Tabell’s Market Letter – March 02, 1990

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 March 2. 1990 – –.-y!e–. herewithw.arn ……therearlr—th'!iour e!ter ,tbJwk, .. will-'—qQn8iJJt. a,..QscJl.iQ!1..Qf,,.,…..,..,..,….-.,,.J- the rather formidable array of numbers below Those who are turned off -by this sort of thing – – may immediately consign this sheet to the waste basket. Numbers freaks that we are, our own view is that these statistics manage to shed some useful light on the market outlook. 1989 HlSh Late 1989 Low Januar HlSh Januar Low Februar H'Sh Februar Low 3/1 DJ Ind. 2791.41(10/9) 2569.26(10/13) 2810.15(112) SlP 500 359.80(1019) 332.61 (11/6) 359.69(112) IIJ Tran 1532.01 (9/5) 1136.74(12120) 1201.10(1/2) DJ Ut,l 219.50(10/10) 211.96(10/13) 236.23(112) OTe Ind. 472.4 (10/9) 432.1 (11/6) 455.6 (113) Breadth 1026.90 (8/8) 1008.85 (11/6) 1015.56( 113) 2543.24(1/30) 2649.55(2/15) 2564.19(2/23) 2635.59 322.98(1130) 334.89(2/15) 324.15(2/23) 332.74 1031.83(1/30) 1088.19 (2/9) 1076.64(2/22) 1133.89 216.30(1125) 223.91 (2/9) 216.86(2/22) 219.13 410.7 (1/30) 434.2 (2/15) 424.1 (2/23) 431.8 996.77(1/30) 1001.04 (2/9) 996.05(2/23) 998.29 As can be seen. the table traces the history of five market averages plus our daily breadth index from late last year though yesterday. The left-hand column serves to suggest that the stock market scene, as of last October, was essentially tranquil. Most major averages were in the area of their all-time highs. and it would have been picayune to point out that breadth had not posted a high since August and that the DJ Transports apparently had peaked in September. There is the old story of the farmer whacking his mule across the forehead with a 2-by-4. asserting that this was iust to get his attention. The October decline—200 points on the Dow—occurring. serendipitously, on Friday the 13th—served admirably to get investors' attention. What followed was, for the market. a process of separating the men from the boys. For the Dow Jones Innustrials and Utilities. the break was a one-day affair with lows 1—-'belflg-postd.atb-'–othl'–indi.tor-s,a8Ahetable.ghows,wentontonewbottoms.,…- three weeks later The Transports-, in the course of emerging -as theweakest -of the-bunch continued to a new low in December. posting a whopping 25 decline. The year-end rally arriYed on schedule. and the first two days of the new year were bright ones. 8S the averages continued to move ahead. For the Industrials and Utilities, once more. new. all-time highs were involved. The S & P 500. however, marginally failed to better its October peak. and OTC issues. Transports and Breadth fell well short. It was clear, by this stage. that market leadership was becoming sharply narrower. January was a declining month with the low occurring at month-end. Most of the averages posted new lows. below the bottoms which had occurred in the fall of 1988. Only the Utilities were able to hold well above their prior bottom. although the DJIA also did so on an intra-day basis. In most cases, however. the penetration of October-December lows was decisive By this time, there was abundant evidence of market deterioration. Breadth was below its level of November. 1988 when the Dow was under 2100. The Transports. by this time. had shed almost a third of their value, and even the hitherto-strong utilities posted a fairly seyere decline. It was necessary to begin seriously to consider the possibility that January had seen a rna lor market high. A rally in all of the averages took place in early February. followed by a retracement in which most indicators—breadth. significantly. being an exception—held above their January lows. Prices have moved irregularly upward since. Those January lows and the subsequent. mid-February highs seem to us to be significant points to watch. Ability to penetrate the February peak convincingly. would suggest. for many indicators. a test of the January highs. This is particularly true for the DJIA. which has been showing above-average action for the entire period. It is interesting that the hitherto laggard DJ Transports have already exceeded their mid-February levels., On the other hand. failure of the current advance; … followed -by.newlows .below-those.of January, would buttress the contention that a major downtrend is now in effect. ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL INC. Dow Jones Industrials (12 00) S & P 500 (12 00) Cumulative Index (3/1190) 2653.38 335.53 4773.88 AWTebh No statement Of expreSSion ot OPInion or any other matter herein contained IS, or ISto be deemed to be, directly or Indirectly, an Offer orthe solicrtahon ot an offer to buy or sell any secuTity referred to or mentioned The matter IS presented merely for the convenience of the subscnber While we believe the sources of our information to be rehable, we In no way represent or guarantee the accuracy thereot nor 01 the statements made herein Any action to be laken by the subSCriber shOuld be based on hiS own investigation and Intormatlon Delafield, Harvey, Tabellinc , as a corporation and rts officers or employees, may now have, or may later take, pOSitions or trades In respect 10 any securities menllOned 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 Delalleld, Harvey, Tabelllnc, which IS registered wllh the SEC as an Investment adVisor, may give adVice tOils Investment adVISOry and other customers Independently ot any statements made In thiS or In any other Issue Further Information on any security mentioned herein IS available on request