Tabell’s Market Letter – February 01, 1985

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9249660 – February 1, 1985 Until a temporary stall finally occurred on Friday morning3 the extraordinary January market strength contmued throughout this week. Tuesday featured a 15-point rally, in which the laggard Dow finally achieved a newall-time closing high at 1292.62, eclipsing the previous peak scored some 13 months before. The Dow-Jones Transportation Average joined its sibling index In new high territory. The broad-based indicators, the S & P 500, the S & P Industrials, and the New York Stock Exchange Composite. whose new highs we celebrated last week, continued to post new peaks in this weeks trading. As might be expected. satisfactory numbers of individual issues have also been moving Into new high ground. The number of new 52-week highs has been above 100 every day for the past three weeks, with 319 such peaks being attained on Wednesday, the highest number, with a single exception. since November, 1982. The year-end rally has now reached about 11 on both the Dow and the S & P, an event which has, In the past. normally presaged a good market. However. what has contInued to be most extraordinary is the number of daily advances being chalked up in NYSE tradIng. For the first three trading days of 1985 declining stocks exceeded advanding ones by modest amounts. Following this. the entIre remainder of the month produced days on which advancing stocks exceeded declining ones. a string of 19 consecutive days. This has quite simply never occurred since breadth statistics were first compiled in 1926, — The phenomenon is rare enough that we thought it worthwhile to tabulate SImilar past occurrences. The table below shows every sequence of 12 or more successive advancing days in the past 59 years. the present case being the 15th such occurrence. Also shown are the percentage change In the Dow in the followmg 20, 40, and 80-day periods. Most interesting is the fact that, of the 14 prior occurrences of such an event. 13 occurred during periods WhICh we can historIcally identify as bull markets. The final three columns of the table give the date of the subsequent bull-market peak in each case, the number of –months until that hIgh was reached, and the percentage change in the Dow to the bull market's end. .–; —-r — -………. umbcr-of'- i.C 'a nif'-cAft' e 'r .' Iillr-'11i7Of..,.-….. ——D-a-t-e——— Da'J –D-J-IA— Jul 8-Jul 21 1936 12 165.23 Sep l-Sep 25 1942 12 109.37 Dec 3D-Jan 18 1943 16 121.56 Jarl 22-Feb 4 1947 12 182.29 Nov 26-Dec 8 1951 12 266'.90 Nov 7-Dec 2 1952 16 283.78 Jul 21-Au9 5 1954 12 347.79 AuS 4-Aus 24 1960 15 641.56 -20- – taus —- 1.46 5.35 4.48 -1. 64 1.30 2.86 -1.91 -7.70 40 Das ——- 1.56 6.8 7.40 -3.83 2.54 1. 47 3.48 -9.18 80 Da'.Js ——- 6.46 9.95 10.51 -6.85 -0.93 -0.25 11.21 -4.05 Mkt End Mth5. ——– Mar 1937 10 Ha 1946 44 Ma't 196 O Jun 1948 16 Jan 1953 13 Jan 1953 1 Apr 1956 20 tee 1961 16 —C-h-S17.65 94.29 74.81 5.97 10.07 3.53 49.8 14.55 Jul 28-Aus 18 1965 16 AuS 24-Sep 13 1965 14 894.37 9Ot92 4.12 2.36 4.82 3.34 6.39 Feb 1966 7.01 Feb 1966 6 5 11.27 8.06 Jan 3-Jan 24 1967 16 847.72 Sep 13-0ct 3 1968 12 949.47 Jan 5-Jan 26 1971 16 866.79 .Jul 25-Au9 9 1978 12 891. 63 Jan 7-Jan 31 1985 19 1286.77 -0.43 0.12 1.02 0.23 11 2.69 2.91 3.76 -1. 70 3.49 -0.04 6.53 -9.00 tee 1968 Dec 1968 Jan 1973 —— '1'i' 23 2 24 16.22 3.76 21.33 . The good news in the table, as mentioned above, is the fact that long strings of advancing days seem to be largely peculIar to a bull-market environment. The bad news is that they seem to be more characteristic of a bull market's later stages than its earlier ones. especially in recent history. All of the occurrences from 1960 to date have seen limited rises following the breadth strength, and .. in three cases at least, the remaining lifetime of the bull market was SIX months or less. The two occurrences in 1942 and 1943 and that of July-August, 1954 appear to be the only instances where a great deal of room remained on the upside. As might be expected. extraordInary breadth appeares to suggest addItional short-term strength. In 11 of 14 instances, the Dow had advanced 40 trading days, or approximately two monthslater. There appears to be a distinct upward bias for most of the other time periods under study. As is often the case. in other words. the recent extraordinary strength would seem to forecast further strength. rather than any imminent correction. AIVT rs ANTHONY IV. T ABELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (12 00 p.m.) S & P Composite (1200 p.m.) CumulatIve Index (1/31/85) 1279.04 178.75 2333,68 No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, dlrectty or indirectly, an offer or the soliCitation 01 an ofler to buyor sell any security referred toor mentioned The maller IS presented merely tor the convenience of the subscriber While we believe the sources 01 our information to be reliable, we In no way represent or guarantee the accuracy thereof nor 01 the statements made herem Any action to be taken by the subscriber should be based on hIs own Investigation and mformatlon Delalletd, HaNey, Tabell Inc, as a corporation and lIs ol1lcers or employees, may now have, or may later take POSitions or trades In respect to any secufltles mentioned In thiS or any future Issue, and such position may be dillerenlirom any views now or Ilelealler e,pressed In thiS or any other Issue Delafield Harvev laOOIl Inc, which IS registered With the SEC as an investment adVisor may give advice to 115 Investment adVisory and olher customers mdependenlly 01 any statements made In thiS 01 In any other Issue Further Information on any secunly mentioned herem IS available on request