Tabell’s Market Letter – September 08, 1989

Tabell’s Market Letter – September 08, 1989

Tabell's Market Letter - September 08, 1989
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.- TABELL-S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 H, September 8, 1989 ….,..,1—–..We-try I intl1isspace,. to av'Qicrthele-mphition.-W.to-turn- ayunctilarbu-rwecannotchangf.f thef8Gt -0.. that we have been writing financial commentary (and reading it) for more than 35 years. Since there is little new under the sun, it is easy to predict the sort of thing one will hear after the market has been going up for quite a while as is the case at present. As surely as death and taxes, there will emerge pronouncements informing us that the market is in need of a correction. We are not sure why this is so. It may be that there remains buried deep in our psyche Borne remnant of the puritan ethic, which, essentially, holds that it is sinful to have fun. It IS almost as if a rising market constituted a manifestation of illness which could be cured only by periodic doses of unpleasant medicine. However, a look at the facts of market history suggests that protracted. uncorrected rises are, first of all. perfectly normal phenomena and. secondly, tend to be signs of market health rather than sickness. In the present case, the period of time during which the market has failed to undergo a needed correction can be dated back to November 16, 1988. Since then, over exactly 200 trading days, the Dow rose 35 to a high reached a week ago without a single correctIon of as much as 5, the biggest interruption being a three-week hiatus involving a 4.44 correction last March. Since that time, the rise has been even steadier. with the Dow moving ahead 22.69, while the largest correction was a 3.63, five-day affair in June. The point that needs to be made is that this behavior is in no way unusual. Every bull market in modern stock-market history has produced a protracted rally not unlike the present one, and in many instances, that rally has greatly exceeded the current advance in both time and extent. The table below shows some figures. Bull Market Start Start Date Date Jun .13 49 J.un1349 Sep 14 53 Sep 14 53 Oct 22 57 Dec 17 57 Jun 26 62 Nov 22 63 Oct 7 66 Oct 7 66 May 26 70 Jul 7 70 Dec 6 74 Oct 1 75 Feb 28 78 Apr 21 80 Aug 12 82 Jan 24 83 Jul 24 84 Dec 7 84 Oct 19 87 Nov 16 88 LON G EST RALLY Days After Percent Length Bull Market Bull Mkt Start Advance In Das End Date End Date 0 41.32 282Jun12…s.0 –.JanL53 0 60.04 326 Jan 3 55' -Apr 6 56 38 59.31 410 Aug 3 59 Dec 13 61 356 32.06 370 May 14 65 Feb 9 66 0 22.21 145 May 8 67 Dec 3 68 29 42.05 205 Apr 28 71 Jan 11 73 206 28.93 140 Apr 21 76 Sep 21 76 542 28.38 107 Sep 22 80 Apr 27 81 114 21.17 100 Jun 16 83 Nov 29 83 96 59.55 343 Apr 21 86 Aug 25 87 274 35.00 200 ' Days Later 705 318 595 187 373 431 106 149 115 341 – Shown in the table is the longest rally for the ten most recently completed bull markets plus figures for the current one to date. For the purposes of this exercise, a rally is defined as an advance without any 5 correction. Six of the past ten bull markets produced rallies of this type lasting longer than the current one has so far, the longest of these running for 410 trading days, from December, 1957 to August, 1959. Five such rallies produced greater percentage advances than this one has shown so far, including rises of approximately 60 in 1953-1955, 1957-1959, and 1984-1986. The other advances were not too different in character than the current case, the smallest one being a five-month, 21 rise in January – June 1983. Through the mid-1960's there appeared to be a tendency for the longest rally of a bull market to be the first one, starting either from the low or from a test within a couple of months of that low. More recently, the tendency seems to have been for the longest rally to begin much later (viz December, 1957 or July, 1970). This one, having started November 16, 1988, over a year after the October 19, 1987 low, is typical. 1 What,is. perhaps, most -interesting is -that..-inno'casehas ,the-endof'along'rally signified the — – bull market's end. The last three columns of the table show the end date of each upward cycle's longest rally, the actual end date of the cycle, and the intervening number of days. The shortest interval between the rally's end and the bull-market peak was five months in April – September, 1976, and there have been cases where the advance continued for a8 much as two and a half years following the long rally's completion. At the current stage, therefore, although a short-term correction would be consistent with past history, there is no particular reason to expect one. Such a correction, moreover, were it to occurJ would, at worst, constitute an extremely early warning of the termination of the present bull market. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) 2693.20 S & P 500 (12 00) 346.13 Cumulative Index (9/7/89) 4929.50 No statement Or expression ofoplnlOO or any other matler herem contamed IS, or IS to be deemed to be, directly or Indirectly, an ofter or the sollCltalion 01 an offer to buy or selt any secUrity referred to or mentfOned The matter IS presented merely for the convenience of the subSCriber While we believe the sources of our InformatIon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements made herem Any action to be taken by the subSCriber should be based on hiS own Investigation and InformatIOn Delafield, Harvey, labelllnc, as a corporation and tts 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 posrtlon may be dllferen\ from any views now or hereafter expressed In thiS or any other Issue Delafteld, Harvey. labell 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 security menboned herein IS avaIlable on re9uest

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