Tabell’s Market Letter – July 02, 1992

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