with over 1200 edvaoces were a bappy surprise, but a great deal more evidence of intemal strength will be mJUired to suggest that strength cao be anything more thao transient. It has been pointed out maoy times, here aod elsewbere, that the action of the Dow, whicb reacbed the latest in a series of new highs on Iune 1st, subsequently corrected a modest 4, aod bas now recovered over half the ground lost, is untypical of the general market. It is regularly noted the S & P made its high back in laouary aod that secondary stocks are down sbarply. In a diverse market the question of what stocks have done what and to what extent is never an easy one. However, in an effort at clarification, we looked this week at the action of 3699 stocks. We examined for esch issue its high for the first three months of 1992, a period wben the S & P, early on, achieved its all time pesk aod the Dow, by early Marcb, bed approacbed the 3300 level. We compared this price with eacb stock's low for the second qusrter, when both averages made their deepest pullback for the bull market so far. The results are shown in the table below. The simplest ststistic is that the average decline for all the stocks in PERCEllTAGE DECLIIlES OF I..IVIDIIAL ISSUES – Ist-2rd IlllARTERS 199Z the survey is 27.3. This is a fairly large number wben one compares it to NYSE ASE OTe TOTAL X Stocks X of Stocks X of Stocks X of Stocks X of Dee. Total Total Total Total the relatively small drops in the averages, even allowing for the fact that we are tslking about different timeframes for individual issues. The 0-10 346 21.9 40 10.5 198 11.4 584 15.8 mediao decline for all issues is 10-20 506 32.0 89 23.4 360 20.7 955 25.8 somewhat less, and there is a reason for this as we sball see presently. 34 20-30 30-40 346 21.9 179 11.3 84 22.0 349 20.1 779 21.1 — 62 16.3 288 16.6 529 14.3 of all issues are down 36 or more. Wbenane breaksthe-study—' – down into NYSE, OTC, aod ASE 40-50 95 6.0 41 10.8 219 126 355 9.6 issues, there emerges an even clearer 50-60 62 3.9 35 9.2 161 9.3 258 7.0 60-70 26 1.6 17 4.5 95 5.5 138 37 picture of market weakness. The average aod mediao declines for ASE and OTC issues are in the 30 area. 70 20 1.3 13 3.4 68 3.9 101 2.7 48 of all OTC stocks are down 30 or more. Total 1580 381 1738 3699 There is an interesting Avg. Decline 22.2 30.1 31.3 27.3 sidelight to all this, though, and it casts some light on the composition of Median Decllne 18.6 30.2 28.9 235 today's equity market. It turns out that a goodly portion of the decline figures, especially for secondary issues, is accounted for bY the fact that maoy of these issues are low in price. We decided to try eliminsting from the study those issues selling for under 20 per sbare. This produced some rather interesting results. It turned out tbat a surprisingly large number of tbe stocks under study Were under the 20 price level. Overall 2420 of the 3699 stocks, almost two-thirds, were low-priced. This might be expected for OTC issues aod for these stocks, indeed, 1335 of 1738 or 77 of all the NASDAQ stocks in our survey were, as of Iune 26th, selling for under 20. Similar percentages obtained on the ASE. Surprisingly, though, 775 of 1580 NYSE .Iocks we studied, very close to half of them were low-priced. Eliminating these stocks changed the results dramatically. Taking ouIy higher priced stocks the average fall for all issues was only 17.4. Furthermore, the three exchaoges were much closer in average results. The mean drop for NYSE issues was 16.6. For ASE stocks it was 17.7 and for OTC stocks 19.0. Almost all the extreme declines-those in tbe 50-r-greater range occurred in low priced stocks. There were, on the NYSE, only 5 issues that dropped more than 50, 1 on the AMIDe aod only 14 over-the- counter. Another interesting facet of the survey was in the dates on which highs aod lows were made. The various highs seemed to be scattered rather evenly throughout the first quarter of the year As far as the low. were concerned, though, the results were quite different. For the S & P 500, the lowest closing level of the quarter was 394.50, posted at the very beginning of the three-month period on April 8th. Two subsequent drops in late April and mid-May beld well above this level in the 410-408 area. The June 18th bottom was at 400.96, still well above the early April figure. For individual stocks, however, almost half posted tbird-!usrter lows in the period May 28-June 26. This figure held true pretty much across the board and there was very little difference in the patterns for the three excbanges. We have hed then, in the first six months of the year, sizeable corrections in a large number of individual stocks. These severe corrections, though, were concentrated in lower-priced issues, maoy of them traded in the ASE aod OTC marts. The decline for investment-grade stocks, the figures suggest, bas been less pronounced. ANTiiONY W. TABELL, CMT Dow Jones Industrials 3330.29 DELAAELD,HARVEY,TABELL Standard & Poors 500 411.76 Cumulative Index (7/1192) 7397.30 No statement or expreSSion of opinion or any other matler herein contained IS, or IS to be deemed to be, directly Or indirectly, an offer or the soliCitation of an offer to buy orsett any security reterred Co or mentioned The matter rs presented merely (or the convenience of the ubscnber While we beheve the sources of our rnformatlon 10 be reliable, we In no way represent or guarantee the accuracy thereol nor of the statements made herem Any achon to be taken by the subSCriber should be based on hiS own mvestlgahon and Information Delafletd, Harvey, Tabett Inc, as a corporation and lIs officers or employees, may now have, or may later take, poSitions or trades In respect to any secuntles mentioned In lhls or any future Issue, and such posilion may be dlHerent from any views now or 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 mentroned herein IS available on request

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Tabell’s Market Letter – July 10, 1992

Tabell’s Market Letter – July 10, 1992

Tabell's Market Letter - July 10, 1992
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TABELL'S MARKET LETTER 5 VAUGHN DRIVE, CN 5209, PRINCETON, NEW JERSEY 085435209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9872300 July 10, 1992 Reacting to the June employment figures released late last week, the Federal Reserve cut the discount rate to a thirtyyear low of 3 percent, which in tum signaled a cut in the Federal funds rate. This was followed shortly thereafter by cuts in – – . the prime rate to 6percent lead by New Yoljc City.moneynterbanks. Bond price.,not surprisingly,advanced. ALthe same time the Dow Jones Industrial Average continues to move ahead and continues to outperform all other broad based indicies, masking a picture we feel is clearly not representative of the overall stock market. One exception to this picture is the interestsensitive sector of the stock market, which would include the financial and utility groups. The discrepancy of the interestsensitive sector Versus the general market can best be shown by examining daily breadth of the market data. The chart below shows the behavior of daily breadth in a different manner from the traditional total issues trade breadth index, and enables us to examine this important segment of the market. CUlUATlVE 11m I'tIUtRUD STOCK BlttAIU 11100 tUU..olUYI! IfrS COIIICIM UOOC IItUDTK IIIDU The NYSE, for some SIXty five years, has recorded the advances, declines, and uncha'lged of all issues traded. More recently, breadth figures have become available for common stocks only. This new series, constructed as a breadth index (advances minus declines divided by total issues traded), is shown in the middle third of the chart above. As expected, this common stock index behaves in a similar manner to that of the traditional total issue breadth index. By subtracting common stock issues from total issues traded, we are also able to develop a preferred stock breadth index, representing approximately one-fifth of the total issues traded. This interest-sensitive index is shown above in the upper third of the chart. Both of these breadth indexes are compared to the DJIA in the lower tlurd of the chart from the August 1982, low to date. In the ten year period examined, the uruverse of preferred stocks listed on the NYSE has remained relatively constant. However, a secular increase in common stocks traded on the NYSE exists with recent additions havmg some uruque characteristics Those would mclude American Depositary Receipts (ADR), Closed-end Mutual Funds and, more recently, Preferred Equity RedemptIOn Certificates (PERC), to name a few. A clasSiCal breadth divergence can be pointed out on the chart above where the common stock breadth index spent most of the second half of 1983 declining, wlule the DJIA went on to new highs in October 1983, This divergence was followed by a correction, 15.59 percent, in the DJIA, lasting until July 1984. The preferred stock breadth index during this period, however, went to a new high, reflecting the ongoing strength in the interest-sensitIVe sector dunng the general market declinmg. By hIndsight, we also know a breadth divergence occurred prior to the October 1987 correction; i.e., breadtb reached a high in March 1987 while the DJIA went on to further highs which were not confirmed by breadth. A siDlllar divergence was registered pnor to the October 1990 low. As the preferred stock index continues to move into new high temtory, it becomes more apparent the mterest-sensitive sector of the market, representmg a major component of the stock market, has been relatively outperfonning the market. However, the common stock breadth mdex currently is still well below its high achieved last February. Were the short-term strength in the DJIA to continue to new high, a breadth divergence of over 100 days would then eXlst, a confirmation of a new high in common stock breadth becomes difficult, Dow Jones Industrials (1200) Standard & Poor's 500 (1200) Cumulative Index (7/10/92) RJSaa 3326.51 414.58 7006.00 Robert J. Simpkins, Jr. Delafield, Harvey, Tabell Inc. No statement or expression of op'nion or any other mailer herein contained IS, or IS to be deemed to be, directly or Indirectly, an oHer orthe soliCitation of an offer to buy or sell any security referred to Or mentioned The matter IS presented merely for the convenience 01 the subsCriber While we believe the sources 01 our Inlormatlon to be reliable, 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 investigation and information Delalield, Harvey, Tabellinc as a corporation and its officers or employees, may now have, or may laler take, posItIOns or trades In respect to any secun\les mentioned In thiS or any future Issue, and such pOSition may be different from any views now ur hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabellinc , which IS registered With the SEC as an Investment adVisor, may 9,ve adIJlce to rts Investment adVISOry and other customers Independenlly 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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Tabell’s Market Letter – July 17, 1992

Tabell’s Market Letter – July 17, 1992

Tabell's Market Letter - July 17, 1992
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TABELLS MARKET LETTER 5 VAUGHN DRIVE. CN 5209. PRINCETON. NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC 1609) 987-2300 – July 17, 1992 We recently found ourselves in a mild dispute with a local professional gentleman regarding the amount of his fee. Basically, the practitioner was asking for a sum exactly twice-;'ha(Weared appropriate–fenseltii1siti;n-. noted that the-o we thought reasonable had been the going rate as long ago as 1986. That claim initiated, on our part, an entirely unrelated train of thought. Quite obvIOusly, our antagonist considered it absolutely normal that a fee being charged today, in 1992, be double that charged as recently as six years ago. The implicit assumption was that most prices bad doubled in those six years. It was an assumption of which, had we chosen to put on our economist bat, we could have disabused him. The latest figure for the Consumer Price Index, which uses 1982-1984 as a base of 100, is its June level of 140.2. The corresponding figure for June, 1986 is 109.5. The overall price level for the past six years, therefore, has increased, not by 100, but by 28.04. The magnitude of this difference becomes even more apparent when one converts the six-year change to an annualized percentage rate. A 100 increase over six years translates to an annual rate of increase of 12.24. The actual increase over the sixyear period was at an annual rate of 4.2 . In other words, an educated, literate citizen was implicitly assuming the mflation rate over the past six years to bave been almost three times what it had actually been. The difference between the two approximate rates is particularly significant when one projects them over an extended period of time, say ten years. At a four-percent rate, prices will increase by a bit under 50 over a decade. This can hardly be called stability, but it is a great deal better than the tripling of prices which would take place at an annual inflation rate of twelve percent. Now tbis may simply be taken as an example of what mathematician John Allen Paulos has called, in tbe title of his book, Innumeracy. There are, however, other implications. Most of us know, indeed, that the rate of inflation in recent years has been approximately four percent. If asked, this is probably tbe answer we would give. Is it poSSIble, though, that imprinted in our thinking, albeit unconsciously, is the implicit assumption of a higher rate There is some reason for such an imprint. We have, on occasion in the past, experienced double..figit infiation—12.2 in 1974, 13.31 in 1979, and 12.4 in 1980. These, however, are tbe only years since tbe end of World War IT that greater-tban-lO -i;C7.;;s.;s iDtheCPI have occurred-. -The rate has-been under five percent in all but one of the past ten years anQio30-yearsiritie pasf 44. Nonetbeless, the thought seems to persist in the minds of many that a lugh rate of inflation has reguarly been the case in the past andlor is likely to be tbe case in the future. AJI this raises the question of whether many investment decisions may in fact be being made under unconscious assumptions that, rationally, we know not to be true. The current steepness of the fixed-income yield curve may be an example of an unconscious assumption regarding inflation. Investors, at the moment, demand an interest rate for 30-year bonds more than twice the current rate on Treasury Bills. Certainly there is, in tlus sharply positive slope, an assumption of some sort regarding a future high rate of inflation. Indeed. as far as interest rates are concerned. investors seem to be operating on a number of assumptions which are contrary to most recent experience. In terms of an historical framework, current long-bond yields-seven-plus percent for governments. correspondingly higher for high-grade corporate debt–are on the high side, suggesting the existence of a built-in assumptIon that the long-term trend of interest rates is upward and of bond prices, therefore, down. Yet over the past ten years precisely the opposite has been tbe case. For the decade of tbe 1980's, tbe total return on long-term corporate bonds was actually slightly greater than tbe corresponding return on common stocks despite the fact that the decade saw one the the great common-stock bull markets of tbe century. Somewhere in the investor's mindset, in other words, is the assumption that normal bond market behavior is that of the 3S years through 1980, dunng which time, a generation long, bond prices beaded generally south. Sidney Homer, of course, pointed out years ago that the most recoglllzable Interest-rate cycle is the very-long-term one—twenty years or more. Yet bow many analysts have forecast tbat the bond market trend of the past ten years is likely to continue in the same direction for the next ten What implicit assumptions, then, are being made regarding the stock market It is certainly a matter of common knowledge that, on an historical basis, current equity prices are at record levels vis-a-vis present earning power. There certaInly exists an assumption here of Increasing earnings and a conventional recovery from the recession. ThJs indeed may yet take place. but its likelihood is not supported by the most recent data. S&P 500 earnings declined for nine often straight quarters through the end of 1991, rose only marginally in the first quarter of this year and are not expected to increase all that much in the second quarter. Investors are willing to pay prices for common stocks which strongly suggest that the trend of the last two-and-a-half years j, about to be sharply reversed. To be fair, this argument can be turned around. The current high valuallon levels for equities do not constitute a new phenomenon. They have been in effect for some years now. There is at least some justification to the view that supply-demand factors currently justify higher price levels for stocks than those that have prevailed in the past. II has been said that the market discounts and, at times, appears to display foreknowledge of future events. There is also evidence, though, that it tends to ignore recent history, continuing to believe that what has been true for long periods in the distant past will continue to be thte in the future, despite an abundance of contrary evidence. ANTHONY W. TABELL, CMT Dow Jones Industrials (1200) 3327.59 DELAAELD,HARVEY,TABELL Standard & Poors 500 (1200) 414.16 Cumulative Index (7116/92) 7514.68 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 secuflty referred to or menlloned The matter IS presented merely for the convemence of the subSCriber WhIle we believe the sources of our InformallOn 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 Information Delafield, Harvey, Tabellinc . 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 pOSition may be different from any vIews now or 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 lIs 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 avallabte on request ,. 1

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Tabell’s Market Letter – July 24, 1992

Tabell’s Market Letter – July 24, 1992

Tabell's Market Letter - July 24, 1992
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TABELL9 S MARKET LETTER 5 VAUGHN DRIVE, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 July 24, 1992 The DIIIrlet over the past couple of weeks has begun to show some-very tentative-signs of technical improvement. After – reacbing itS all'time-high of 3413;21 on June lsI;-the Dow bouomed at 3274.12 on-June-18th.-That low was successfully tested on July-' ,,- 8th at 3293.28, and, at Wednesday's close of 3277.61 , was tested again -with, indeed, a subsequent rally. This series oflows seems to be probing the strong support at 3300-3200. Meanwhile breadth has held well above its mid-June level on both July lows. I I I I IFTSE The decline producing this week's test was ostensibly the result of DAX SloP weakness on European DIIIrlets, engendered, most recently at least, by 1987 Low 64 60 66 central bank efforts to support the dollar. Indeed, since late May, London's FrSE Index is down 12.4, and the German DAX is off by 10.3. These 1990 HIgh 101 125 110 drops greatly -exceed the 4.2 fall of the S & P in May-June to a low 1991 HIgh 110 109 1t 8 (400.96) that it finds itself, at the moment, comfortsbly above. In simplest terms, this can be seen as nothing more than a 1992 HIgh 1 t2 115 125 continuation of the U.S. DIIIrlet's long-term outperformance of European July 23 1992 98 103 marts, a phenomenon that has been going on since 1987. The table at left 122 shows the British, German and U.S. DIIIrlet averages indexed to make their respecltve 1987 highs equal to 100, giving each average's high for 1990, 1991 and 1992, together with yesterday's close. It is apparent that, since 1991 at least, the American market has clearly been the better performer. It is interesting that, at Thursday's close, the FrSE was actually below its 1987 peak and the DAX not much above it. (The 1987 high for the DnA, remember, was 2722.42.) It is not yet, in our view. time to predict disaster for the two major European indices, 2750 …despite their recent sharp corrections. In many r ..ways, indeed, their patterns are much like our ii.own. They have recently posted highs on which .. ..they have been unable to follow through, – -comparable-to -tbe -June -I—close-above-3400'on-the ……. …..DJIA, and tbey are at th. moment testing prior …..important lows. The London pattern is depicted Z500 2250 2000 1150 1500 ' I,I. I ,' … u , XI Jhh lUJI h ,I II III g B!!;u i ;. I ! i,'–,- hlI ,,I I. ' hu.i ,;.. h hh, . – , , I …. ..on the 50-point-unit cbart at the right. As can be ..seen, a break below 2300 would be necessary to ..complete a top formation. Such a break has not 12.50 ,, ,, 1000 yet taken place. Moreover, as can be seen, strong support eXlsts from just below current levels all ' the way down to 2000. The DAX pattern, shown at left below, is SO. 14p AN etfAN B1 4N 8e PAN 11'1 PAN 90 AN 91 AN 9 not unlike that of London. It did, recently, break below a short-term top wben it fell below tbe 1800 FTSEl00 INDEX 50 POINT level, but tbe downside target of that top, at 1600, bas just about been attained. As is the case witb Great Britain (and, for that matter, our own market) powerful support is found close to present prices, at 1600-1500. Unlike the case in the U.K., though, tbere remains heavy overhead supply left to penetrate from the substantial top formed during 1990. However, more than is the case in London (and .lOOO m'. .iinoD II , I, 1&00 ii !i! ,1.1I 110D 1800 ISOO 1'00 III!ii! I , I'ihl Ihllll! ….,.. – – .r– ! hll pl 'I I ''1I.,'1,.,10I .n.!'' I'lillii' 1IIIHIh…. ,I' . …. -.- II' ! p p I;' UOO also more than with our own indicators) there exists an important post-1990 base which indeed suggests significantly higher levels– possibly as high as 2400 or 50 above current prices. A .break below 1500 would, of course, call this pattern into question. We have not mentioned the most important overseas market–the one which li off our Pacific rather than Atlantic coast. We sbowed a chart of the Nikkei back in March suggesting that the then downside breakout (to 20,000) 'looks .AN .N 82 like a killer.' Following today's close around OAX INDEX (Garmany) 20 POINT 15,500, the lowest level since April, 1986, tbe chart does not look any better. Indeed the disturbing feature of the TokYO DIIIrlet is the minuscule volume suggesting a terminal decline whicb could be serious and protracted-as was tbe case with our own market in 1930-32. Technical work continues to suggest the advisability of approacbing prospective Japanese equity investment with extreme caution. ANTIIONY W. TABELL, CMT Dow Jones Industrials (1200) 3290.31 DELAAELD,HARVEY,TABELL Standard & Poors 500 (1200) 411.35 Cumulative Index (7123/92) 7444.86 No statement or expression of oplnlon or any other matter herein contained IS, or IS to be deemed to be, directly or indirectly, an offeror the soliCitation of an offerlo buy or sell any secuflty referred to or mentioned The matter IS presented merely for the convenience of the subscrtber Whtle 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 herem Any acllOn to be taken by the subsCriber should be based on hiS own Invesllgahon and Information Delafield, Harvey, Tabellinc as a corporation and lis officers or employees, may now have, or may later take, positions or trades In respect to any securl!les 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 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 Informallon on any secuflty menlloned herein IS available on request

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Tabell’s Market Letter – July 31, 1992

Tabell’s Market Letter – July 31, 1992

Tabell's Market Letter - July 31, 1992
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r- .,,, TABELL'S MARKET LETTER 5 VAUGHN DRIVE, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 July 31, 1992 Numbers! The fmancial markets provided us with a whole bunch of them this week. Start with 100 (or 96.99, which is close enough). This was the amount by whicb..!!!e DJIA .Yo'as altead after.Tuesday andWednesctayprochIced tw-,,rallies, ch appr9xil1l!ting –;- —fittipoints. This-particul'; appromation, actually, was no accident. On both days, the Dow was ahead by more than50 duri'ng the day, thus provoking the invocation of the downtick rule, designed to inhibit computerized trading. It more than likely says something about the current market that, in both instances, the index pulled back sharply, if temporarily, from the plus-50 level. Or how about 1300 Until this week, no trading day in 1992 had been able to produce more than 1300 advancing stocks, the last instance being in December, 1991. On Tuesday and Wednesday, there occurred two such days in a row. For whal it is worth (probably not much), two consecutive days of 1300-plus advances constitute a fairly rare market event, this week having seen only the seventh such case in all market history and the first one in almost five years–the last one having taken place shortly after the bottom in October, 1987. However, we are probably being unprofessional in leading off this piece with talk about the Dow Jones Industrials and market breadth. We should undoubtedly have begun by noting the fact that the Standard & Poors 500 achieved, on Wednesday, a newall-time high, closing, after an almost-five-point advance, at 422.23 and bettering its previous high, achieved back on January 15th, of 420.77. A further high occurred yesterday. This news may come as something of a disappointment to practitioners of the craft of stock-market comment, since a guarsnteed space-filler for the past six months has been discussion of the underperformance of the Dow by the Standard & Poors. Our readers are well aware that we ourselves have more than once yielded to the temptation to produce scholarly disquisitions on the subject. However, all is not yet lost. The emergence of the S & P constitutes a relatively new phenomenon–one which can be said to have surfaced as recently as Juoe 18th. On that date, the Dow reached a low at 3274.12, down 4.08 from its June 1st all-time high in the biggest correction of 1992 thus far. The 500, at 400.96, was down 4.19 from its prior high. Since that June 18th bottom, the S & P has advanced 5.73 to yesterday's peak versus an advance of only 3.60 for the Dow. It remains to be seen whether this will alter the longer term pattern. Measured from late 1991, when the current phase of the market advance began, the S & P is ahead 12.98 from its November 29th low. The Dow, by contrast, was, at its own bull-market in JuQJ'dIP 12JS'&, lIJ\(LaUastnight',clo8eremained ahead by IS.11 . The basic difference-in marketachievementbetween!he two averages occurred between ;;d-January and mid-June. The S & P, on January 15th, reached a peak it was not able to better until this week. On tbat day the Dow was at 3258.50. It was to go on almost without interruption to a whole series of new highs eventually winding up ISS points higher in June while the S & p drifted. As we aaid above, the reversal of that pattern is a product of only the past six weeks. Yet another number–15,095.95. That, as, by this time, readers might be able to guess, was Wednesday's close on Japan's Nikkei Index, yet another six-year low. It has long been the function of this letter to write about numbers, and we have tried, in exercising this function, to remember to keep them in perspective. This being the case, we found ourselves a bit put off by the story in the latest issue of Time magazine on the subject of the Tokyo market. It featured a chart of the monthly close (couldn't the world's largest newsmagazine find the daily figures) of the Nikkei starting (why) in January of this year and trumpeted the fact that the index was down 30 since then. This was true, but irrelevant. The Nikkei had been in almost steady decline for ten months previous to January, 1992, having made its most recent important high in March, 1991 at 27,146. It is now down-not 30–but 44.39. Even this, though, misses what should be the point of any story about the Nikkei, which is that, at its high in December, 1989, it was at 38,915. From that point, in a severe, but conventional, bear market, it fell 48 to 20,221 nine months later. Following a sharp but short (5 112 month) recovery, which never came near the old high, the pluoge resumed anew, and by March of this year dropped to a new low. As we all know, that decline has continued through this week. The Nikkei is thus down from its high, which, it seems obvious, is the journalistically interesting fact, since there have been few declines of this magnitude in !!!!y equity market in all recorded history. Why, readers may ask, do we keep harping on the subject of the Nikkei Is it not sufficient simply to warn those of our readers who may be so inclined against investment in the Japanese market and let it go at that It may well be. The fact that the S & P high and the Nikkei low occurred on the same day this week should argue against any direct short-term correlation between the U.S and Japanese markets. However, we think the historically unusual nature of what is going on across the Pacific cannot fail, in some way and at some stage, to have some implications for our own market and economy; The Japanese freefall some time ago passed beyond the conventional limits of a cycle bear market and is more and more coming to resemble a market in the latter stages of a very-loDg-tenn boom-bust cycle. Sooner or later, we will have to assess the meaning of all this for U.S. stocks. All of the numbers which have heen the theme of this issue deal, of course, with historical fact. What implications do they hold for the future We suggested last week that the market was beginning to show early signs of technical improvement, and this week's powerful follow-through confirms that impression. The trnuble is that it is difficult to read significantly higher price targets. Certainly, the S & P having achieved a new high, is becomes likely that the Dow will do so. It has possible objectives in the upper 3400's, and similar projections can be made for the broader-based indicators. Beyond such levels it is difficult to project at present. ANTHONY W. TABELL, CMT DELAFIELD, HARVEY, TABEu.. Dow Jones Industrials (1200) 3390.00 Standard & Paars 500 (1200) 422.82 Cumulative Index (7/30/92) 7612,87 No statemont or eypresslon of OPInion or any other matter herein contained IS, or IS to be deemed to be, dlrectty or Indlrectty, an offer or the solicitatIOn of an offer to buy or sen any security referred 10 or menltOned The matter IS presented merely for the conventence 01 the subscnber While we beheve the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor olthe statements made herein Any aclton to be taken by the subscriber should be based on hiS own mvestlgatlon and mformatlon 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 POSition may be dtfferenllrom any views now or hereafter expressed In thiS or any other Issue Delalreld, Harvey, Tabellinc ,which IS registered WIth the SEC as an Investment adVisor may 91ve adVice to Its Investmenl adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further mformallon on any securrty mentioned herein IS available on request

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