journal of technical analysis (jota). issue 17 (1984, february)

~~~:~~IANS ASSOCIATION

JOURNAL Issue 17 February 1984

MARKET TECHNICIANS ASSOCIATION JOURNAL

MTA Journal/February 1984 1

MARKET TECHNICIANS ASSOCIATION JOURNAL Issue 17 February, 1984

Editor: James M. Yates Bridge Data Company 10050 Manchester Road St. Louis, Missouri 63122

Contributors: Joseph H. Bat-the1 Crawford Perspectives Walter Ft. Deemer Don Dillistone Dowse Securities Management Corporation Herzfeld & Stern ISFA Corporation Dennis E. Jarrett John E. Mahoney John J. Murphy Roger Williams Richard J. Yashewski

Publisher: Market Technicians Association 70 Pine Street New York, New York 10005


@Market Technicians Association 1984


MTA JOURNAL - FEBRUARY, 1984

Title TABLE OF CONTENTS

MTAOFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page

6

MEMBERSHIP AND SUBSCRIPTION INFORMATION .............................................. 7

STYLE SHEET FOR SUBMISSION OF ARTICLES ................................................. 8

MTA LETTER FROM THE EDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . James M. Yates

9

MARKETREND: A TECHNICAL MARKET OPINION (January 3,1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Joseph H. Barthel and Richard J. Yashewski

11

CRAWFORD PERSPECTIVES (December 17,1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Crawford Perspectives

MEMORANDUM(December23,1983)............................................................ 33 Walter R. Deemer

CANADIAN RESEARCH REPORT TECHNICAL LETTER (December 9,1983) . . . . . . . . . . . . . . . . . . . . . . . . . Don Dillistone, C.F.A.

37

THE DOWSE MARKET LETTER (January 13,1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dowse Securities Management Corporation

41

TACTICS AND TECHNICS (December 14,1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . Herzfeld & Stern

47

lNVEST(January6,1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 ISFA Corporation

MARKET TECHNICAL ACTION (December 29,1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Dennis E. Jarrett, Ed.

MARKETFOCUS(November9,1983)............................................................ 67 John E. Mahoney

FUTURE TRENDS (January 12,1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 John J. Murphy

WILLIAMS TRENDS INDICATORS (December 12,1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Roger Williams, Ph.D.

CONTRIBUTING INVESTMENT NEWSLETTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

INDEX OF AUTHORS (MTA Journal - Issue 1 through Issue 16);, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

INDEX OF TITLES (MTA Journal - Issue 1 through Issue 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95


1983-84 MARKET TECHNICIANS ASSOCIATION

OFFICERS

PRESIDENT Fred Dickson Millburn Corp. 212398-8489

VICE PRESIDENT John Greeley 212/747-l 520

VICE PRESIDENT (SEMINAR) Richard Yashewski Butcher & Singer 516/627- 1600

SECRETARY Gail Dudack Pershing & Co. 212902-3322

TREASURER Robert Simpkins Delafield Harvey Tabell 609/924-9660

COMMITTEE CHAIRPERSONS

PROGRAMS John Greeley 212/747-l 520

ETHICS & STANDARDS/PUBLIC RELATIONS Tony Tabell 609/924-9660

NEWSLETTER Robert Prechter 404536-0309

PLACEMENT John Brooks 404/266-6262

JOURNAL James Yates 314/821-5660

COMPUTER SPECIAL INTEREST GROUP John McGinley 203/762-0229

CERTIFICATION FUTURES SPECIAL INTEREST GROUP Charles Comer John Murphy 212825-4367 212/‘724-6982

MEMBERSHIP Cheryl Stafford 617/227-9500

SAN FRANCISCO TECHNICAL SOCIETY SPECIAL INTEREST GROUP

Henry Pruden 415/459-l 319

LIBRARY Ralph Acampora 212i747-2355

EDUCATION


MARKET TECHNICIANS ASSOCIATION

MEMBERSHIP AND SUBSCRIPTION INFORMATION

REGULAR MEMBERSHIP - $50 per year plus $10 one-time application fee.

Receives the MTA Journal, the monthly MTA Newsletter, invitations to all meetings, voting member status, and a discount on the Annual Seminar fee. Eligibility requires that the emphasis of the applicant’s professional work involve technical analysis.

SUBSCRIBER STATUS - $50 per year.

Receives the MTA Journal and the MTA Newsletter, which contains shorter articles on technical analysis. The subscriber receives special announcements of the MTA meetings open to The New York Society of Security Analysts and/or the public, plus a discount on the Annual Seminar fee.

ANNUAL SUBSCRIPTION TO THE MTA JOURNAL - $35 per year.

SINGLE ISSUES OF THE MTA JOURNAL (including back issues) - $15

The Market Technicians Association Journal is scheduled to be published three times each fiscal year in approximately November, February, and May.

An ANNUAL SEMINAR is held each Spring.

Inquiries for REGULAR MEMBERSHIP and SUBSCRIBER STATUS should be directed to:

Membership Chairman Market Technicians Association 70 Pine Street New York, New York 10005


STYLE SHEET FOR THE SUBMISSION OF ARTICLES

MTA Editorial Policy

The Market Technicians Association Journal is published by the Market Technicians Associ- ation, 70 Pine Street, New York, New York 10005 to promote the investigation and analysis of price and volume activities of the world’s financial markets. The MTA Journal is distributed to individuals (both academic and practitioner) and libraries in the United States, Canada, Europe and several other countries. The Journal is copyrighted by the Market Technicians Association and registered with the Library of Congress. All rights are reserved. Publication dates are February, May, and November.

Style for the MTA Journal

All papers submitted to the MTA Journal are requested to have the following items as pre- requisites to consideration for publication.

Short (one paragraph) biographical presentation for inclusion at the end of the accepted article upon publication. Name and affiliation will be shown under the title.

All charts should be provided in camera ready form and be properly labeled for text reference.

All tables should be properly labeled and in camera ready form.

Paper should be submitted typewritten, double-spaced in completed form on 8% by 11 inch paper. If both sides are used, care should be taken to use sufficiently heavy paper to avoid reverse side images. Footnotes and references should be put in the end of the article.

Greek characters should be avoided in the text and in all formulae.

One submission copy is satisfactory

Manuscripts of any style will be received and examined, but upon acceptance, they should be prepared in accordance with the above policies.


A round of applause for those fearless technicians who provided their newsletters for this issue. It was decided to include the entire newsletter in this issue. If more are received for next year, the space per newsletter will be reduced.

At the suggestion of Bill Doane, we have obtained a copy of The National Directory of investment Newsletter’” from Idea Publishing Corporation, 55 East Afton Avenue, Yardley, Pennsylvania 19067, telephone (215) 493-1810. The cost for those interested is just $16.00, plus !§3.00 postage and handling.

Looking forward to the Seminar. We hope to have greater participation from the speakers in the MTA Journal by contribution of their remarks. Publication will provide valuable reference at the Seminar as well as a convenient record of participation.

A hearty thanks to Sally Ruppert for once again assisting valiantly in the final production.

James M. Yates EDITOR


This page left intentionally blank for notes, doodling, or writing articles and comments for the MTA Journal.


MARKETREND

Volume 14. No. 1 Januaw 3, 1984

4 Breadth-Momentum

4 Sentiment Indicators

REBUILDING THE WALL OF WORRY -

r E

Ii N I C A L

Ml A R K E T

0 P I N I

C n

-

Reproduced m its entwty with permwon of Richard J. Yashewskl. Joseph H. Barthel, and Butcher 8 Smger. Inc. Copyright 1984 by Butcher 8 Singer. Inc.


MARKETREND -2- TECHNICAL MARKET OPINION

4 bull market climbs a "wall of worry". During the June-August period of 1982 the bull was putting the finishing touches on a very.well constructed wall of worry that #as built during the 1981-1982 bear market. The wall held together amazingly well through the August-November 1982 historic lift-off phase. That upside explosion froze the bears in their position and even caused the bulls to expect some sort of retrace- nent phase. That disbelief and doubt was the glue that held the wall of worry together. The first quarter of 1983 brought higher prices and a bit of deterioration in the senti- nent sector but although some cracks appeared and some blocks fell off the wall remained standing. From April to late June 1983 the wall of worry tumbled in a rather rapid fashion. The speculative fires burned brightly, the public became overly optimistic while NYSE and AMEX members took a far more defensive position, advisors were bullish and insiders were selling heavily. We could go on but the point is that virtually every important building block of the wall of worry had tumbled to the ground. The Sentiment indicators "guaranteed" a corrective phase but of course they do not tell you the way that correction will unfold. From mid June to mid July we were of the opinion that the correction could take the form of a "washout" on the downside. We got the "mini-massacre" to the early August lows but when there was no follow through we adapted 3ur opinion to a trading range type of correction with any unusual weakness limited to the secondary sector.

Since the August lows we have remained confident that downside activity would be limited to the lower bounds of the trading range. While the activity of a limited number of Blue Chip issues lured a number of analysts to call for an end to the corrective phase, we resisted the temptation. There were a number of reasons we resisted but perhaps the most important was that the wall of worry had not been properly repaired. As you have seen on the first page of this issue the bull has been working on that wall. He was working at a very gradual pace for the past four to five months but over the past few weeks he has been rebuilding the wall at an almost feverish pace. The wall is now strong enough to insure that any downside probes will be very limited in scope and duration. The wall is also strong enough to support a meaningful upside breakout of the extended trading range we have lived with for all these long months. The length and strength of the projected advance will be dictated by the interaction of our three monitored sectors. Let's take a look at their current condition and then we will draw our conclusions.

BREADTH-MOMENTUM INDICATORS The trading range activity of the past six to seven months has witnessed three meaningful downside probes. The first began from the mid June highs, was temporarily inter- rupted by the aborted July rally attempt, but was completed during the late July-early August "mini massacre". The second, and less intense probe, originated off the mid October rally highs and was completed by early to mid November. That selling wave was centered in the secondary issues, took the AMEX and OTC averages to new lows and created a solid oversold condition in the secondary sector. The third and least intense probe was completed by mid December. That decline plus year end factors did produce new lows in the NYSE and AMEX cumulative advance-decline lines and some additional weakness in HYSE, AMEX and OTC high-low comparisons. But also of note, the Blue Chip sector (DJIA) held far above its August and November lows, the more representative averages (NYSE Composite and S&P 500) respected their August and November lows, and the weakest sector (AMEX and OTC) respected their November lows.

We have been looking for an intense downside probe (within the bounds of the trading range) to signify the completion of the corrective process in the Breadth-Momentum sector. Is the market telling us that the Breadth-Momentum corrective process will instead bea miniature instant replay of the September 1981 to August 1982 Breadth-Momentum


TECHNICAL MARKET OPINION -3- MARKETREND

situation? The more we look at the activity of our Breadth-Momentum indicators the more convinced we become that this process may indeed be unfolding The missing ingredient that would prove this thesis correct is a technically strong'uoside surge. The rallies off the August and November lows did not display strong characteristics and eventually faded. Thus far the bounce off the mid December lows has been equally un- impressive. Is this due to typical year end cross currents or does it signify the need for yet another short term downside probe ? The jury is still out on that question. But a word of advice - believe any short term show of strength. If the market.is able to muster enough strength to create a significant overbought condition, it would be proof positive that the trading range corrective activity is complete.

MONETARY INDICATORS The decline to the mid December lows for the bond market violated some imoortant suooort zones. In our last issue based on a solid oversold and improving sentiment conditions, we told you to expect a short term upside bounce. But a bigger concern was the inability of the bond market (and financial futures contracts) to launch rallies capable of penetrating downtrend lines and resistance zones, while declines took out suoport zones and uptrend lines. Our bond market indicators tell us that the rally off the'mid December lows has not demonstrated any unusual technical strength. But the activity of T-Bill, T-Bond and Cash T-Bonds has been very encouraging. The short term trend has clearly turned bullish and if there is additional upside progress over the next week or two the intermediate term trend could turn positive also. The bond market is properly positioned to extend its rally off the December lows. If it does this development could be the catalyst for an equity market upside breakout. (See the Monetary Indicator Conen- tary section for specifics).

NI INUlCAIUKb SENTIMEV- -.'--- - We have

_-^--

a split situation in the sentiment sector but the big news is the outstanding improvement in many of the components of our Sentiment Scoreboard. Our Early Warning Sentiment Indicators are on balance neutral to negative. Equity option and stock index option put-call ratios are no better than neutral and in some cases bearish. In addition the premiums on stock index futures are at their hiqhest (and most bearish) levels since they came into existence. Their message is that there may be one more short term selling wave before the market accomplishes a trading range upside breakout.

The reason why any short term downside probe will be very limited in duration and scope and the reason why it may not occur at all is the very significant improvement in the majority of our Sentiment Scoreboard components. The Sentiment Scoreboard now stands at 12 Bullish, 2 Bearish and 5 Neutral indicators versus a 9-5-5 level at the time of our last issue. In addition there is the distinct possibility that two or three of the neutral indicators could swing to the bullish category over the next week or two. If this takes place the Sentiment Scoreboard would be in a condition similar to August- September 1982. (It is important to refer to our illustrations and comments in the Sentiment Indicator Commentary section).

Over the past few months we have commented about the gradual but steady improvement in these intermediate term sentiment indicators. That process has accelerated over the past two weeks. The past two weeks have seen the quickest and most dramatic improvement in our NYSE and AMEX member trading statistics that we can remember. (Please refer to the Sentiment Indicator Section for details). The public sector has picked up its short selling in dramatic fashion while NYSE and AMEX members are positioning for an eventual upside breakout. We are closing in on a sentiment extreme.that is in many ways comparable to the summer of 1982 -- The wall of worry is rebuilt.



INCLUSION long with our last issue we included a Special Report on the mounting evidence of a

potential rolling top. In that report we presented a number of scenarios or "game plans" that the market could follow. Each of those game plans would alter the timing of the completion of the rolling top process. We believe very strongly that during 1984 there.will be a very significant and sharp break in equity prices. But we also hold the opinion that the break will not occur until the market has posted new recovery highs.

The foundation built prior to the rally to new highs and the technical strength demonstrated during that rally phase will dictate how long that rolling top process will extend before it overwhelms the bullish forces. The foundation for the rally is built on sentiment considerations. While our early warning indicators are not positive, the more important components of our Sentiment Scoreboard are telling us the technical foundation for a substantial and significant rally is now in place. Our Breadth-Momentum indicators will monitor the strength of that rally phase. They generated the numbers for us to label the August 1982 lift-off as "historic" and they generated the numbers for us to identify the loss of momentum in April-May-June of 1983. We trust they will do the same as the projected rally unfolds in the coming weeks.

Our first issue in Januarv of 1983 was titled "It Ain't Auqust But It Ain't Over". The English could have been better but the advice was sound. We already have a title for this issue but a second choice would be "It Ain't January of '83 But It Ain't Over". Yes, the bull market is 28 months old; yes, there are unmistakable signs of a rolling topi yes, we expect a substantial decline to develop during 1984; yes, there are sectors and industry groups that have already seen their bull market highs; and yes, we expect an-y advance from current levels to be far more selective. These opinions are based on solid technical evidence. But there is also enough technical evidence pointing to the fact that the bull market ain't over yet.

MTAJournaVFebruary1984 14

TECHNICAL MARKET OPlNlON

Brudth-Yomontum Indlcatoorr

-5 MARKETREND

INDICATOR

NW IO-Day Advance/cec1ine

m The oversold reached in mid December II a good signal for an upside bounce. The upside bias of the past two weeks has brought the IO-day liln back to neutral territory. If a solid overbought develops, it viuuld signal an upside resolution of the trading

Ti%E lo- and 30-Day Advance/Oecli,,s range. Th 30 d Ii has dropped to neutral te:rftorJl bupit has yet to move to a solid oversold condition. The 10 and 30 cmbinatlon Is Positive. with the lo- over an upturned

m lo-Oay Closing TICK

NVSE 10 - and 30-Day Closing TICK

RVSE lo-Day Trading Index

30-day line. One week ago. the IO-day TICK registered it's best oversold condition since August of lgE2. But part of the credit must go to year end tax loss selling that tradftionrlly depresses this indicator during mid to late December. So, this positive must be taken *Ith reservations. The 10 and 30 carblnation is neutral with an upturned and neutral IO-dav line above a rtlll d&turned 30-day line. - The IO-day line fafled ta generate a deep oversold during mid December and is already

m lo- and 30-Oay Trading Index in overbought territory. The 10 and 30 combination is rmsitive. but we would have liked to see a deeper o;ersold

RYSE lo-Day High-Low Differential

from bath the lo- a;;',:"-day lines during the mid December pe The IO-day line broke below it's August and Novrbcr-lows in mid Llecabw. Part of the blame is due to year end t4x loss selling and Dart to the man" oreferreds wstina new lows. but before we c;n.get positiie. th; October-.

m lo- and 30&y High-Low Differential and Nwabcr peaks must be bettered. The 10 d 30 combination is still negative. but the'fO-day is turned up. A move by the lo- day line above it's late November hiqhs would

- m Issues Above IO-Yeek Average

be a solId sign of progress. The IO-week line Is once again nearing oversold territory (below 30%). Yhat we ,,eed 1s

.either a deep oversold or a awe above the mid October level of 65%. Either would signal the

m ~SSUCS Above 30-Week Average potential for a sustained upside move. The30 -wee kli ha d down to the low 402 level. Th?: itsczrable to the lerelr

WE IO-Day Advancing/Declining Volume reached in early Nwsber. The IO-day line was in oversold territory in mid Oecenber 4nd contributed to the m'drket's ability to lift throuqh the end of December. Now cu&ntly mildly overbought. it's inmrtant to see additional rtrenath over the ncit week or tm.

~.~ -~

NVSE IO- and 30-Day AdvancinglDccltning Volume The 30-day line has traced out three oversold readings sime the June top. August was most intense. early November second best, and third was the mid December experience. Is this an indication of a loss of danside

T(YSE Cumulative Advance/Decline Line

MEX Cuulative Advance/Oacllnc Line

mmentw? A good overbought nuld say yes. Th WISE cwlative idvanceldecllne Ii h ,:ted a noninal new low. but price ho% $11 above it's kgust and November lows. Yill price follow breadth? If It doesn't, it would . set up a powerful positive divergence.

The MEX advance/decline line has posted , new low. but the OTC advance/Decline line has held above it's early November low. AHEX and OTC prices are also comfortably above their November lows - this is a potentially big positive develoyrcnt.

Earron's Stock Group 4-Week Average This indicator has just completed It's third straight week in which no groups made new highs or new 1~. With the year-& cross currents out of the MY. we should set sane- thing decisive very soon.

)1VSE 20 lbst ktive Stocks - l-week Average This indicator refuses to move to a deep oversold condition. At -15 on a four week basis, it shows less downside intensity than

m lo-Day Daily Best ktrve August or early November. me lo-day line reuined in oversold territory for much of the past two weeks. It is now in the process of moving towards neutral territory. There is roan for further rally activity. Match closelv to see if a solid overbought develops. -

iWSE lo- and 30-Day Daily Fbst Active Th 30 d line is cmpleting a nearly tr) mo:th -$od in solid oversold territory. The 10 and 30 cmbinatfon is PO* positive (10 wer an upturned and deeply oversold 30-day llnel.


MARKETREND

Monetary Indicators

TECHNICAL MARKET OPINION



Monetary Indloator Commentary

BOND PlARKET INDICATORS FIXED

AS T-BILLS, T-BONDS AND CASH T-BONDS

ATTEMPT TO REVERSE BEARISH TREF!D

In our last issue We observed that an oversold condition had developed and sentiment was improving. Our COnClUSiOn was to expect some short term strength but remain more concerned with the series of poor rallies and more convincing declines that have taken place since the May top. The short to intermediate trend for interest rates is still bearish but we do see some?

There is no way to turn the mid December violation of the Dow Jones Bond Average August lows (at 69.85) into a positive but it is encouraging that since that point there has been a holding action in the price area (12-30-93 close 69.47 vs. 69.38 on 12-16-83). The NYSE Bonds cumulative advance/decline line took out its August-November support line but as of now is still above its August lows. New lows in price unconfirmed by breadth are an important positive divergence. Volume actually contracted over the past two weeks but volume comparisons can be very misleading during the year end holiday season. The lo-day high-low differential did make a new low two weeks ago but has already turned up. It would have to better its September-November highs to turn positive but at least there was no further deterioration. The lo-day advance/decline oscillator correctly forecasted the recent strength and is now in neutral territory. It would be a big plus if this indicator generates a stronger overbought than September and November over the next few weeks. The ability to get deeply overbought is a sign of internal strength and brings added technical credibility to any rally phase. A week after our last issue our Bond Market Sentiment Index reached a very bullish extreme (only 24% bulls on bonds and an equally positive 29% on bills). This sentiment survey is sus- pended for the holiday season but the current rally did start from a significant sentiment extreme. Now for a look at some very promising activity in the futures and cash markets.

T-BILLS, T-BONDS AND CASH T-BOFDS

THE POTENTIAL FOI-! TREND REVERSALS



T-Bills - In our last issue we were very concerned with the break of the important 90.40 -by March T-Bills. That support zone violation had no downside follow-through and more importantly the rally that developed has now resulted in an upside penetration of the very important A-B downtrend line. Last week's high of 90.82 was a big plus and any close over 90.90 would signal further rally potential to the 91.50-91.60 zone. There is a solid evidence of a trend reversal in these futures contracts.

T-Bonds - While the important A-B downtrend line has yet to be penetrated we are en- couraged with the recent strength in the March T-Bond contracts. A close above 70 l/2 would accomplish the trendline penetration and a close above 71 l/2 would turn the intermediate term picture decidedly bullish. A close below the mid December reaction lows at 69.00 would negate the recent positive progress.

Cash T-Bonds - The mid December decline did respect the early August lows. A close above 89 would take out the important A-B downtrend line. A close above the November highs at the 90 level would turn the intermediate trend positive.

Conclusion - We are strong believers in the phrase the trend is your friend. We also feel it is very important to realize when a potential trend reversal may be developing. Since the August lows the rallies have been poor and the declines have been damaging. There is increasing technical evidence of a reversal of this trend. The short term trend remains positive as long as the mid December lows are respected. If the current rally accomplishes the upside objectives outlined above the intermediate term trend will also turn bullish. There is mounting technical evidence that the interest rate sector could indeed be the catalyst for revitalized upside activity in the equity markets.


.


Sontlnnnt IndIcatora

-9- MARKETREND

SENTIFENT SCCEEBCPRD

Week Ending 4-Week Bull-Bear 12/30/83 Average Rating

NYSE Specialist Short Sales 24.3% 28.3% Bullish AMEX Specialist Short Sales 11.6% 12.2% Bullish NYSE Public-Specialist Short Ratio 101.3% 75.5% Bullish AMEX Public-Specialist Short Ratio 385.7% 365.9% Bullish NYSE Member Short Sales 75.3% 79.1% *Bullish AMEX Member Short Sales 54.9% 55.7% *Neutral NYSE Public Short Sales 24.7% 20.9% *Bullish AMEX Public Short Sales 45.1% 44.3% *Neutral NYSE Public Short Ratio 2.26% 1.96% Bullish AMEX Public Short Ratio 1.24% 1.33% Neutral NYSE Total Short Ratio 9.19% 9.47% Bullish NYSE Public-Member Short Ratio 32.6% 26.3% *Bullish AMEX-NYSE Volume (Adjusted) 25.2% 20.0% Bullish Investment Advisors - % Bearish 21.1% 18.2% Bearish Indata All Equity Institutional Cash Levels 8.6% 8.55% Bearish Insider Buy-Sell Ratio (8-Week Moving Average) 1.91 *Neutral NYSE Odd-Lot Index - lo-Day Moving Average = 2.34 Neutral NYSE Short Interest Ratio 2.29% December versus 2.33% November Bullish AMEX Short Interest Ratio 2.19% December versus 2.11% November Bullish

Change From Previous Issu

Neutral Bearish Neutral Bearish

Neutral

Bearish

NOTE: Bull-Bear ratings are based on the 4-week averages of the monitored sentiment indicators unless otherwise noted.

NOTE: The NYSE and AMEX member trading-statistics are reported on a two-week delay basis. The statistics reported for the week ending December 30, 1983 are actually figures for the trading week ending December 16, 1983.

* Rating changes this week.

- mm----

EARLY WARNING SENTIPENT INPICATCRS

INDICATOR

Put-Call Premium Ratio Public Put-Call Ratio O.C.C. Put-Call Ratio O.C.C. Dollar Wtd. Put-Call Ratio CBOE Put-Call (lo-Day) CBOE Dollar Wtd. Put-Call Ratio S & P 100 Put-Call Ratio (5-Day) S & P 100 Customer Put-Call Ratio (5-Day) AMEX Major Market Put-Call Ratio (5-Day) Marketvane Stock Index Sentiment Value Line Index Futures

Premium/Discount lo-Day Moving Average S & P 500 Index Futures

Premium/Discount lo-Day Moving Average NYSE Composite Index Futures

Premium/Discount lo-Day Moving Average

Week Ending 4-Week Bull-Bear 12130183 Average Rating

.38 -- Neutral 26.1 26.6 Bearish 37.2 37.6 Neutral 14.2 15.0 Bearish 47.8 -- Neutral

9.5 11.7 Bearish 88.2 -- B.earish

112.0 -- Neutral

57.0 -- Bearish 34 -- Bullish

306.9 -- Bearish

299.3

158.5

-- Bearish

-- Bearish


MARKETREND -1 o-

Sontlmont Indicator Commentary

THE WALL OF WORRY

-- AT THE BOTTOF!

-- AT THE TOP

-- AND NO\!


00

So NYSE COMPOSITE KmHy Clold

80

I Sentiment Swheboahd

J1w1e’l7, 1963



The preceeding illustration shows the condition of the Sentiment Scoreboard near the 1982 bottom, the mid,1983 top and now. The Scoreboard is comprised of 19 very dependable sentiment indicators. Whenever a clear cut majority of these indicators move to a bullish or bearish extreme it is evidence of an important market turning point. Long time readers of this letter know very well the very many accurate calls made by this composite indicator.

Currently the Scoreboard stands at 12 Bullish, 2 Bearish and 5 Neutral indicators. That might at first glance appear to be a bit below the desired level. But a closer look shows that virtually all of the bullish indicators are extremely bullish and there is also a very good chance that two or three of the neutral indicators could swing over to bullish over the next week or two. Also worthy of mention is the fact that these readings were generated in a market environment that was trending sideways as opposed to a market which had experienced a sharp decline. We are impressed with bullish sentiment readings no matter how they are generated but more times than not they are even more significant when they appear in a "dull" market climate. The often wrong investor groups are busily positioning for a downside resolution of the six to seven month trading range while the pros are positioned for an upside resolution. You - may have your doubts about the many Breadth-Momentum problems that still exist and you may be uneasy about the interest rate situation but these indicators are telling us if there are to be any surprises the surprise will be on the upside.

We would like to see a few more bearish advisors and the relatively low level of institutional liquidity will be a limiting factor but speculation has dropped to bullish levels, insider selling has dried up and virtually every measure of public versus NYSE and AMEX member short selling is at extremely bullish levels. Take some time to study the illustrations that follow. A number of the indicators are actually at more bullish levels than they were at the August '82 bottom. When viewed as a composite the message is clear. The market is in a very bullish "low risk zone". How much power it will be able to generate and how long the wall of worry will remain intact are questions yet to be answered. But these important and dependable indicators are telling us the next important move will be to and through the trading range highs.

INSIDER BUY-SELL RATIO GREATLY IKPROVED,



NY ANII AREX SPECIALIST SHORTS AT VERY

SPECI/J,LISTS BULLISH - PUBLIC BEAFISH WHC DO YOU WANT TO FOLLOW?

NYSE PMUYSPECIALIST SUORT RATlO I-WEEK NOVINQ AVERAGE

----- m-w-

----m-

-- --



TRADING RANGE ACTIVITY AND THE DEEP NCVEi+BEP WPRECTICb! IN SECONDARIES HAVE BROUGHT THE SPECULATIVE FIRES UNDER CCMTROL,



THE SHORT INTEREST RATIO -- BULLIWBIASED-OP YOTH

200

loo

1,O

170

I**

1so

1.0

110

I20

110

loo

00

nvss snos, m7wSST i- v DA 111

so

70

SO

NYSE SHORT INTEREST RATIO IUONTHL Y DATA)

ANEX SHORT INTEREST RATIO WONTHLY DATA1



A review of our favorable sentiment indicators would not be complete without a view of the NYSE and AMEX Short Interest Ratios. The Short Interest Ratio (SIR) is one of the oldest measurements of public market sentiment. It is calculated by dividing the total number of shares that have been sold short on the New York Stock Exchange (or AMEX) by the average daily trading volume for that exchange. Stock market history tells you that a high reading of more than 1.50 indicates a large number of investors have sold stock short in expectation of declining prices. As the majority of investors are usually wrong at key market turning points, a high SIR is usually followed by higher market prices. Conversely, a low SIR of less than 1.00 indicates that investors have a high degree of optimism that the market is heading upward and are therefore not selling short. This usually occurs after a period of steadily rising stock prices and is often followed by a substantial decline.

A lot has been written about the very bullish signals that these indicators have reached over the past four months. While they have not received the press coverage that the bulls on the SIR have, a few astute technicians have raised very valid objections to the recent unusually high SIR readings. Are the readings indeed super bullish? Are the readings over inflated and the indicator actually outmoded? It is our opinion that the real answer lies somewhere in between these two opinions. Let's take a look at the principal points raised by both camps.

The SIR Believers - The believers throw the raw numbers at you. Four consecutive months of record or near record SIR readings (2.28, 2.11, 2.33 and 2.29). They remind you that there are over 205 million shares sold short and give you the impression every last one of these shares will run to cover just as soon as the market rallies for a few days. They cite as proof positive that this will occur the many very accurate signals this indicator gave in the period from 1933 to 1975. They try to downplay the advent of listed options trading and may even try to convince you that the availability of puts has actually reduced the overall level of short selling.

The SIR Disbelievers - The disbelievers will refer you to the chart on NYSE Short Interest. They will point dut the nearly parabolic rise in short interest since the 1977-1978 period (when listed options trading became widespread). They will explain in detail the advantages of reverse conversions for member firms. They will explain a number of other profitable option hedged strategies and straight arbitrage opportunities and conclude that the NYSE and AMEX SIR's are useless in today's marketplace.

Our position lies in between these two extremes. The stock market and the technical indicators that are generated from its statistics are in a constant state of change. There is no question that the recent ultra bullish readings must be taken with a grain of salt. The 2.11 to 2.33 readings of the past four months cannot be as valid as for instance the 2.00 of July 1970 or the 1.90 of September 1975, but neither can they be ignored. The advent of listed options and the increase of other sophisticated arbitrage strategies has merely changed the parameters of this indicator. We disagree with those who would discard the NYSE and AMEX SIR's and we disagree with those who mistake the recent readings as something ultra bullish. It’s quite apparent that the parameters have changed when you can go through the entire 1981-82 bear market and the best you have to show is a 1.56 reading in July of 1981. Those waiting for a 1.00 reading to hit the exit doors would have been forced to ride out the entire bear market fully invested.

The parameters we have found effective are bullish above 2.00, bearish below 1.50 and obviously neutral between those two points. Another very important point is that these two indicators must be used in conjunction with many other valid sentiment indicators. Your position on sentiment conditions changes only when the vast majority of the indicators are clearly bullish or bearish. We were very well aware of the 2.28 NYSE reading and the 2.18 AMEX reading in September but did not overreact because mOSt Of our other Sentiment Scoreboard indicators were still a good distance from bullish territory. Now with four consecutive 2.00 plus monthly readings for both the NYSE and AMEX SIR's coupled with the significant improvement in the other Scoreboard COmPOnentS we believe a significant bullish sentiment extreme has been reached.



MARKETREND'S BEST CALL FCR 1983

THE FOLLOWING IS A REPRINT FROM THE MAY 2, 1983 ISSUE OF MARKETREND,

RISK/REWARD RATIOS REVISITED

With everyone looking for what to buy we thought it might be time to remind our clients to remember your risk/reward ratios.

It has been our contention that the average length of time a stock group can enjoy a Bull Market advance is between 4-8 years in duration.

If our contention that stock group life lasts 4-8 years then it seems to us that an important observation to make currently is to point out those groups that have exceeded 8 years in a bullish trend.

:xample of an industry group's average life

ENERGY (UNWTD)

96911970 1197111972 1197311974 1197511976 11977 11978 1197911980 1198111982 1198311984


TECHNICAL MARKET OPINION 9. Mini Computers

-17- MARKETREND

- Data General, Datapoint, Digital Equipment, Prime C(XnPUter, Wang Labs 10. Word Processing

- CPT, NBI, Syntrex, Wang Labs 11. Cad Cam

- Autro-Trol, Computervision, Evans & Sutherland, Intergraph, Scitex 12. CATV

General Instruments, Scientific Atlanta, Oak 13. Waste Disposal 14. Publishing & Newspapers 15. Radio - TV Broadcasting

Z: Shoes Insurance - Property & Casualty, Specialty, Auto

Example of an industry chart with poor long-term risk/reward ratios

GENERAL HOSPITALS

SUMMARY

In the initial first leg of this Super Bull market most stocks and groups participated in the rally stage. We believe as the Bull Market matures the need to focus in on groups with proper risk/reward ratios will be an important ingredient to investment success. We strongly urge long-term investors to weigh heavily their portfolios in the group lists as possessing positive long-term risk/reward ratios and in turn be a scale up seller of the long-term hyperextended groups.

POST SCRIPT

We included the brokerage stocks in the group that possess long-term unfavorable risk/ reward ratios. The only way we can explain this inclusion would be if volume contracts to the 60-80 million share range during the latter'half of 1983 and possibly through the balance of this Super Bull Market. Time will tell.



MARKETREND'S 1983 ANNUAL REPORT

OUR DECEFlBER 31, 1982 TO DECEP!BEP 31, 1983 RECOfYENCATIONS

LIST CF COYPLETED TPADES

Great Atlantic & Pacific Tea Co. California llicrowave Compucorp American Home Products ICN Pharmaceuticals AVX Corporation Royal Crown Cos. Technology for Communication Ducommun Inc. Corvus Systems Southern Company Williams Companies Beefsteak Charlie's International fiultifoods Dr. Pepper Adams-Russell Chubb Corporation 11GM U/A Entertainment LTV Corporation

Sold at 11 Gain of 83.3% Sold at 30 Gain of 60.0% Sold at 13 5/8 Loss of 33.9% Sold at 50 Gain of 25.2% Sold at 12 Gain of 55.5% Sold at 45 Gain of 93.5% Sold at 29 Gain of 47.7% Sold at 20 l/4 Loss of 4.9% Sold at 44 l/4 Gain of 53.2% Sold at 17 318 Loss of 1.4% Sold at 14 3/4 Gain of 20.4% Sold at 30 l/4 Gain of 47.5% Sold at 5 318 Loss of 15/6% Sold at 34 Gain of 23.6% Sold at 20 l/2 Gain of 46.6% Sold at 24 Gain of 28.0% Sold at 69 l/2 Gain of 8.5% Sold at 15 Loss of .06% Sold at 19 Gain of 20.6%

F .

1983 SCOREBOARD . .

1z/3o/83 u/31/82 % clmge 1983 MAEKETREND SCCREBOPRC

Q58.64 I,04654 +20.3 DJTrmqmuions 598.59 448.38 +33.5 mirtilitics 131.84 119.46 +10.4 s&P500 164.93 140.64 +17.3 NYSEComposite 95.18 81.03 + 17.5

I i%LAQW 223.01 170.30 +31.0 278.60 232.41 +19.9

\‘2!t1e I&E Compcdc 19435 158.94 +22.3 tVild&~Eqpity (BiI S) “,X$+.. 1,451.588 +18.7 EL:” 7.98% +12.0

‘11% ll-11M - 2.2 W-Yoz.~~ s380.75 s448.m -15.0

29.3% Average Gain per Recommendation

Average Holding Period per Recommendation 24 weeks

Annualized Percentage Gain 46.6%

.



wonltorod ust

SYMBOL STOCK

INCOME IPL Indianapolis P I L

HIGH-QUALITY - BLUE CHIP T knerican Tel 6 Tel ET Bankers Trust FNC ccc GTE

Citicorp Continental Group GTE Core.

PG Procter'6 Gamble

GROWTH - LOWER PRICE ALN Allen Grouo FRH First Miss;ssippi

SPECULATION - HIGH GROWTH BCMB BDW Int'l BBN Bolt Beranek L Nerman INMA Intermagnetics General SCM SCII Corp. SUF Singer Co.

LOUER PRICE - HIGH SPECULATION N

0;1LBB Caesars New Jersey Oekalb AgResearch Class B

EN20 Enzo Biochem FJQ Fedders Corp. FPA First Pennsylvania ORCO Optical Radiation

!ZAT Pan knerican Seagate Technology

UH U.S. Home

Completed Trades

MM Sold at 15 LTV Sold at 19

PRICE 12/30/83

28 l/B

61 l/2 45 l/B 37 l/B 54 43 314 56 7/B

23 7/B 12

:: 5/B 6 5/B

:; 5/B

14 314 26 l/2 25

5 7/a 6 518

30 0 l/B

13 7/B 11 l/2

DATE RECOmENDED

415182

g/6/83 916183 916183 916183 1 O/4/82 g/6/83

g/26/83 2izaia3

9/12/83 9ilzia3 B/18/82 9/12/83 9/12/B3

916183 5f23ia3 9/26/83 5/23/83 5123183 g/26/83 5123183 9/26/83 9ilzia3

Loss of .06X kin of 20.6%

PRICE RECOMMENDED

22 718

46: l/4 35 l/4 46 33 314 53 718

:2, 3/B

39 3fa 26

9 314 33 l/2 24 7/8

17 l/2 21 l/2 28 l/2

7 3/B 6 3;4

28 6 ,114

18 314 14 314

CAPITALIZATION (nil)

14.0

914.0 28.4

126.5 32.6

165.7 166.2

6.0 20.2

:::

i.: 16:6

16.2 12.0

a.7 11.0 16.1

BZ 43:1 32.2

PRICE OBJECTIVE

33

70-72 49-50 39-40 56-58 48-50 62-64

27-29 14-15

40-41 28-29 14-16 37-39 30-32

19-20 29-30 27-28

7-a a-9

30-32 9-10

19-20 14-15

STOP-LOSS

25 718

:: 27

:79 314 43

15 9 314

:i l/2 WA

::

11 14 3/B 20

3 l/2 3 318

20 3 .I/2

ifi

OUR TELEPHONE YOTLINE IS NORMALLY UPDATED ON MONDAY AT 9:oo A,M,

AND WEDNESDAY AFTER THE CLOSE, 4:00 P,M, (EASTERN TIME),

IF THERE ARE ANY QUESTIONS REGARDING ~:ARKETREND PLEASE CALL

LUCILLE FINNIGAN, TECHNICAL ASSISTANT AT (516) 627-1600 OR

(212) 895-4915,


MARKETREND TECHNICAL MARKET OPINION


DECEMBER 17, 1983-(7)

CRAWFORD PERSPECTIVES 250 East 77th Street New York, N. Y. lOO2l (212) RH 44973

BUY THEM THIS WEEK - SHORT TERM

We could be having a "downside washout" by the time you get this. And then, we may not. Some indicators have already reached their "buy" levels and some have not. A washout would make it an "easy" buy. The danger is that we will turn up immediately and not go very far. any more buying of any sort

Long term, we do not advise ! Look for this big rolling top to continue its

rolling along within a 1150-1340 range into the spring with a severe shake- out BEFORE election time. It could be the beginnings of a major crash. To quote our Wall Street Journal interview in 1981: "Mr. Crawford says they (the planets) portend 'the best bull market we've had in 15 years - up to 1984. Then, a Great Depression-type collapse."

There will be a minor eclipse of the moon Monday (Moon-day), Dee 19th. It takes place in the degree symbolized by the Sabians as: A Man Declared (now get this) Bankrupt! Any guesses? The problem is too many guesses. It is tightly aligned with the planets Jupiter and Neptune(inflation). It appears that a large bankruptcy may touch off pump priming. It won't be the first time. Lunar eclipses have a strong tendency to reverse whatever trend is in effect most powerfully. A good rule of thumb is to short whichever market is moving up most wildly to the eclipse date. The only thing I see in that condition is the U.S.$!!! This strengthens the 'bankrupt' scenario.

Trading strategy: Watch the market's reaction to whatever news hits on Mon or Tue. If the washout comes, buy. If it doesn't, we should turn up by the end of the week anyway. Mercury turns backwards in the sky on Wed and the beautiful Venus crosses its node on Thur, which is the Winter Solstice. Three days later, the Sun starts its northward journey - the rebirth of the LIGHT - celebrated for millenia by pagans and Christians alike. May the LIGHT be with you.

Opened my mail since the last paragraph to find Paul Macrae Montgomery's "Universal Economics" newsletter predicting a top in the dollar between November 10 and January lo! Paul, as you may remember from a recent interview in Barron's, makes some of his terrific predictions going contra to subjects and industries so popular as to have gained recognition on the covers of TIME magazine. More recently, Alan Abelson's column pooh-poohed (albeit respectfully) Paul's sale of IBM on the basis of their chairman's picture on Time in early September. PM said the top should be in early OCT (it was) and should drop through the first half of 1984. So far, so good!

Paul just discovered that "SUPERDOLLAR, Dominating the World's currencies" appeared on the Worldwide edition (not in the States) on October 10th and that this would indicate a probable top during the 'time' frame mentioned.

This combination will likely put many commodities 'through the roof.' As readers know, we have been keeping to the sidelines or short on the metals group most of this year. Recent perusal of the commodity charts gives us the feeling that something big is brewing there across the board. This selling wave looks like an exhaustion move to shake out the remaining Bulls. OUR STRONGEST RECOMMENDATION for now is BUY COMMODITIES!!! All Of Them!!

Astronomically, two more important dates come up in mid-January. On the 17th Mars conjunct Pluto with the Sun at 90 degrees to them both. VIOLENCE!! and on the 19th, Jupiter conjuncts Neptune. INFLATION!! mppy HOLIDAYS---

Reproduced I” ,ts entwety wth permss,on of Crawford Perspectives.


WATCH FOR TURN ON THE ECLIPSE!

< 414

412

I 410

1.48

. _. .395

CP is published 10 times per year for $250. Opinions cannot be guaranteed.


HIEHQBABP!.IH

From: Walter R. Deemer Date : December 23, 1983

We had intended to keep our comments to a bare minimum this

week, in view of the holiday season, but, as usual, something has

come along to foul up our plans. The “something” this time is a

very pronounced pickup in investor frustration which we have

detected during just the past two weeks. This buildup appears

to have stemmed mainly from the performance figures for 1983 that

are now so rapidly approaching their final readings (although

interest rate jitters are also playing a part); simply put, 1983

has not turned out to be as good a year for most investors as the

16.6% and 19.9% gains in the S&P Composite and NASDAQ Industrial

averages, respectively, would indicate. This, coupled with the

sloppy market action that has gone on for what seems to be an

eternity now, plus a general lack of conviction about the bullish

case next year from both a cyclical and a secular standpoint,

seems to have driven a lot of people over the line during the

past two weeks (although not , we should add, to the sell side;

people tend to realize that the market will finally take off on

the upside the day after they finish selling) . Our response to

all this, however, is that these are precisely the ingredients

that are normally associated with a secondary low in the stock

market (conditions now, for example, appear to be quite similar

to those that prevailed during the summer of 1982). We believe

that most sectors of the stock market (including the broad market

averages) made a primary low in August of this year, that they ==rlpI====Prl=======r======II==pIrDIpIp------------------------- -------------------------=

The charts in this report have been updated through Thurs-

day, December 22nd; our next report will be dated January 6th.

l l A RAPPY, PROSPEROUS, AND PEACEFUL NEW TEAR TO ALL OF YOU1 * l

Reproduced I” 11s entirety wlh perrn~ss~~n of Walter R. Deemer


-2-

made a secondary low in October-November, at the same time that

the speculative sector made its primary low, that the speculative

sector is now establishing its secondary low, and that at the

same time, the rest of the market is making a second secondary

low (or, more precisely, a tertiary low). The fact that neither

selling pressure nor downside momentum has built up recently to

nearly the levels that they reached earlier this year (which can

clearly be seen if you look at the oscillators on the top of our

sector average charts in the back of this report; the lower the

oscillator, the greater the amount of selling pressure and

downside momentum) is one of the classic elements of a secondary

low; the high degree of investor frustration is the other. We

would therefore urge you not to lose faith here, at what appears

to be the very last minute, but rather to heed the message from

our bullish longer-term indicators -- frustrating though it may

be to do so on a short-term basis.

We have included the charts of four Dow-Jones Industrial

average components at the end of our written comments in order to

illustrate the tug-of-war that is currently going on in the stock

market: Eastman Kodak and United Technologies appear ready to

stage a significant advance, while General Hotors and Procter 6r

Gamble have been acting rather tired recently after good earlier

moves. It seems to us that if the DJI is going to stage a good

rally here (as we think it is going to) that the rally will have

to be led by stocks like EK and UTX (and IBM as well), and that

this strength is going to have to spread to stocks like GH (and

even PG); on the other hand, if the DJI is going to go down

significantly here (which we do not expect it to), the decline

will probably be led by stocks like GM and PG, and EK and UTX

will fail in their attempts to rally. The battle lines in the

DJI (which consists, after all, of only 30 stocks) thus appear to

be unusually clearly drawn at the present time.

In conclusion, we expect the longer-term technical strength

in the stock market, plus the favorable seasonal tendencies, to


-3-

lead to some strength -- and very possibly some surprisingly good

strength -- during the next few weeks, and also that, if we are

wrong, the trend will turn out to be more neutral than negative.

We also think that 1984 will be be a better year for the stock

market than most people appear to expect. We should, however,

point out that there was a rather bearish development on Wall

Street during the past week, in order to maintain our policy of

impartiality (even though doing so will necessitate throwing some

cold water on this holiday season): Bob Farrell reports that his

pushbutton telephone, which was removed in 1974 in a profit-

improvement move, is being replaced next month.

Have a happy, peaceful, and prosperous 19841


This page left intentionally blank for notes, doodling, or writing articles and comments for the MTA Journal.


TECHNICAL LETTER Don Dillistone, C.F.A. 83-208 December 9,1983

The followmg comments are based on techmcal studies of the market itself. rather than the economic and business conslderntions as perceived by our analysts. Thus. the opimon expressed below may or may not correspond wtth ourfundomenful Ltiews.

The stock market in New York is continuing in the Value Line Composite same frustrating manner that has characterized its last ‘XJ seven months or so. It continues to move out in a sideways pattern while internal rotations exact their toll on nerves and pocketbooks. For some time now I have been

,80 G---

-\-#.-\/\ -/‘--

MA, JliNk 1 J”LI 1 AL.G rSTPI-OCT ’ No\ 1 WC

suggesting that one of most baffling markets to guage is a ,983

sideways one, since there is really no way to make a It has been strong recently, but at 196 is still comforta- guess, at least an educated one, as to how long these bly below its recent highs of just over 200 in September things are going to last. and October, not to mention its all time high of 208 last

July. About the only thing that can help is to keep looking at

the internal workings of the market for signs of either The Breadth on the NYSE, (a cumulative total of daily growing strength or weakness. advances minus daily declines) is the most traditional as

well as the the most widely followed indicator of the Standard and Poor’s Composite overall market when making comparisons between gen-

I

era1 movements and the narrowly based blue chip stocks as represented by the Dow Jones Industrials. Here again, there has been some strength lately, but that same

160 worrisome pattern persists. It is just unable to penetrate 150 its previous peaks although the Dow Jones Industrials

seem to have little problem in going on to new highs. 140

The blue chip segment has been dominating the market since mid-summer, not an encouraging sign. This is exemplified by the strong leadership being shown by the Dow Jones Industrial Average. Although it has pushed to successively higher highs. the more broadly based ones haven’t. As an example, a few weeks ago, the Standard & Poor’s 500 touched its all time high, but only well after the Dow had already significantly penetrated its own. Things were even worse a couple of weeks ago when once again the Dow went up to make another all time high. So far, the S&P is not only lagging, it is staying (currently 166) well below its high of only a few weeks ago, 173.

The even more broadly based price index, the Value Line Composite, tells a similar tale. It is probably the best barometer for the NYSE, since it not only tracks 1,700 stocks, (including some from the American Exchange and a handfull from the over.the-counter markets), but is also completely unweighted.

For some reason, the myth has grown up that the market is healthy when it has ‘good leadership,’ the likes of General Motors or IBM. But the contrary is true. The market is healthier when indicators such as the Value Line and Breadth are outperforming the so-called lead- ers. How these myths arise and are given such credence is somewhat of a mystery. Perhaps it is because pro- nouncements are made that spread through the financial community and become repeated so often that they just become part of the Wall Street lore.

RICHARDSON GREENSHIELDS OF CANADA LIMITED GEORGE T RICHAKDSON. CHAIRMAN

- Reproduced I” 16 entrety wth pernws~on of Don D~ll~stone and &hard Greenshlelds of Canada LImoted. Copyright 1983 by Richardson Greenshelds of Canada Llmlted.


A recent, if trtvta!, example of this may well be the now commonly accepted view that the break-up of American Tel will add an average of 15 million shares to the dally trading volume on the NYSE. A consumation to be devoutly wished for, perhaps, but still one that stretches the imagination. The ‘old’ Telephone over the past 12 months traded about the same number of days below one million shares as it did above. When the dust settles, if the ‘new’ Telephone continues at the same pace, its seven offsprings would have to each average better than two million shares every day to give the NYSE volume a daily boost of 15 million shares. How may stocks, all in the same industry, consistently trade over 2 million shares a day? They may do so during the initial frenzy of being sorted out, but day after day? Week after week?

But that is the now widely-accepted and barely- questioned figure that is used. It may have started in some bar for all I know, but wherever, it has been picked up by most of the financial media and has moved into such general interest publications as Time Magazine.

Who knows? They may end up being right. But if they’re not, we will still end up reading such comments as: “A leading analyst said that yesterday’s volume was impressive, but he hastened to point out that to put that into perspective, we have to remember that the break-up of Telephone has added about 15 million shares to the daily total.”

Eventually this particular myth will die out. No one that I know, for example, continues to marvel at the increased levels in today’s volumes that can be traced back to the breaking up the Standard Oil Trust. But the one about ‘strong sponsorship’ does persist, even though, more often than not, the opposite turns out to be true.

That begs the question as to whether the relationship between the Dow stocks and the rest of the market is showing any signs at all of improving. Actually, there is a ray of light, maybe only a pre-dawn flash so far, but at least an indication that the outlook for the NYSE may getting a little brighter.

If we divide the daily closes of the Dow Jones Indus- trials by the Value Line Composite we can get a chart showing their relationship. When the market’s under-

Dow Jones Divided by Value Line

currents are healthy, i.e. when the Value Line is outper forming the Dow, this line will fall, the other way around, it will rtse.

Since July, on balance, it has been rising, not a good sign. But it did briefly stall out at the end of August, and now, for an even longer length of time, it has once again started to move out sideways. What this is telling us about the market is that since mid-October, even though the Value Line itself has not gone anywhere near its 208 peak, registered originally when the Dow was 1,240, it has at least started to keep pace with the Dow.

This doesn’t mean that the correction is about to end, just that the outlook isn’t quite as bleak as it has been. The overall conditions of the NYSE remain not sufficiently attractive to suggest that the correction is over and that another upward leg has already begun. To the contrary, within the confines of the now almost eight month horizontal move, the most likely near term action is for the market to now move back down to probe the bottom area of its formation. That, in terms of the Dow, would be back towards the 1.200 level.

Since the TSE tracks the direction of the NYSE so closely this would also mean our market pulling back too. Although not as significant for the TSE, the Breadth of our market has also shown the same relative weakness to our leading price indicator - the TSE 300. Although that index registered a new all time high in September, the action of the Breadth refused to confirm it. The conditions in our markets are little different from New York’s and it is likely only wishful thinking to believe that we won’t suffer along with the NYSE.

Toronto Breadth


3

Suffer is probably too strong a word. Although it appears that North American markets are near the top

But if you look at it technically, (how else are you

of a sideways correction, it should be remembered that it supposed to look at a chart?), the picture changes. The

is only a sideways one, not a deep one. Not only that. it so 1960’s saw the last part of a major bull cycle that began in

far just appears to be a correction, not a reversal in trend. 1942. We are in a different part of another major bull

We are in the throes of a major bull cycle, and that means stock market cycle, one that began at the end of 1974. In

that when the correction does end, it should end with terms of the cycle, we are actually closer to the left hand

another major move upward. side of the chart than the right hand side. That seems to point towards a continuation of the current sideways direction.

THE U.S. ELECTION

Quite a few forecasters have a habit of prefacing their In 1948, the NYSE was still in a general sideways

predictions with the comment: “Barring unforeseen cir- pattern that had begun in 1946 and was not to end until

cumstances,” which has always struck me as being 1949. Prior to 1946, the Dow Jones had enjoyed a tre-

somewhat redundant. If they could have foreseen them,

mendous four year rise from around95 to over 200, then

they would have taken them into account. Actually, not went into that sideways pattern. That seems suspiciously

all that much can be foreseen, but in looking forward to similar to some of the things that we have experienced. If

next year there is one fairly significant event that can be we were to experience a year something like 1948, we

foreseen: a U.S. presidential election, (barring unfore- could look forward to more sideways movement, made

seen circumstances). up of an early decline, a very good rally, then losing most of that as the year draws to a close.

In order to get an idea as to the possible impact of this event on the stock market we have charted the action of

What do I think? 1 kind of agree with the second

the Dow Jones Industrials for every presidential election

interpretation more sideways movement, but not necessarily all year. In any case, since Linda went to all

year since 1948. We have constructed this in a rather different form than such charts usually take in that we

the trouble of drawing the chart, I thought that you might

have joined the nine election years together to make a

be interested in seeing it and maybe drawing your own

conclusions. single chart. The result is a graph of the action of the Dow for nothing but election years. The closest analogy would be an eccentric investor who bought nothing but blue

But I would continue to emphasize that what I am looking for at the moment is a continuation of the current

chip stocks, and only then during election years, and who liquidated his entire portfolio every December 31st,

sideways correction a correction against the longer term uptrend. The implications of this continue to be that

only to buy it back at the start of the next election year. The scale is semi-logarithmic and is included for compar-

when the horizontal move is over, the next significant

isons only. (The Dow was around 180 in 1948). vertical move should be upwards. Even during the sideways move, there will be the stocks that do well. That’s

Dow Jones Industrials the other side of the ‘rotation’ coin. Rotation doesn’t just mean that some stocks go down, it also means that at the

1110 -

160 -

\

same time some stocks go up.

MO -

ri

1

d

I recently identified some Canadian stocks that have had good corrections, have good support reasonably near the cl;rrent market, and are showing signs of moving up. At the end of the list are three Sell recomendations.

ASTRAL BELLEVUE PATHE 8% - The stock has broken the downtrend of its correction and appears to be moving back up to test its high of 10. Breaking through would give it a further upside objective of 13. There is good support beginning at 8.

B.C. TELEPHONE 22% - The stock has impressively

” ti attractive.

broken through the resistance that it had encountered at its former all time high of 21ih. It now appears to have upside objectives of 25 and 28 and continues to appear

54 60 69 M 72 76 80

CADILLAC FAIRVIEW 9% - The stock has done a At first glance, election year investing looks pretty lot of work in the bottom half of its sideways correction

attractive, but a closer look leaves something to be which usually leads to an eventual upside breakout. It desired, at least from our 1984 perspective. It can, in fact, appears to be trying to do so right now which would be

be open to different interpretations. confirmed by a move above 10%. It would then have an upside objective of 13. The sideways pattern has left

It clearly went up, but only eventually. The first five behind good support beginning at 9%. years (1948, 1952, 1956 and 1960) saw it go sideways. From 1960 it was a lot better, and in fact, that is where all COMINCO 60 -The stock dropped back to the top of the growth occurred. It was in the 196C’s that govern- its base formation when it touched 54 which was also the

ments really got the hang of tinkering with the economy. bottom of an upward sloping channel. Its objective They didn’t do it well, they just got good at doing it. But if remains 75 with good support confirmed at 55. their actions in election years did have an increasing impact on the market relative to the prior-1960 years, FCA INTERNATIONALZO% -The stock has broken then it does bode well for us in 1984. up a potential top formation and broken free from it. Its


4

next oblective appears to be around 26 and that former formation should now in turn provide good support lust under 20.

INDAL 12 - The stock made a double bottom just under 10. It looks to be on its way to testing its former high at 13. Breaking through it would have a further upside objective of 16. The double bottom was made up of a pair of spikes and most of the work in that base was between 11 and 12 which should now provide good support.

JANNOCK I3& - The stock tocched the bottom of an emerging upward sloping channel when it corrected back under 12. It now appears to be heading back to the top of that channel which would give it a near term objective of 16. There should now be good support at 11

NATIONALBANK 141/, - The stock had been looking quite toppy and indeed had a good deal of trouble in getting through the 13 area. It broke up the double top formation that had formed though and knifed on up through. Its next objective is its all time high of 15iz, but breaking through there would provide a further upside objectwe of close to 20. That previous top should now provide good support at 13.

REDPATH INDUSTRIES 22’,, - The stock has broken out from a six month sideways correction with a near term objective of 25. That sideways move should provide good support at 22.

ROYAL TRUSTCO 283: - Watch this one. It may be in the process of ruining a perfectly good looking rounding top formation. If it can break up above 29 it would have a near term objective of 32 with good support around the current market.

ROYAL BANK 34 - The stock has broken the downtrend line of its correction and formed a little base which now indicates that it may be able to break through its high of 36. That base has left behind good support just under the current market.

SCOTTISH & YORK 4.45 - A breaking of the downtrend line of its correction, the emergence of a near term base and subsequent breakout, and now a breakout past its previous peak; all within a channel with an upside trendline at 6.00, makes it look pretty good. There is some support at 4.40 and more at 4.20.

STELCO 29;, - After reaching close to30, penetrating the strongresistance that had been evident previously at 2912, the stock has retreated to fill the gap It left behind on either side of 29. It has a short term target of 31!;, a second one in the mid-30’s, and should find strong support between here and 28!2.

THOMSON NEWSPAPERS 371, - The stock has been correcting sideways now for about nine months. It keeps on running into resistance at around 39 but the actlon seems to indicate that when a breakout occurs it wili be on the upside. A move to 40 would be a confirmation of this and would provide an upside objective of 46. Ther? remains good support lust under the current market.

VERSATILE CORP A 9 - The stock touched the bottom of its upward sloping channel when it dropped to 818 and it bounced right back up. It has had a good correction, all the way back from ll&, and its next upslde objective withm that channel would be around 13. There is good support in the 712 to 8 area.

At the same time, there are some stocks that could be sold in here:

INTERPROVINCIAL PIPELINES 33:/, - There isn’t anything wrong at all with the stock’s recent history in fact the chart continues to look quite strong. But the longer term chart gives rise to some misgivings. This is a stock that seems to swing widely into and then out of favour. At the moment it is very much in favour and is close to its all time high. If the same pattern persists, it could once again be approaching a big cyclical high, so perhaps at least part profits should be taken.

PEMBINA RESOURCES 17 - The stock has made a rounding top and has recently enjoyed a return move into this formation where there IS a good deal of resistance. It appears as if on the next decline it could drop under 15 and I would be a seller here.

PROVIGO 17 - The stock has been climbing in an upward sloping channel and its long term pattern remains quite good. Shorter term traders should be concerned though, since it is right back at the top of that channel which means that it could slip back to around 14 and still stay within the confines of that channel. Longer term, I would hold, but traders could take profits here.


1 The DOWSE Market Letter an analysis and commentary on the stock market and the alternatives for liquid assets

No. 66 January 13. 1984

DOW TOPPING OUT

On Thursday, Jan-

uary 5, another

volume record was

set for the New

York Stock Ex-

change, as 160 mil-

lion shares were

traded. The Dow

Jones Industrial

Average closed out

the week at 1287,

an all-time weekly

closing high. In

spite of all pre-

dictions to the

contrary, the U.S.

dollar continued to hit new highs against several European currencies. Gold con-

tinued to slump, breaking the important $370 support level in late trading on

Friday, January 6. It appears that we are starting 1984 with a bang. It should be

another exciting year for the investment markets.

Since we are starting out a new investment year, it is time to give you my stock

market forecast for 1984. I will also offer some thoughts about 1985. As I see it,

the stock market, as represented by the Dow Jones Industrial Average, is in the

process of completing an important top, sometime early in the first quarter of

1984. My weekly chart of the Dow shows a rising wedge, a potential top formation.

Support for the Dow is indicated by the rising support line, which currently

provides support at about Dow 1250 or so. Resistance is indicated by a line drawn

Reproduced ,n ,,s ent,rety wth permss~on of Dowse SecurWs Management Corporation


connecting the tops. Resistance currently comes in about Dow 1300. You can see

that the range of trading, as measured by the support and resistance lines, has

narrowed over time. You should also note that, as time has passed, each rally has

been a little smaller and weaker. The rate of advance in the Dow is slowing down.

This is preparatory to a reversal or change of direction. The correction will be

indicated by a decisive break of the support trendline (currently at Dow 1250). In

view of the spectacular fireworks of last week, it is possible to see a final but short

blowoff above resistance to Dow 1350 or so, but in such an event, I would expect a

quick reversal.

A break of Dow 1250 would project a decline to Dow 1050 to 1100, under a number

of different technical measuring methods which I use. These are indicated on the

chart along with the major support area for the Dow. My cycle work indicates a

possible low in late-April to early May. It is possible, however, that we will not see

Dow 1050 - 1100 until the Fall or Spring of 1985.

To sum up, the fast start in 1984 looks like the last gasp for the bulls. Expect an

important decline to start soon. Dow 1050 to 1100 is my projected target for the

next buyable low.

IBM - Last Stock to Top Out?

of technical I

until the - ‘81

strongest f’s’s.lt.t~r”‘l.‘~t~~*~

I ‘?’

stock finally ;, ;,I’ ; s’ ;, 1.; ;, J ; 1; ; 1; ; J ; ;; ; 1; ;, J

breaks down. IRM has been the driving force of the August 1982 to January 1984

bull market. During that time, IBM advanced from the middle 50s to approx-

imately 135. Since IBM represents one-sixth of the total weighting of the Dow

Jones Industrials, IBM’s ability to advance has kept the Dow on an upward oath long

An old axiom r


-3-

after the average stock topped out (in June 1983). On the recent rally from the

late November low, IBM has underperformed the Dow. IBM is showing its first

signs of weakness. In fact, IBM appears to be tracing out an important head and

shoulders top formation, as indicated on my chart. A break of 116 for IBM would

complete the top and project a decline to 95 to 100 or so. You can watch the

action of IBM to confirm my forecast for the Dow. A break of 116 by IBM would

signal that the top is complete and that a decline is underway.

I view the action of the Dow and IBM as the critical points to watch, early in 1984.

Watch to see if IBM can make a new high on this advance. Watch to see if IBM

breaks 116 on the next decline. I will update the action of IBM in my February

letter.

Longer Term Implications

When considering the longer term possibilities for the stock market, I initially look

first to economic fundamentals and then, second, to my technical studies. My

primary longer term economic model is Kondratieff Wave analysis. My current

outlook under Kondratieff was covered in detail in my November letter. I need

only point out that we appear to be near the end of the Kondratieff plateau period.

On a long term basis, the economy is gradually getting weaker and government

monetary policy is having less and less of a stimulative effect. Interest rates have

topped out (in 1981), the dollar is king and the prices of gold and oil are weak.

Inflation is not a current problem. This combination of factors should lead to

falling prices across the board in due course.

I pointed out in my November letter that the Kondratieff secondary depression

arrives unexpectedly, almost without warning, as many investors are caught by

surprise. I also pointed out that Dewey’s research indicated a span of 52 to 56

years from top to top. Since the last Kondratieff stock market top occured in

September, 1929, we could see a continued uptrend until the fall of 1985 (56 years).

In other words, my Kondratieff Wave analysis does not project the precise timing

of a major stock market top. The stock market could be making a major top here,

or it could be held off until the fall of !985. Therefore, I conclude that there is

still time on the Kondratieff clock for another bull market leg after the forecasted

correction runs its course. To determine whether this is probable, I turn to my

most reliable technical forecasting methods - cycles and Elliott Wave analysis.


The most significant stock market in-

vesting cycle I use is the 41-month or ~Yz-

year cycle. The last 3K-year cycle bot-

tom occured in September 1981. The next

projected 3Yz-year cycle low is due in the

spring of 1985.

I I i I i i I MONTH TO MONTH CAIN

TEN YEAR PATTERN OF DJIA PRICES 1887 - 1982 I

I also use the decennial pattern, first

discovered by Edgar Lawrence Smith in

the 1920s. The idealized IO-year pattern

2 1st - i

is shown on the chart (courtesy of and prekre :d

-

L

2nd 3rd 4th 5th 6th 7th 8th 9th 10th

I by Growth Fund Guide, Box 6600, I

Rapid City, SD 57709). As you can see on the chart, years ending in five (5) are

generally the strongest stock market years in each decade. The fifth year

decennial pattern is a powerfully bullish force. It has worked very well in the past.

I look for it to repeat in 1985.

My Elliott Wave analysis suggests that the Dow has completed or will shortly

complete a five wave advance. My updated wave count is shown on my weekly

Dow chart. This five wave advance could represent a completed bull market, or

just a sub-divided first wave of five. In view of the 3%year cycle, the decennial

pattern and the possible Kondratieff 56-year span from top to top, I am currently

leaning towards

the view that

the bull market

will extend af-

ter a Wave II

correction.

The Elliott tar-

get for the

Wave II low is

Dow 1030 to

1060 (the span

of wave 4 of 0 the previous bull move). This target zone is shown on the chart. It corresponds to

the targets developed earlier in this letter.


-5-

On any correction, I deem it crucial to the bullish case that the Dow find support

at Dow 1030 or above. In my current view, only the onset of the Kondratieff

depression could cause the Dow to break 1030.

To sum up, longer term considerations currently suggest that the bull market will

resume for another significant advance, once the projected 1984 correction has run

its course. If the Dow breaks 1030, however, all bets are off.

PORTFOLIO STRATEGY

There is no change in the Dowse Model Portfolio (shown on page 6) this month. In

view of the strength of the U.S. dollar and the weakness in the spot price of gold,

both long and intermediate term bonds continue to look attractive. If you are

under-invested in bonds, you should consider adding to your positions during the

first quarter. We sit with a modest amount of equities (10%) awaiting the

projected correction. Patience is a virtue with respect to the stock market.

CLOSET OF ANXIETIES

Forecasting the future direction of the economy with any certainty or accuracy is

difficult. It is as much an art as it is a science. This is because there is always one

unknown factor - how human beings will react and respond to future events. If you

get two economists in the same room, you will get two different opinions. My

advice to Binkley and other investors about forecasting the economy: ignore the

economists and concentrate on following the markets.

BLOOM COUNTV/Berke &tied

1


-6-

DOWSE MODEL LIQUID ASSET PORTFOLIO

Cash (U.S. Treasury Bills) 55%

Intermediate Bonds (U.S. Treasury Notes - 1 to 5 years) 20%

Long Term Bonds (Corporates) 15%

Common Stock 10%

Liquid Asset Portfolio

*Plus a modest position in Canadian Maple Leafs held as financial insurance.

Published by: Dowse Securities Management Corporation P.O.Box 2929 San Francisco,CA 94126 (415)421-7503


HERZFELD 6 STERN ESTABLISHED 1880 MEMBERS NEW YORK STOCK EXCHANGE, INC

30 BROAD STREET, NEW YORK, N.Y. 10004

NEW YORK . BROOKLYN . PHILADELPHIA . PARAMUS . STAMFORD GREAT NECK . MIAMI BEACH . PALM BEACH . HOLLYWOOD. FLA GENEVA . AMSTERDAM

Only Alice (of Wonderland) could possibly grasp the upside down nature of this investment world. I don't the famous rabbit hole. I

know if we've gone "through the looking glass", or down

probably have to be placed might direct the whole question to the Mad Hatter, but he'd in restraint.

Economic City. The yellow Some awful things have happened on the way to

brick road is very bumpy if we are following reactions to late breaking busineis news. We were probably much better off in the midst of the worst recession since the thirties. be unemployed.

Try telling that to those unfortunate enough to But as reported statistics improve, the gloom settles over investor

psychology rather than the bluebird of happiness.

The Street is almost manic as it remains transfixed by the false gods of interest rates and money supply.

Yesterday, the Department of Commerce reported record dollar sales of automobiles, and gains for stores selling clothing, building supplies and food, as well as for drug and department stores and restaurants. The result was a 1.9% jump in sales last month to $102.5 billion from $100.6 billion in October.

December 1983 will be a "sparkling selling season", because sales are picking up more than usual, said Robert Ortner, chief economist for the Commerce Department. Malcolm Baldridge, Secretary of Commerce, said that merchants are having their "merriest holiday selling season" in many years.

A happy condition? I should say not! The Wall Street Journal greeted the "good" news with the story "Bonds slide as news of retail sales surge last month boosts fear of tighter credit". New signs that the economy is expanding briskly sent tremors through the credit markets.

The retail sales increase which followed a 1.4% gain in October, is "one more piece of evidence that the economy's growth continues to be robust". The large rise intensifies fear that the Federal Reserve will tighten its credit hold pushing interest rates higher to keep the economy from overheating.

But let's not lose our heads. Just remember that we luckily have a visit from Santa on the horizon. The consumer is aware and is exhibiting his confidence in the administra- tion's economic program. The rest of the world only wishes it could have it so bad.

In fact, the Wall Street Journal points out that some analysts say the credit market overreacted to the latest retail sales figure. "I don't think there is any cause for alarm as far as the bond market is concerned." This is from the chief economist of

Additional information on securities mentioned herein is available won rewest

Reproduced I” 11s entmty wth permss~on of Herzfeld 8 Stern.


Manufacturers Hanover Trust Co. He goes on, "We are in a well balanced economic recovery that gradually is slowing to a sustainable, non-inflationary pace. For example, the GNP after adjusting for inflation is increasing at a 5-6T0 annual rate in the current quarter and will expand at about a 4'. clip in the first quarter. That compares with a 9.7:" rate in this year's second quarter and a 7.7'1 pace in the third quarter." Kellner adds, "as the pace of the economic advance slows, interest rates will retreat." Is that bad?

Now add the economists at Citicorp who see a sharp slowing in the economy's growth. They think the inflation adjusted GNP will expand at a 4% annual rate in the first

quarter and at only a 2.4% clip in the second quarter. This is according to Lief Olsen, Citicorp Information Services' Chief Economist. He says, "We believe that the Federal Reserve will relax its currently restrictive policy soon enough to avert an outright decline in economic activity. As a result, GNP will reaccelerate in 1984's second half, growing at a 4.8% clip in the third quarter, and 4.6% in the fourth quarter." Is that bad?

Apparently there are two major dynamic elements setting the strong tone for the economy, observes Business Week. The consumer, showing growing confidence, is spending h+AVily. Besides, capital investment is already in a major upswing. The results show up clearly in the job market. Employment is rising rapidly while unemployment is coming down far more sharply than anticipated.

In a year-end survey the National Association of Purchasing Managers finds that 86% of its members expect 1984 to be better than 1983 - the highest proportion to respond this way in the 26 years that the NAPM has been making its survey. The purchasing executives expect the economy to perform well throughout the year. The margin expecting better business in the first half stands at 6 to 1. And by a margin of 14 to 1, the members predict that the second half will be better than the first. That sure is bad news!

A year ago when the recession hit bottom 8 of the 10 largest states had unemployment rates of 9% or more. Now only four report rates that bad. Of these, Michigan has the highest jobless rate - 11.9%. But a year earlier it had a depression-level rate of 17%.

Again, the combination of growing order backlogs and extremely lean inventories practically guarantee that manufacturers will keep expanding output.

Finally, the worst news of all is that capital spending is contributing mightily to the economy's rapid advance. This was to be expected at this point in a recovery that is

increasing its use of plant and equipment capacity. And an unexpected area of good news is that housing demand has picked up a second wind after the summer tumble. Good news? Can't be!

Fortune recently agreed that postwar history strongly suggests that the expansion next yearwill be slower than this year. The rise of around 7% since the end of 1982 is about the same as the average for the first year of the seven previous recoveries. Average growth in the second year has been only about 4%. "If the past is any guide extraordinary stimulus would be required to keep growth barreling along - and that isn't in the cards." Oh my!

And the best news is that with productivity growth running around 3% a year, the resulting 3% to 4% rise in unit labor costs will be consistent with a low-inflation recovery, the kind of thing nobody dared dream about back in the 1970s.

So, Alice, pop through the looking glass or pop down the rabbit hole. The economy is not giving you any reason to see an upside down world. Good is still good in spite of

the spooky actions of the Volkers, Kaufmans, and Wojnilowers. The Street may bow


before its false idols, but the cracks are widening and the curtain is rising on a new kind of economic scene - low inflation and economic advance at one and the same time.

The market should be about wearing out its welcome for the Kaufman histrionics. How often can he be wrong and set the Street's nerves on edge? As the theme wears itself out and the market accepts the fact that an increase in the money supply is what the doctor is ordering, strength will return to the major uptrend.

Time has played out as the tax selling and swapping draws to a close. It probably played a part in the long May to September consolidating correction. It was ended with the October alltime high breakout to 1286.69 intra-day for the industrials confirmed by alltime transportation highs in November. weakness in the latter index to break its November low.

I don't expect the current Nor will the industrials

crack their 1210 November intra-day figure.

The pressure should be lifting by the end of this week, as the year end rise really starts to lift the Dow to new highs by year-end.

Bearish sentiment is increasing as fear of the interest rate structure grows. Just remember that this market is still young with lots of life left in it. 1971 had another 18 months ahead when it was the same age as this one.

The 1962 bull market carried from October to February 1966. A 1984 conclusion to this major move is not by any means a certainty. If it could follow in the footsteps of the 1962 and 1971 major swings, it could also follow the 1974-1975 pattern and break out with vigor this month. This is an unusual and historically balanced economic pattern and the bull has plenty of upside discounting ahead of it.

As the finale of this tax switching spill plays out the cross currents, we should be catching some falling stars, such as: Apple Computer (AAPL - OTC - 23 3/8) in computers, Hi-Shear Industries (HSI - 14 l/8) in metal fabricating, Plantronics (PLX - 23 l/2) in electric equipment, Ramada Inns (RAM - 10 l/4) in hotels, Sperry (SY - 45 l/2) in office equipment, and TDK Electronics (TDK - 44 5/8) in electronics.

Gene Jay Seagle Director of Technical Research

DJII 1246.65

APPLE COMPUTER

Technically basing price and relative action for approximately 3 months. Moving up out of the base calls for initial climb to 30. Longer term 35-40 can be accomplished. Stop 19 7/8.


PLANTRONICS

Has penetrated three month base range around 22. Should reach 26 resistance near term. Longer objective 30-32Stop 19 7,S

~.~--~ ImoM1 I 9e1

SPERRY CORP.

Turning up from 30 week average for objective 52 near term and 60 long term. stop 39 7/D.

HI-SHEAR INDUSTRIES

Positive relative action and penetration of 30 week moving average should help through 16 resistance to 20 near term. stop 11 3/4.

RAMADA INNS

In buy mode resting on 30 week moving average at lot. Seems ready to break out of 6 month consolidation and penetrate the 12 resistance for move to 14

objective. stop a 314.

I ISU I I.., Ia- Corp.--y '--+--'-- I___ --. --. --. w

m . . ____ q

TDK ELECTRONICS

Climbing up above rising 30 week moving average with positive turning relative action. Near term objective 55 - and intermediate price low 60s. stop 39 718.


INVESTMENT SERVICES FOR AMERICA

-lNlrEsz-

\

January 6, 1984

HAPPY NEW YEAR

..Aooking Bad<, Looking Ahead...

INVESTMENT STRATEGY

ECONOMY: A year ago, it was generally predicted that the economy would experience a sluggish recovery from the previous year’s serious recession. Due to improving consumer confidence and personal balance sheets, INVEST thought business would be strong throughout the year, though there would not be sudden excesses which would lead to an early termination. Except for a welcome slowdown in the third quarter, this is what actually materialized. The successful year culminated in a near-record Christmas season.

Our survey of various indicators leads us to believe that there will be another slowing now in the first quarter of the new year. We have developed an economic index which helps us determine the fundamental climate for investing. This index rose steadily until late July, slipped in late summer, then increased strongly until just recently when it showed slight weakness. Personal spending has recently exceeded income, hourly earnings have shown a slight drop, and personal saving has fallen. Nondefense durable goods fell over 4 percent in November while the index of leading indicators fell for the first time in 15 months.

After this winter respite, we look for renewed sustained expansion for the remainder of the year. Industrial utilization of capacity should continue to increase to the 83 to 85 percent level. Capital spending will then play its traditional role in supporting the economy during the second year of recovery-expasion. Housing should play less of a role, with new starts averaging 1.5 million, down from 1983. New car sales will probably drop from the hectic pace of late last year. Unemployment should fall gradually.

INTERE!X RATE!& We continue to emphasize that inflation is the prime determinant of the course of the economy, the trend of interest rates and the stock market. Due to a balanced Federal Reserve policy and stable industrial price levels, the 1983 Consumer Price Index rose between 3 and 4 percent, the lowest rate of increase since 1967. We look for little change for the winter and spring months. Weather-related problems will probably translate into some higher food prices, but the demand-supply for oil should remain favorable despite the record cold wave. There could be lower oil prices as OPEC struggles with problems caused by the erosion of its monopolistic prowess.

The government budget deficit remains troublesome; but with an election year facing us, there could be pressure for compromises. As yet there has been no crowding out of private debt demands by the huge Treasury financing. With corporate cash flow on the rise due to permanent changes forced by the recession, we do not believe we are on a collision course for this year.

Interest rates have been remarkably stable since early August. We look for some easing as the economy’s pace slows and private credit demands remain moderate. The bond market reached a recovery high in early May, then lost half of the 1982-1983 rally by early August. The rebound

A Service of ISFA Corporation P.O. Box 25536 Tampa, Florida 33630

Reproduced I” ,ts entrety wth perrn~ss~on 01 ISFA Corporation


January 6, 1984

we foresee probably will not reach last May’s highs. This would confine a rally in long-term bonds to about 10 percent. With inflation at around 4 to 5 percent and long-term U.S. Treasury bonds close to 12 percent, the seven-point differential is historically high.

Investment grade, tax-free municipal bonds remain attractive for income purposes at yields ranging from 7-l/2 percent in five years to 9-l/2 in 15 years. Diversif ied, professionally managed bond funds are available at a tax-free return of 9-l/2.

COMMON STOCKS: The last half of 1983 proved difficult for profitable investing as the market digested its record volume gains made earlier in the year. On the fundamental side, prices reached a point where they were discounting increased earnings which would not be reported until the end of the year. Technically, deterioration set in as fewer issues continued to advance and measures of investor sentiment turned negative. It became necessary to dispel the euphoria which had entered the market.

INVEST’s technical analysis has called for caution over the shorter term for some months and remains so, since the number of issues advancing still has not reached a clear majority over those declining. (See below.) Sentiment measures have improved somewhat. The next advancing leg in the current bull market will probably start when the majority of investors do not perceive the anticipated improvements in the economy that we are projecting. The fundamentals seem in place. We are forecasting another good increase in corporate profits. Stocks are reasonably valued as they rest midway in an historic valuation range. Inflation should remain subdued, there seems widespread support for reduced budget deficits, and interest rates probably will not advance from current levels. Significant market moves usually start when a sufficient number of investors become pessimistic over the economic and world outlook. We think such a period is approaching and that 1984 should be a profitable year for investing, coinciding with traditional election-year patterns.

INVEST’s Approved Buy List is constantly monitored for opportunities which should prove profitable under our favorable forecast. Conservative accounts should benefit from investing in large, highly capitalized companies because of their financial strength and superior product lines. When it comes time to expand plant and equipment, they wili be financially able to do SO

in a high interest rate environment.

TECHNICAL COMMENT (Common Stock): The Monetary Section of the A-MAC DISCIPLINE is at +3 (favorable). The Technical Section is in the neutral zone.

Long-Term Strategy: Remain fully invested. Short-Term Strategy: Neutral, caution warranted.

Our overall outlook would change if our perception of inflation were altered. Things to watch for will be trends in commodity futures, gold and metal prices, military conflicts, and government, corporate and personal discipline in financial considerations.


FOLLOWUP RECOMMENDATIONS FROM INVEST “HOLD” LIST

ATLANTIC RESEARCH (ATRC - 29) - This rocket motors and data communications company appears to have found support at $27. It may trade within a narrow range for the next couple months before continuing upward.

BANDAG (BDG - 54-l/2) - Reported impressive earnings of $1.22 per share in the third quarter vs. $0.83. This company has avoided major stock price fluctuations, and we feel this tire retreader will continue its steady growth.

CHARMING SHOPPES (CHRS - 21-1/S) - In a downtrend since July, the stock appears to be stabilizing at the $20 level. Near-term outlook for these women’s specialty stores is neutral. However, we still feel that consumer demand will remain strong in 1984.

CITlCORP (FNC - 36-l/2) - Loans to Brazil have caused severe concern. However, we feel that this has already been discounted, and that at current levels it is undervalued.

CLOROX (CLX - 26-l/2) - Impressive earnings growth in the past year and reasonable P/E suggest that this stock will rebound and surpass recent highs.

EQUITABLE GAS (EQT - 46-l/8) - Recently dropped in sympathy with overall industry. A hard winter may push oil prices up, which will help earnings in the near term.

GOLDEN NUGGET (GNG - 13-l/8) - Consistent earnings increases follow record casino winnings in Atlantic City. We expect the company and the gaming industry as a whole to outpace the market next year.

MELLON NATIONAL. (MEL - 49-5/S) - At a low seven times earnings, the price of this stock seems to be undervalued. Loans to Mexico appear to be slowly working their way out of trouble.

MILLER (HERMAN) (MLHR - 26-5/S) - Continues to hit new highs. Expansion in the office furnishings field, as the economic recovery continues, could allow for yet further appreciation potential.

J.P. MORGAN (JPM - 67-3/S) - Exposure to foreign loans still a threat. However, at a low 6.5 times earnings, the stock price seems to have already reflected this. Morgan raised its dividend to $1 from $0.925 recently, and we still recommend JPM as a “Buy” for conservative accounts.

MORRISON5 (MORR - 18) - With the continuing expansion of “Ruby Tuesday’s” restaurants which serve high-margin alcoholic beverages, this company’s success should continue. Recent earnings have been slowed by start-up expenses.

(Continued on 6th page.)


APPROVED BUY LIST

TOP RATED STOCKS FOR APPRECIATION

STOCK

Arkansas Best Facet Enterprises Fay’s Drug General Cinema* Kellogg Co. Lawter International La-Z-Boy Chair Lincoln National Corp. Magic Chef Morton Thiokol Novo Industrials ADR Pay% Save Corp. Pyro Energy Ralston Purina Roadway Services Rohm & Haas Rohr Industries Sanders Associates Southmark Corp. Torchmark Corp.

SYMBOL

(ABZ) (FCT) (FAY)

EN’ (LAW) (LAZB) (LNC)

Ki’ (NV01 (PAY N) (BTU) (RAL)

IEIP)

K. wvi) (TMK)

PRICE+

26-l/2 15-518 13-l/4 45 32-l/4 19-7/s 46-l/4 65-I/4

2::;: 56 25-718 S-l/S 27-314

23: 361518 50-l/4 9-718 42-314

A IS

7 I 3 713 734 736 757 745 734 754 734 735 724 736 7 12 747 737 734 7 12 723 731 746

ISFA employees are prohibited from buying or selling depend@ upon the recommendations, additionq and deletions of taprated seauities for three (3) hsiness days.

AIS= A denotes INVEST’s appreciation ranking

I denotes INVEST’s income ranking

S denotes INVEST’s safety ranking

(7 being the highest value, 1 being the lowest)

+ Prices as of 12/30/83

* Denotes new addition to INVEST approved list for the week of Dec. 27, 1983.

ADDITION

GENERAL CINEMA (GCN - 45) - The largest U.S. theater chain has not been hurt by competition created by home video entertainment. In contrast, it has been helped by the availability of more movies. As consumer spending grows, this company will benefit. General Cinema is also the largest independent bottler selling Pepsi-Cola, Dr. Pepper and ~-UP. Efforts to gain beverage market share are paying off and profits are improving. We now recommend this stock as a “Buy” and expect earnings to increase at least 13 percent ln 1984. AIS: 7 3 5.

FOLLOW-UP RECOMMENDAliONs:

ENNI!I BUSINESS FORMS (EBF - 22-l/g) - Upward price momentum appears to have faltered, and we would temporarily defer new purchases. Currently selling at a reasonable price/earnings ratio, we are now rating EBF a “Strong Hold” and believe it will resume its uptrend following its firstquarter reporting period. Current AIS: 6 3 4.


APPROVED BUY LIST

TOP-RATED STOCKS FOR INCOME

STOCK SYMBOL PRICE+ A IS

Brooklyn Union Gas-2 (BU) 32-318 576 Central Hudson G&E-2

KG; 23 476

Commonwealth Edison-2 26 475 Commonwealth Energy-2 @ES) 19-318 576 Eastern Utilities Assoc.-2

[FE;:; 14-718 574

Florida Progress-3 20-l/2 575 Gulf States Utilities-3 GSU)

::-5/S 475

Idaho Power-2 (IDA) 475 Indiana Gas-3

I::;; 33 575

Interstate Power-3 17-518 475 Kansas P&L-l # (KAN) 30 576 Mutual Omaha Int. Shs.-I

tt:: 12-l/4 477

Oklahoma Gas & Electric-l 21-l/8 475 St. Joseph Light & Power Co.-2 (SAJ) 15-314 574 So. Carolina Elec & Gas-l (SCG) 17-314 475

11 If the dividend yield does not increase, the issue must be deleted from our Buy List. I=Denotes dividends payable January, April, July and October. 2=Denotes dividends payable February, May, August and November. 3=Denotes dividends payable March, June, September and December.

TOP-RATED STOCKS FOR SAFETY

STOCK SYMBOL

Abbott Labs (ABT) American Express (AXP) American Home Products

g; Consolidated Foods Exxon Corp.

Iz:? General Electric Intl. Bus. Machines R. H. Macy E? Mellon Natl. J.P. Morgan IYF% Philip Morris (MO) Procter & Gamble

I::; Standard Oil of Indiana Winn Dixie (WIN)

MditionaI information available on requesL

FOLLOW-UP RECOMMENDATION (continued)

PRICE+

45-l/4 32-I/2 49-518

:!-3/S 58-518

122-318 52-I/2

::-3/S 71-314 56-718 50-518 28-718

A IS

537 547 647 657 667 547 647 637 547 657 647 547 557 557

YIELD

9.3% 11.8% 11.5% 10.9% 12.2% 10.0% 12.6% 9.2% 9.9%

10.3% 8.5%

12.0% 9.1% 9.4%

11.3%

INTERNATIONAL BUSINESS MACHINE (IBM - 1223/S) - Defer new purchases due to some deceleration in its uptrend. IBM should perform only slightly better than the averages in the coming six months. IBM was added to our Appreciation Buy List last January at 97-3/S. It will remain on our Safety Buy List. We continue to rate this issue as a “Strong Hold.” New AIS: 6 4 7.

LEAR PETROLEUM (LPT - 215-l/2) - Disappointing price activity over the past several months could inhibit near-term potential. Exceeding the previous high of $30 could present a problem in the near future. However, after a couple months of stabilization the price should rise above past highs. “Strong Hold.” AIS: 6 2 3.


MOUNTAIN FUEL SUPPLY (MFS - 25-3/4) - Stock’s recent consolidation seems to be following the weakness of the rest of the group. Mountain Fuel Supply appears to be undervalued at this time with a P/E of 7.9. Moody’s recently upgraded Mountain Fuel’s paper and debentures, and deficits seem to be a thing of the past. MFS just posted its first third-quarter profit in three years.

NORDSTROM (NOBE - 35-l/2) - Expect further consolidation in the 35 to 40 range followed by a continuation of its uptrend. Earnings have been better than anticipated.

PHILLIPS VAN HEUSEN (PVH - 45-5/S) - Latest quarterly earnings of $2.73 per share vs. the prior year’s $1.89 confirms that Phillips has been able to capture their share of the consumer spending spree. Still, at a conservative 8.6 times latest 12 months’ earnings, this remains a “Strong Hold” for further gains.

ROBJZRTSHAW CONTROLS (ROF - 45-7/S) - Remains in a steady uptrend and recently reported a surge in earnings of $1.26 vs. $0.39. This manufacturer of automatic controls, especially home thermostats, is due to split 3 for 2 this week.

WELLS FARGO (WFC - 39-5/S) - Touching new highs and still at a conservative 6.7 times earnings, WFC remains a “Strong Hold” for the near to intermediate term.

INVEST continually evaluates a wide variety of Mutual Funds suitable for investors with diverse investment objectives. Listed below are 1983’s choices.

1983 PERFORhMNCE OF RECOMMENDED MUTUAL FUNDS

Maximum Capital Gains

St. Paul Growih Fund NAV on 12131182 NAV on 12130183 g:; Dividends Paid $ 132 Capital Gains Paid $1.441

Approx. NAV Appreciation +21.9%

Massachusetts Emerging Grovth NAV on 12131182 NAV on 12/30/83 g:-;: Dividends Paid $ :06 Capital Gains Paid None

Capital Growth with Income secondary

St. Paul Capital Fund NAV on 12131182 $12.71 NAV on 12130183 Dividends Paid Capital Gains Paid



Approx. 1983 Income Yield +2.8%


Pioneer II NAV on 12/31/82 NAV on 12130183 :::*:; Dividends Paid $ :56 Capital Gains Paid $ .885

Income with Capital Growth Secamhy

Income Fund of America NAV on 12/31/82 $ 9.98 NAV on 12/30/83 Dividends Paid :‘“*:z Capital Gains Paid $ 133

Income - Corporate Bond Portfolio

Bond Fmd of America NAV on 12/31/82 NAV on 12/30/83 s::.:; Dividends Paid $ 1:44 Capital Gains Paid None

Income - Stock Portfolio

Frahlin Utilities Series NAV on 12/31/82 NAV on 12/30/83 8 x2 Dividends Paid $ :50 Capital Gains Paid None

Income - GNMA portfolio









Franklin US. Govemmen t Scarities Fmd NAV on 12/31/82

$ E NAV on 12/30/83 Dividends Paid $ :94 Capital Gains Paid None

Income Exempt from Federal Taxes



Massadwetts Managed Municipal Bond Fund NAV on 12131182 $ 8.90 NAV on 12/30/83 Dividends Paid Capital Gains Paid



NAV = Net Asset Value


Looking back to 1983, the year was good for investments. The first half of the year brought the more substantial portion of the year’s gains, while the last half of the year saw a majority of stocks give back some of their forward progress. The overexuberance for high-technology issues, in particular, rang out the year in a more sober fashion.

The Dow Jones Transportation Average turned in an excellent reading, up 33 percent for the year, but was surpassed by a wide margin by the INVEST List for Appreciation, up a total of 44.9 percent for the full year. Both the S&P 500 and the INVEST percent changes include dividends and are thus total-return measures.

Capsulized below is the performance of major investment indexes for the full year 1983.

1983 INVESTMENT PERFORMANCE INVEST RECOMMENDATIONS. MARKET INDMES

50%

40%

30X

i5

G

20X

a

2 10%

f

0%

-10x- [

GOLD -20% , , , , , , , , ( , , , ( 1 , , , I , 1 r

FROM 12/31/82 TO 12/30/83

Cold, the Sotheby Art Index, and the Dow Jones Utilities realized the lowest capital gains strategies.

The Lipper Mutual Fund Index, the Value Line Composite Index, the NASDAQ Composite Index for Over-the-Counter securities, and the Dow Jones Industrial Average were all up nicely in a range of 17 to 22 percent.


Technical Action VOL.1 NO.21 “INTERPRETING MARKET FORCES” DECEMBER 29,19G3

--̂ ----------------------------------------------------------------------

___-__-------------------------------------------------------------------

NEW YE-R*’ BLFISTOFF ‘777’

______-------------------------------------------------------------------

Tm: TECHNICALS RRE MIXED, CONFUSED RND, GENERALLY, WEAK - WHICH IS CKL THE =E REA!3M WHY CI STRONGER THAN EXPECTED RkLV COUD Now BE OCCURRING. THE NOVEMBER LOWS IN THE INDICATORS &ND CIVERMiES HELD ON THIS PULLBACK, A VERY ENCOURAGING DEVELOPMENT, ESPECIALLY AMING TE SECONDCIRV IS!suES. VOLUHE MJALVSIS SAYS OUT-OF-FAVOR ISSUES CIRE BEING ACCUMAATED. THE SENTIMENT AND SHORT-INTEREST DCITA IS EXTRENELV BULLISH. A LATE YEW-END RCILLV.

SHORT-TERH: THE RALLY APPEARS TO HAVE FURTHER TO GO 6FTER BREWING-OUT FROM A 4-WEEK DOWNTREND. SHOOTING FOR 1290.

INTERHEDIATE-TERllr NEXT FEW WEEKS SHOULD SEE THE RlKLV CONTINUE WITH t’J0 SIGNS, VET, OF A RCILLV TDP.

LONG-TERtl, THE LONG-TERM RENAINS ON A SELL SIGNAL.

SLe!IEGY k!LLH Pm!! 81 12&!1 LONG-TERM INVESTORS REtlAIN IN CASH. INTERHEDIATE TRADERS SHOULD BE LONG STOCK AND OPTIONS. SHORT-TER?l TRCIDERS !5HOULD BE LONG MARKET INDEX OPTIONS. CALL THE HOTLINE FOR EXACT RECOtWlENDATIONS.

P&GE 8 JS GENERCILLV WHERE A RUNNING RECORD IS MINTAINED ON PERFW. MANY NEW RECUIHENDATIONS ON THE HOTLINE.

----------------------------------------------------------------------- MARKET TECHNICAL ACTION CtlHPOSITE INDICATOR

(MEASURES MOHENTUH, WCIVE ANALVSIS, AND TRENDS)

-----------------------------------------------------------------------

:;ww;/

z r 1 WtJmslIE LN~mLOR

:

-is z z

10-z. * - - * ’ * - ’ * * - * 12-2;

MARKET TECHNICAL ACTION, POST OFFICE BOX 171, GREENS FARMS, CT 06436

EDITOR: DENNIS E. JARRElT, MBA COLUMBIA UNIV., BS BOSTON UNIV. PUBLISHER: PEMBROKE INVESTMENT ADVISORY SERVICE, INC COPYRIGHT 1983 PEMBROKE INVESTMENT ADVISORY SERVICE. INC.

Reproduced I” its entwety wth perm,ss,o” of Oennls E. Jarrett and Pembroke Investment Adwsory Servu. Inc. CopyrIght 1983 by Pembroke Investment Advisory Sefwe. Inc.


-2-

RALLY UNDERWAY - STRENGTH OF RALLY COULD BE A SURPRISE.

INTERMEDIATE-TERM FOR SECONDARY STOCKS REMAINS IN CI DOWNTREND, BUT NO NEW LOWS AND CI POSSIBLE CHANGE IN TREND.

NEW MARKET LEADERSHIP APPEARS TO BE TRYING TO ARISE FROM THE "WHIPSCIW" CISHES.

OUR MRKET TECHNICAL ACTION CDNPUSITE AVERAGE

REFLECTED THE DECLINE PRIOR TO THIS RALLY EFFORT.

that accurulation uas the wisest course of action dmside risk was riniral, and wit;

I Tuesday's f12127~ upthrust, good participation

the rally to carry at

11 XT :

9-30, ' . . . ' ' - - . . * ' 12-23 The DON Average (see graph) is enclosed in our

usual 42 envelope based on a 2l-day exponential

roving average. This particular technique assists

in predicting overbought/oversold levels, a5 uell

'[jAu\[i :',I::i":h::

.

PRESSURE IS FOR IIN ;P NOVE - MOT 1215' This tire

'IT CAN DE SE: THAT THE

4------------------.-*----- ___- .: the Dow resides at its ridpoint (1260). Tuesday's

: rally has pushed the average 'off-cmter', on *Rat

i appears to be a track toward 13WJ-1310. The Dou

: i never got really oversold, but don't fight the

3 !!!8!%EI m!c!!E INTENSITY -&a I

; tape.

9-30 ' ' ' ' ' ' ' ' - ' ' ' 12-23 AARKET VMUNE IlfTENSlTY (WI) IS YLL DN ITS MY

TONARD THE OVERBOUGHT AREA, REFLECTING THE STffEfMTH

INHERENT IN THIS RALLY. The higher-low and

louer-low scenario did not occur on this decline,

sgr between the IWI and the Don Average. However, the

I WI did provide a nice lead tiee, when it entered

where over the last three years, the

eoeentur 'runs out-of-stear'.

WI turned-up sharply.

; THE PRICE INTENSTTV INDICATOR (PII) PORTRAYED (I I z

: SlfllLAR PICTURE, CONFlfMlNS THE VOLUHE RCTIVITV.

z Last 'the price actlon was % - - .PRICE INTENSITY- - - - - - - - - - - - - - . - - - i oversol~~ne "e5h;f;d be ready to BUv.. zpl

.,. Sure .

9-'3a . . - ' * * - * - . ' -3 enough, the short-terr oversold condition turned-up

fror a point where it did in early-November. The

interrediate-terr did not reach a sieilar oversold

situation, but the short-tere pararters allou for

a nice tradeable rally. SO SO FOR THE SUSTO MD

DON'T FIGHT THE WKET.


-3-

THE INTERMEDIATE-TERM RALLIES HAD ESTABLISHED LOWER HIGHS, &ND LOMER

LOWS FOR RANY INDICES. THE GOOD NEWS IS THAT NEW l--S WERE NOT tlME IN

THE VARIOUS INDICES ON THE PULLBMZK JUST ENDED.

SHORT INTEREST DATA IS VERY BULLISH.

-q--- ~- -- -

r I

Ma!e OTC cm, 1 The NASH OTC Coeporitr haa i5 ow of

our fsvorite5, bein roprmentative of the

secondary rarket. Ail 5orfs of ranipul5tim

can be performed on this little average,

such a5 what you 5ee to the left. The chart : 1 represents the last 60 day5 fK the N&SW

I : _ Corposite with a IO-day exponential rpviap

zgu I

.-- average oxillator. The key point to be

rade i5 that the Composite ha5 penetrrted 5

up through it5 ten-day averaqe, in advance

of the othw averyes and indicator5

(except the Awriran Exchaonpe Index, ehich,

likmi5e has penetrated upwrdl.

SECUNDRRIES ME STRMIS.

se -_

THE PUBLIC-SPECIALIST SHDRT DATA IS THE M&T f 1 r

BULLISH IT MS BEEN IN bT LEAST THREE 13) : r

552 line. Caveat,

good, but if Barron’s ha5 not ‘blown-it’, the ;?l$

rarket could really ‘BLAST OFF’. 3-26

9 F 2 - !!!a!nEB~Io-lo_Icw_ Ez!B!ns -

- s-s

II 4 LIKE VEIN IS TM LIIBER-TOTAL SMORTS

RATIO, WHIC4 IS BECDHMS VERY BUUlSR.

Althouph, it is bermin very bullish, the

4-week ooving average has seem better

readinpr. But not too wry, again, if

Barron’ data is correct, the ratio is

nearing a stron9 buy at the 802 line. The

wst recmt mekly reading was 772, 50 the

trend is still toward the buy area. Rote

77 L MOW fi6cE& - 1

the latnt reading on the graph. Provided

3-26 ’ - ’ * ’ ’ . ’ * ’ ’ ’ . : * * ’ ’ I all the data is a5 reported, one would have

I’>-23 to be 5liqhtly off-cmter to be a

short-Sell at thi5 juncture.

The technical data reflects a Fall ying ShOFt- teFD, I firring

intermediate-teFD, and much irproved relative strength in the secondary issues. WE NEED DRRRON’S SHORT-SRLE DRTR TO BE CORRECT, HHICN COULD

INDICC)TE c) UERY STRONG RRLLY THRT UILL 60 FARTHER THf?N HOST BELIEVE.


-4-

vQl--E ANALYSIS INDICATES INDIVIDUbL STM=KS CYRE RALLYING.

I . -3EI . . . . . . . . . . . .-I 12-23

RECENT BUYINS HODE WlOOE) REAUMSS WE BEEH I#

THE 60’S IPERCERTi REFLECTINS FR!JORASLE

KCUWULATIDN CHARACTERlSTICS IN TREWD, MWWfTwI,

AND VOLUME YAVE CYCLES. The readings held at a high

level throughout the correction, a VERV SOOD 51611

FOR SETTER THM EXPECTED STREIIGTH ON THIS CURREYT

RRLLV. A short-tere downtrend line has bese

'penciled-in' 011 the graph, ehich, rubsquently,

has been penetrated decisively to the upside. The

MODE is an excellent suoaary of the urket's

condition built frm individual stock Yg!!&gg

analysis.

indicator turned-up free a botfoe, but not a5

sharply, as the aarket volur intensity. Not too

surprising, if one look4 at the Advance-Decline

differential for the last 1-2 weeks, which has been

fairly narrou. As the rally gather4 thrust, and

spreads, the stock intensity will bqin roving with

all undue haste. THE MY IS POSITIVE VW%.

aA!!! w2!ME rLJImsIIv EXPONILCY - : OR THE OTHER HMD, THE RET VOLUHE WE TREND SURVEY

WWT) SHOWED MUST HO DETERIORdTlW IMATSOEVER,

IIIDICATIIIG THE WMECTION FWI llAlJY STOCKS, Rs tiE&StRED TilROUSH UWHE IMIKVSIS, @CE~. This

2 fi ; measure turned-in u) atstanding perforrance on the

I decline. Last issue we said, ‘THE !)(jEfl#& MRKET

z WPEhRS TO BE PAST ITS LOU FOR THIS CYCLE,

e[qqmyyi IItIa m mm’. ye, 5wnorea5wto DOUBT. Rmober, a trend change ln the VRT usually

- signals internal 1055 reached by stocks prior to

I lad

I 1 z VMME RAVE TRENDS

-is -I (Percent of stocks in each category) 9y3P .. . * *

. 12-23 ____________________------------------------- ------

!2!2! !?!13 A3vAIIcII YAW 311 31X

McLIWIffi WES 23 25 MEUTRRL YVES 46 44

_--___---___________- MT VOLW NAVE TREMD BZ 61

The Velure gave Trend Survey Table indicate4 building strength with this rally. An increase of 2 percentage points in too

ueeks. This survey data is crucial in recoaaendinq contrary actioo, such as selling, when others are buying, with

confidence. COWlDEEE IS THE KEY WORD.

COHCLuSzON: rest stocks are resisting further correcting-action. The action rhoul d JOY shift back to the upside. THE BZ6 BRD BULL IS RLZUE

AND IIELL, LZUZNG IN NEW YORK CZTY. BUY ON #ERKNESS.


-5-

STOCK SYNOPSIS

Last issue we presented one prior recommendation, and four potential recommendat i ens, of which three were recommended, and two (Warner

Communications and Graphic Scanning) are doing extremely well. Official recommendations are on the Hotline only - don’t anticipate. A% many of

YOU know, our concentration is on volume analysis and it5 accumulation line (under each graph) disparities vis-a-vis price, and/or buying vol ume breakouts. We start from the premise that volume portends prier movement . The data goes through many vicissitudes to extract trends,

wave5 or cycles, and momemtum for each of the SOO+ stocks analyzed daily. But as with all market approaches, we maintain stop-loss orders,

preferably mental, and ruthlessly cut losses short, while l llouing profit5 to run.

MC, a5 the next two &LA and MA), is part of

I$ t’lt”s’,, ,A

-

MERADA HESS MHC)

the oil and oil-service group that ha5 been

- lil ’ down so long that *one has to look up, to look

- down’. Bargain hunting has been coring into

play in sufficient quantity to reverse the -

“‘i\j+G~l~ :

accumulation line. The trendlines on MC have “$- 9

been broken. Short-twr, porsibly, but there

is accumulation and it does appear heavier

than prior rallies. Rnerber, the accurulation

line here i5 only one of rany ‘cuts’ utilized

on each stock. Ye will watch carefully.

z5z[

13

GLOBAL MRlME 6LH)

SLI i5 another 5tock that price indicate5

; FL1’tgtbtll~~~~@%& t

could head for zero. This is the sccood volun -

breakout in six wnth5, but unlike the prior

“kqlLlq,Lt/J -

oove, the entire oil group is improving.

Sooeone i5 buying heavier in the 8 dollar

area. Until the price cloros above 9, a trend

change mill not be confirred, but odd5 favor a

trend change, based on various volume

5easure5. Appear5 to be low ri5k.


Well, an&ha oil stock, the cosputer is

spittinq these out 'left-and-right'. VA shows

the same characteristics as rrny of the other

in this group, namely: low-risk, rccurulation as shown by 5 differmt voluoe analyses, and a

price domtrmd line that has been, or will soon be penetrated to the upside. Rhy? I don't

know, l just follow the player4 to see *hat

they do. COULD DE A BUY AT 4NYTIHE.

nNnLosIC CORP MLOH

ALo6 i$ a hiphn-risk situation as part of a

high-tech group that wants to rally, but

can't. The dountrmd lines for price and

velure have not yet been decisively penetrated, but with anothK day or tw of

help froa the urket??? bnticipation, yes, but

ue try to ride uith the siqnals. If it roils

over, aftn a recomendation, it will be

elirinated, quickly. DO ROTE THAT THE

SECONDARIES ARE STRORSER, IN SERERIK, TlfM

WHEN AL06 TRIED ITS PREVIOUS RALLY.

COffRUNlCAlIONS WRP MERlCA (CCPA)

CCPB is a little nunber that corrected 60-702 froa early 4unuer. The chart only reflect4

that last 90 days, nhich, not surprisingly,

head4 dam. Little or no interest, but lo and

behold 7 days aqo, it appear4 soaeone i4

uillinq to pay alaost any price for their

shares, a4 the price has juuped 752. The price

jurp is of no interest in itself, but note how

the accurulation line has 9one through the

proverbial 'roof'. VERY lNTERESTIffi SITllATIOU.


-7-

PORTFOLIO SYNOPSIS

We are summarizing the complete performance of all ret ommendations from 6/27/83 to date in this issue. It is something that we strive to improve upon at all times as we feel market timing is only part of what an investor needs to make money. The other part is the selection of the proper vehicles or issues to achieve that objective. Many of our peers are great on either market timing or issues, but not both. Uell, our goal is to be outstanding in both areas.

It is assumed that every recommendation starts with slO,OOO and adjusted for the percentage profit/loss incurred on the r-u omeendation. The percentage numbers are NQL MJNUALIZED, nor adjusted for any other time period, nor do they take into consideration margin, commissions, dividends, or interest earned on free funds.

ISSUE m!!!QS RECVlZED CARRY FORWARD %190,670 QN s180,OO INVESTED s+p 100 DEC 175 PUTS 25,330 s+p 100 rl&R 160 CALLS 10,000 s+p 100 MR 165 CALLS 9,690 NBI CQRP 10,700 DYSAN CCIRP 10,670 CESSNA CIIRCRAFT 9,070 SENSORI'WTIC 89-Q HQSPITAL CQRP 9,490 QUALITY CCIRE 9,690 CHART HOUSE 9,130 PRIM 9,290

-------

S312,ZlO

RETURNS - 6/27/83 TO 12/27/83

s312,210/MlT INVESTED (s290,OOO) - 7.7% APPROXIMCITELY 15X ANNUALIZED

s251,836/AHT INVESTED (S240,OOOI = 4.7% WPROXIMATELY 28% ANNUALIZED

s564,046/CIllT INVESTED (s530,OOO) = 6.4% APPROXIMATELY 22% ANNLMLIZED

DOW JONES AVERAGE 1260.00/1229.50 = 2.5’/. APPROXIMATELY 5% ANNUALIZED


-0-

(DFFICICV RECOHHENDATIMJS ARE ONLY Tm)SE MADE DN THE HI@ HDTLINE)

IEIE I1EC: lZLZZ SIBX REMNDED El! ez!

Iua alRP tm=m 11/02 36 39.75 WESTERN UNION (UIJ) 11/02 35 36.25 INTELLISENT SYS (INTS) 11/02 15.5 18.25 LEE LWITCI (LEDhI 11102 18 18.75 TELERATE ( TLR 1 11/16 22 23.00 KINDERCARE (KNDR) 11/l& 21 20.50 BR cOHfUbJI~TIDN(SRHF) 11114 22 19.50 C&IF. IlICRDWAVE (CHIC)11/14 10 le.63 LSI LDSIC (LLSI) 11121 21 19.00 SRAPHIC !XANNING(SSCC) 12116 4.63 6.38 MARNER COMIlUNIC. (UCI) 12116 22.88 25.07 S+P 100 FEE 165 CALLS 12116 6.5 0.63 RtlER STERLIZER (CISZ) 12/19 18.5 17.75 MNKCYERICA (SAC) 12/19 20.38 21.00 FLOATINS POINT (FLP) 12119 35.5 36.50 INTERPEDICS (ITH) 12/19 16 15.63 PENNEOIL (PZL) 12119 32.5 32.75 CVlER RROhDCAST (ABC) 12/22 54.5 5s. 75 woN PRODUCTS (&VP) 12/22 24.63 25.25 FEDERCY EXPRESS (FDX) 12122 47.25 45.75 NCITIONhL RED ENT (W’UE) 12122 22.25 22.50 cmDoRE (mu) 12/22 41.38 42.25 HEWLETT PACK (Hwp) 12/22 42.25 42.63 EF HUTTON (EFH) 12/22 35.38 36.13

HOLD HQLD HOLD

HOLD HOLD MILD WLD HDLD HOLD HULD HOLD HOLD HOLD HOCD HOLD HOLD HDLD HDLD HOLD HOLD HOLD HOLD HOLD

xc +10.4

+3.6 +17.7

+4.2 +4.5 -2.4

-11.4 +3.5 -9.5

+37.0 +13.1 +32.8

-4.1 +3.0 +2.a -2.3 +o.e +2.3 +2.5 -3.2 +1.1 +2.1 M.9 +2.1

nrsGwA!!EwS

HOTLINE M.X’lBER IS <203> 259--8076 -

NEXT ISSUE DATED JANUARY 14,1983.

THE HOTLINE IS UPDATED MONDAY, UEDNESDCIY, W FRIDAY HDRNINSS, - AND DAILY WHEN EVENTS SD DICTC\TE.

THE HOTLINE IS AN INTEGRAL PCIRT OF YWR SUBSCRIPTIDN, CARRIES THE

LCITEST MARKET COf’WlENTbRY, AND WR OFFICICK RECDtlMENDATIDNS FOR

MARKET TECHN I CFIL CSCT I ON

Registered wth the SEC as an mvestment advSOr. PublIshed bweekly, 24 6wes per year, $199. Pursuant to rule 206(4bl wa adwse that readers should not assume that recommendations made tn lha future wll equal the performance of recommendations made rn the past. It IS furthermore not our mtenl~on to slate, indicate or Imply m any manner whatsoever lhal any charts, formulae, theones or methods can guarantee profitable results. All contents are derived from sources belteved rekable. but wa cannot guarantee accuracy.


Issue No. 11/83 Issued on the second Wednesday of each month Nov. 9, 1983

0

)JIA - ,250

,200

150

M J JlAl S 101

THE CURRENT PICTURE In our last letter we said the Overbought/

Oversold Indices and the Downside Volume were indicating a short term decline. This indeed occurred, as can be seen in the chart at left

(trendline AB).

Is the market ready for another uptrend? Not according to the OB/OS Indices which, although close to being oversold, are still in downtrends. However, the lo-day line has a slight divergence, which is encouraging, and both are at levels from which rises usually commence. (Note the ZO-day

line now and at its August low.)

The Closing Strength Index is still in an

Jptrend. This is a measurement of "smart money" sentiment based on the volume and closing price for the day, on the premise that knowledgeable investors habitually act late in the day. The CSI has in fact been bullish since last December.

The Advance/Decline Line is in a downtrend, but is nearing the bottom of its channel.

Both the Upside and Downside Volume are still in downtrends, but there has been a slight divergence over the past two and a half weeks.

We mentioned that the AMEX Market Value Index,

which consists of more speculative, low-priced stocks, has been heading down, as can be seen in the chart at riqht, below. However, this decline may be part of a normal corre :ion, as this index has risen )ver 110% since it bottomed )ut in 1982. A breakout from its channel could be bullish

For the whole market.

Several of our longer term indicators are still bullish, suggesting that the mar-

ket has a lot longer to go before it goes into a SwiOUS

iecline.

Notwithstanding the side- vays movement in the DJI over the last six months, we

OSLER. WILLS, BICKLE LIMITED

Toronto: P.O. Box 60, Royal Bank Plaza M5J 2K6 (416) 865-2ooO

Calgary: 407 2nd Street S.W. T2P 2Y3 (403) 290-1710 Montreal: Suite 1525, 800 Dorchester Blvd. West H3B 1X9 (514) 879-1770 Granby: Suite 33, 135 Rue Principalc J2G 2Vl (514) 372-9131 Vancouver: 1409-1177 West Hastings Street V6E 2K3 (604) 681-1244

Reproduced ,n 1,s entirety wth perm,sston of John E. Mahoney and Osler. Wills, Buckle LImited.


believe the market has sufficient strength to last another six, as will be seen in our assessment of the long term. We recommend those stocks in "stage 2" in our Trendanalysis.

THE LONG TERM In August, 1981, we featured a long term analysis , cycles and the topping-out pro-

cess and consider the time is ripe to do so again. Last time, we were enabled to forecast the decline for the following year. Let us hope we can do so again.

The 1949 low to the 1974 low gives us an average medium term cycle length of 4%

years, counting the cycles as marked in the chart of the DJIA below (1st cycle not shown)

In an effort to explain the 1978-79 rration in which the market moved sideways, we pre- was caused by conflicting sub-cycles, and that it to conclude that the medium term cycle should have

as marked (at the end of cycle 7). This also works

It follows that the half-way point should mark the beginning of a new cycle (cycle

8). On this assumption, we must conclude that cycle 8 ended in August, 1982, only 41 months later. A short cycle, but valid.

Now for the current cycle. It frequently happens that two successive cycles have approximately the same duration. I f we therefore extend our present cycle (9) to a period equal to cycle 8, we reach a bottom in January, 1986.

Secondly, if we assume that the top of the cycle will occur half way along, this

works out to a peak next April. Also, by drawing a trendline through the June-October

tops, we arrive at a figure of approximately 1335 as a DJIA objective.

Of course, we do not mean to imply that things will work out exactly like that. The remaining six months are viewed as a topping-out process, consisting of several swings and a generally sideways movement. Any of the upswings may be the peak. In the chart of the Weekly NYSE Advance/Decline Ratio at right, note that, following the climb from the bottom WEEKLY NYSE ADVANCE/DECLINE RATIO

to the top of the channel (1982-83), the line is now moving sideways. This is likely to continue, much as it did in 1980-81. (Note: The channel drawn com-

mences with the 1974 low.) Nevertheless, some idea of what is likely to happen should give us the confidence and ability to invest intelligently.

OIL AND GAS It will be noted in the Industry Groups table

that Oil and Gas has dropped from 4th to 14th place in the last two months. The sharp decline can be seen in the chart on page 3. However, it may also be noted that the index has dropped


nearly to 3200, the breakout point, which should be a good support level. We would at least expect a good short term uptrend.

In individual stocks, several of the major integrateds are still considered to be in uptrends (see Trendanalysis) and are now near the bottom of their channels, which should be a good buying point.. Several of the secondary oils are rated as "bottoming out after a decline and forming a base" (Stage 1).

On the whole, it may be concluded that the oils have greater potential than the table indicates.

TRENDANALYSIS

TSE OIL 6 CRS INDEX OILS

For some time we have been recommending a Buy, Sell or Hold in our Trendanalysis

(on page 4). This had two main drawbacks. First, all clients do not look at the market the same way, and therefore a "sell" for one person might be a "hold" for another. Secondly, stocks which appeared to be bottoming out and those which were topping out both were marked "hold", as both would be moving sideways. Instead of Buy, Sell or Hold, therefore, we are attempting to identify which stage of the stock cycle the stock is in. If a stock is moving sideways, it is important to know whether it appears to be bottoming out or topping out.

The analysis given applies to the medium term. By definition, the medium term con-

sists of a number of short term moves, with successively higher or lower swings. These swings can be quite extensive, depending on the stock's volatility, and in a sideways pattern there is no constant succession of higher or lower tops and bottoms.

We have also tried to show the dominant trend by calculating the percentage of stocks in each of the four stages of a cycle and illustrated this by drawing bars in the diagram at the bottom of page 4. At the present time nearly 50% of the stocks are in uptrends, confirming our belief that we are still in a bull market.

INDUSTRY GROUPS The following industry group ranks are based on their performance over the last 3

month and 12 month periods. The quarterly figures are weighted by a multiple of four.

INDUSTRY 'GROUPS

Utilities Consumer Products Transportation Communications Merchandising

Management Cos. Paper and Forest Industrial Product Financial Services TSE Composite Inde

Pipelines Real Estate/Const' Metals & Minerals Oil and Gas Gold

5/11

6 7 8 9

10

11 12 13 14 15

21/X

7

1:

1;

:2” 9

14 15

RANKS as 0

7/u

: 4

1;

5 10 2 9 8

15 12

1 13 14

date

23/g

: 7

1;

133 2 9 6

15 14

1 10 12

919

10 7 5 9

11

143 2

12 6

:“3 1 4 8

T !6/8

107 11 4 9

1 14

5 13

8

15 12 2 6 3

% Change in Last Quarter

12.1 7.7 6.2 2.7 4.2

- 2.3 - 1.8 - 2.2 - 1.4 - 1.6

1.7 - 2.2 - 7.5 - 9.3 -21.8

% Changt in Last 12 Mths

25 38

2: 32

41 35 36 27 27

1: 33 10 27

Combined Figures

(Weighted

67: 65 54 48

32 28 27 21 21

7 5 3

-27 -60


TRENDANALYSIS

. Bottoming out after a decline and forming a base (moving generally sideways).

3: In an uptrend. Successively higher short term tops and bottoms. Topping out after a rise and under distribution (moving generally sideways).

4. In a downtrend. Successively lower short term tops and bottoms.

The bars superimposed on the diagram indicate the percentage of stocks in each stage. 2. An asterisk following the stage number indicates a change from the last issue. 3. This analysis is based solely on chart interpretation and applies to the medium term.


JJM TECHNICAL ADVISORS P. 0. aox 695

WALL STREET STATION

NEW YORK, N. Y. 10268

(2121 7s..6981

Volume 4, Issue 1 January 12, 1984

FUTURES TRENDS

SHORT TERK RATE FUTURES: TREASURY BILLS

Last advice was to use dips for reentry on the long side in the Bill market, looking for a test of Oct/Nov.highs.

As the chart shows, prices rallied from the support "neckline" along the summer peaks maintaining chart up-trends. The current rally has placed prices right up against formidable resistance as expected. A decisive close through that barrier is needed to break prices free from their three month trading range, and would signal a probable retest of contract highs. Volume has been disappointing on the upside and prices appear overbought.

Recommendation: Take partial long profits in this area. Protect remaining March Bill iongs under 9066.Reinstate longs on a decisive close above the Oct./Kov. highs.

Reproduced tn tts entirety wth perm~s~on of John J Murphy and JJM Techmcal Advisors. CopyrIght 1984 by JJM Techmcal Adwsors


_--- _ _--- _

, gg.- . ----A - ~-------- - I --- .__-_ .-,8

---

LONG TERM RATE FUTURES: TREASURY BONDS

As the above Bond chart shows, prices did nick the down trendline along May/O&. highs turning the near term trend up. However, volume was very light on the breakout. Prices still look more bullish than bearish, but no clearcut trend signals have been given. The computer trend has shifted from down to neutral.

The GNMA chart remains much more constructive looking. This week's rally actually set new 7 month highs before settling back a bit. Here again, the lack of volume detracts from otherwise bullish price action and suggests that a near term pullback is in store.

Recommendation: The last issue called for reentry on the long side of GNM?&.. Protect March lonqs under 6804 and continue to use dies for new longs. In the Bond market, the last advice was to cover all shorts and move to sidelines. Use the price range of the past two months for trend signals. Buy a March close above 7116. Sell a March close under 6824.

2


BRITISH POUND: Last issue called for some short covering. New contract lows have resumed the major downtrend. A bullish consensus reading of only 14% is warning of severely oversold market. Use dips for additional profit-taking. Sell into siqnificant rallies.

CANADIAN DOLLAR:Last advice was to take short profits. New lows resumed the major downtrend. Reshort rallies.

DBUTSCHEMARK: Last advice was to take some short profits with March protective stops over .371. As the above chart shows, prices rallied to that resistance level before collapsing again. m additional short profits. Reshort onlv on substantial rallies.

SWISS FRANC: Last advice was to take some short profits or to protect remaining March shorts over .466. Prices rallied to that level before breaking to new contract lows. Take additional short profits. Reshort only on substantial rallies.

JAPANESE YEN: Last advice was to reenter the long side on dips. While downside action has been limited, prices are back to the lower end of the past three months trading range. Some longs should have been liquidated or stopped out by now. Protect any remaining March longs under Dec. low at .426.

3


Last advice was to buy a March close over the Nov. high or to sell a close in new contract lows.

What started out looking like a basing pattern finally turned out to be nothing more than a triangular-shaped consolidation in the major bear trend. While the downtrend has resumed, however, some caution is advised in this area as prices in the nearby months are testing long term support at 62 cents on the weekly continuation chart.

Recommendation: No long positions were established since resistance was never penetrated. New contract lows called for new shorts. would now switch to a strategy of-selling rallies short, looking for a next downside target in the 58-60 cents support area. Protect any March shorts over 66 or 67 cents. Any rallies into the 64-65 resistance zone can be used for new shorts.

4


!

, I

The last issue called for new shorts in the Gold market with Feb. protective stops over 398.

The setting of new contract lows on increased volume is viewed as bearish action. On the long term charts, next major support is seen in the 330-300 zone.

One important thing to watch, however, is that prices are approaching a long term up trendline on the monthly continuation chart drawn under the 1976-1982 bear market lows. That up trendline is currently in the vicinity of 350.

Another point of concern is an oversoid oscillator reading and a low bullish consensus reading of 21%.

Recommendation: Even with the above warnings, I continue to favor a general strategy of operating from the short side during periods of temporary strength. We're switching our attention away from the Feb. delivery to the April. Protect April shorts over 387 or 395.

5


SILVER

Last advice was to protect March Silver shorts over 9.75 and to look to the long side only if contract lows held.

Prices formed a small "rising flag"near contract lows on light volume before breaking to new lows. Some long term support is visible on the weekly continuation chart near 8.00 which may be stabilizing the trend over the near term. Prices appear capable of eventually challenging contract lows near 6.28. Heavy overhead resistance is expected from 8.50-9.20. A low bullish consensus reading of only 18% is cause for concern over the near term.

Recommendation: Hold shorts. If heavily short, take some profits in view cf oversold reading. Protect March shorts over 8.75 or over 9.20. As a general strategy, continue to operate from the short side during market rallies.

6


, ‘, I\. 1 i *‘I-

HEATIWG OIL 10.2 WI. 1984 - W.Y. ucH-I*LWL-YlrcaNn & I

ENERGY FUTURES

By the last issue, all shorts had been covered. No new positions were recommended.

As the above chart shows, heating oil cash and futures prices have risen sharply over the past month. cash prices have actually moved above the August high. Heating oil has led the advance followed by crude oil prices. Leaded gas has yet to flash an uptrend signal and needs a close above its Dec. high to do so.

The extreme volatility of this group has made trading unusually treacherous. Therefore, approach all of the oil markets with heightened caution. I would personally leave this group alone until the price action is more manageable. For those willing to assume the risks, any price declines in heating oil near the Jan. lows might be used for a long probe protecting any March positions under 76 cents.

7


STOCK INDEX FUTURES: S&P 500

Last market advice was to stand aside.

The impressive bounce in all three indices from major support on heavy volume has improved the technical picture. cash indices have already cleared resistance at the late Nov. highs, but futures prices have not yet followed suit. Cycle studies indicate that prices due to turn higher this month. The VL vs. the S&P 500 spread chart has again turned up which is viewed bullishly. On the current pullback, support in the March S&P 500 contract is expected near 168.

Recommendation: Use dips to reenter the long side. Protect under 168 or 166. Add to longs on closes over this week high.

SU.MMARY OF TRADING IDEAS: Rold longs in Bills and GNMAs...follow breakouts in Bonds . ..take some short profits in European currencies... protect remaining longs in the Yen under sec. low...sell rallies in Copper... hold shorts in Gold and Silver . ..for aggressive accounts only, buy substantial dips in Beating Oil . ..hold longs or buy dips in Stock Index Futures . ..add to longs on upside breakouts.

Written by John J. Murphy

Next publication date is January 26.

FUTURES TRENDS is published bi-weekly and specializes in technical analysis of financial futures, metals, energy and stock index futures.

SUbSCrlDtlOn rates are $55 for three mont‘ns, $100 for six months, and $190 for one year.

Telephone updates can be obtained by calling 212 724-6982.

Copyright 1984 by JuI TECHNICAL ADVISORS. All rights reserved. The information included herein has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Those using the above information tar tradrng purposes are solely responsinle ror rnelr own traaing aec1slcn.s.


Decen33er 12, 1983

Mnetary Policy Additions to Debt RealGNPSignals Price Canposition

Stock market RealGNP

Interest Pates Inflation Rate

Prim Pate 10.80 11.00 11.00 11.00 10.75 10.09 PondYields 12.68 12.77 12.90 12.90 12.50 12.00 Inflation Pate 4.5 5.5 6.6 7.2 7.5 7.0 RBalGNP 7.7 5.0 3.0 -2.0 -3.0 -4.0

Market Sensitive Interest Sensitive Market Insensitive InterestInsensitive

Profits cxxwumr sentiment Federal Deficit

Value of the Dollar

Tightened sinceMarch -Further declines expected - Still rising as of Cctober 1983 Falling since July 1983 - Further reduction expecbd Still rising as of Octcber 1983

S & P 500 prcbably reached its cyclical peak in Cctober 1983 Rateof inc=reasedeclining,withabsolutereducti~~

in second ouarter of 1984 Likely to rise slightly until business turns dowh Rising throughthirdquarterof1984, and thendropping

thereafter

1983 1984 32 40 lc! m 3Q @

Actual Est. Est. Fst. Est. Fst. - - - -

High reached in September 1983 High reached in &t&ax- 1983 October 1983 high Septenlm 1983 peak

The insensitivegxupsarelikelytooutperfomthe marketsensitiveandinterestsensitivegroupsduring thenextsev~almnths

Possible peak in fourth quarter of 1983 Likely to start declining in 1984 Federal budgetoutof control. Dwelopmsnts that could

changethepictureincl~eSenateaction,lineiten veto legislation, ard passage of the balanced budget constitutional alwndnmt

Likelytoremxin high until interest rates decline and ecmcqslmwssignsofveak&no

Reproduced an Its entirety with perm~ss!on of Roger Wllkams.


80

130

ed.

rao dec:.i&s are expected,- I

loo

80

la0 ,:.. .:;:: I I I I I I...:.” I

not /expected udtil

100 :,.,

NClTES : 80

65 bb 61 CP 69

do turn.1

fHY wILJ-lIAMsTRENDINDIcAm~ Deemher 12, 1983

Subject to Copyright

.O

is

December 12, 1983

KmJlIAMs !rREm DTlxCAmRS

E3usiness Advance Slminq Dmn

Our fourmajor indexes pointtowarda slcmerpace for business, coupledwitharadual increases in the inflation rate and long term interest rates. The stock market probably passed its xtejor peak in October.

Major Forecasting Guides

Although there was a slight upward blip in October, our mnetxy policy index has declined since its high inmch. Federal Reserve emphasis on the control of inflation (a lagging iudicatir) points toward a policy of continued restraint. Our Peal GNP Signals measure has declined since its peak in July, foreshadowing eventual weaJmess in the efmmmy. At the sama tine, our Debtandhrice~sitionmaasures have continued to rise. These tm measures typically lag behind Monetary Policy and Real GNP Signals. Inflation usually continues to rise even after the econa77y has started todecline.

StockPrices and Interest Pates

long term interest rates areexpected to riseverygently during then& fewmonths, reflecting an advancing econmy, rising credit demands, and a qently rising inflation rate. ?he Standard and Poor's 500 stock price index probably reached its peak in October. Approximtely tm thirds of themketsensitive irdustrygroups dropped during thermnthofNwerS3er, andnewhighs for tiustrygroupe have allbutdis- appeared.

other Clues

TheNwanber mploynentard unemploymantfigures (coincident or lagging indicators) ware stronger than expected, butnotrtuchattentionwas paid to slowgrowth in the labor force, andreductions intheworkmaekand factoryov~tirre. In lheecomnic recovery sinceNovember1982, inventory change amd residentialamstructionhave beenmuchgreater mntributirs than in previous recoveries. Theseelmantsdonot provide a solid basis for a strong and lasting reuovery. At the sme time, consunar durables have been very weak relative to previous recoveries. After rising strongly early in1983, theMichiganconsumr sentimentindexhas been in aplateauarea frcm April throughoCtober.

PeviewaradOutlcok

mnetary Policy and Realm Signals are pointing dmnwardwhile Debt and Price Canposition are still mvirig up. Consurnerand investor sentiment has stalledever sinceApril a&May, ardrmstmrketsensitiveindustry groups declined inMvex&xar. Overall stock nrices probably had their high in October. Inventories and residential construction will provide less thrust for the eammy, which we expect to show an absolute decline sum&me in 1984.


WIIJ-IIAMSTRENDINDI~RS m 12, 1983

THIS EXPANSION: SIMHARORDITFEREM?

S-

Williams Trend Indicators and stoclcprices ledbusinesson thewayup, similar to previous cycles. Earlyupmrd impetus came fruninvmtories , residentialconstruction, axsmer durables, and producers durable eguilmant.

mis expansionhas differed franearlier expansions in the axqmsiticmof GNP change, the behavior of the Federal lxldget, the level of "real" interest rates, rising value of the dollar, sizabledecline innetezgxxts, ardgreatervolatilityofmnetxy@icy.

Similarities

As inprevious business expansions, Williams !lYerd Irdicalxxs and stock prices led business on the way up. Earlyu~thrust~franinventorychange,residentialconstruction, comdurables, and producers' durableeguilmant.

Since the early surge, emnanic expansionhas beendeceleratingwhile the inflation rate has been picking up. CurMmetaryFolicyillldRealGJPSignals irdexeshavetumeddmn, butourDebtandFTiceCBnpositionrmasures havenot. All of this is typical behavior.

Differences ---

Asccsqxwezltoothfxexpansions,thefirstthreequarters of 1983 have ranked very high in invm~changeardresidentialcmnstruction, andverylawinnet~rts,~~esidential strllctures, and consuner durables. Inventorychange,andtoalesserextentresidential construction, donotprwideabasis for a stronganddurable eamanic expansion.

The Federal b&get deficit has risen astmnanically since 1979. The level of "real" inter- estrates has beempositiveandhistoricallyhigh. The international ~lueof thedollar has risen since 1980, ard r& wrts have fallen drastically.

mr&aqpl.icy (as.mxuredbychangeinM-1) hashadmchgreater (skmttenn) volatility since 1975. Inaddition, the switchfrunrapidnonetaryexpansion (I+-lversion) tomch slowerexpansioninlatern~~nthsof1983 hasbeenmredrastic thaninearlier epiSCdeS. Miltcn Fri&mn has noted similarity between 1980 and 1982-1983.

Sincethis -ion startd,sWck prices havekhavedin a mannersimilartothelat~ part of 1980. Inearliercycles,stDck~niceswereusuallyinahealtkierconliti~than they are currently.

Review

WilliamsTrend lixdica~srmv&upbeforethisbusiness expansionstarted. As usual, for- wardinpetuscanrefnminventorychange,residentiala>nstruction, uonsuIEdurables,and produxrs durable equimt. I-kwsver,theccmpositionof~changeduringthi.sexpansion ~srtprestrongly~sizedirmentDrychangeanlresidentials~~.

lheFederalb.xlget, thevalueof thedollar, arxdour net exports haveallbeenmacfidiffer- ent during this bushess lJpwing. Mma~policyhasbeenmrewlatileamlhasexhibitEd apirticularlysharpreversalfrcm~siontorestraintthistime. Stockpricesarermch 1esshealthythistimearoulxL

cmclusim

Forecastingofbusinesscoraditionsrequirescarefulconsiderati~ofbothsimilaritiesand differences as m to previous cyclical episcdes.

1 Subject to Copyright.


MARKETREND: A TECHNlCAL MARKET OPlNlON is published biweekly by:

Butcher & Singer Inc. 1615 Northern Boulevard Manhasset, NY 11030 (516) 627-l 600

CRAWFORD PERSPECTWES is published ten times a year by:

Crawford Perspectives 250 East 77th Street New York, NY 10021 (212) 744-6973

MEMORANDUM is published weekly by:

Deemer Technical Research PO. Box 7099 Port St. Lucie, FL 33485 (305) 335-0780

CANADlAN RESEARCH REPORT TECHNlCAL LETTER is published approximately six times a year by:

Richardson Greenshields of Canada Limited Richardson Building One Lombard Place Winnipeg, Canada R3B OY2 (204) 988-5858

THE DOWSE MARKET LETTER is published eleven times a year by:

Dowse Securities Management Corporation PO. Box 2929 San Francisco, CA 94126 (415) 421-7503

TACTlCS AND TECHNlCS is published weekly by:

Herzfeld & Stern 30 Broad Street New York, NY 10004 (212) 480-l 882

/NVEST is published weekly by:

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MARKET TECHNlCAL ACT/ON is published biweekly by:

Pembroke Investment Advisory Service Inc. PO. Box 171 Greens Farm, CT 06436 (203) 259-8076

MARKET FOCUS is published twelve times a year by:

Osler, Wills, Bickle Limited Box 60 Royal Bank Plaza Toronto, Canada M5J 2K6 (416) 865-2000

FUTURE TRENDS is published biweekly by:

JJM Technical Advisors PO. Box 695 Wall Street Station New York, NY 10268 (212) 724-6982

WlLLlAMS TRENDS /ND/CATORS is published monthly by:

Roger Williams, Ph.D. 6 Devon Drive Orangeburg, NY 10962 (914) 359-1129


INDEX OF AUTHORS Issue 1, January 1978, through Issue 16, November 1983

ACAMPORA, Ralph J. A Dow Theory Update

co-authored with Rosemarie I. Pavlick

The Stock and the Company

Issue 1 Jan. '78

Issue 13 May, ‘82

ANDERSON, James D. Interest Rates/Stock Prices Issue 5

May, '79

ARMS, Richard W., Jr. The Stream of Trading Issue 13

May, '82

BACKUS, Peter Performance Simulation of Technical Analysts Issue 14

co-authored with Clinton M. Bidwell Aug. '82

BARTEL, Bernadette M. Certification, A Report to the Membership

The Lubin Lectures (The Stock Market's Response to Changes in the Economy)

Issue 12 Nov. '81 Issue 12 Nov. '81

The Option Market - Early Trends Issue 9 Nov. ‘80

BIDWELL, Clinton M. Performance Simulation of Technical Analysts

co-authored with Peter Backus

A Performance Simulation of Technical Analysts

Issue 14 Aug. '82

Issue 6 Nov. '79

BOSTIAN, David, Jr. Intraday Demand/Supply Analysis (A Ground

Approach to the Market) co-authored with Howard Wine11

Issue 6 Nov. '79

BROOKS, John C. Why Certification Issue 12

Nov. '81

CLARKE, Roger G. A Discussion of Applied Modern Portfolio

Theory: Its Fundamental and Technical Aspects

Issue 16 Nov. ‘83

Page

19

55

57

43

51

15

61

13

51

49

63

19

23


COHEN, Abraham W. The Bearish Sentiment Index Issue 1

Jan. '78 15

25 The Bearish Sentiment Index Updated Issue 10 Feb. '81

DAVIS, Ned When to Buy and When to Sell. . Issue 11 co-authored with Steve Lackey May, '81

41

DEEMER, Walter R. Public/Specialist Short Sale Ratio Revisited Issue 6

Nov. '79 15

15 Non-Member Short/Specialist Short Ratio Issue 5 co-authored with John R. McGinley May, '79

DIAMOND, David L. Some Perspective on a Different Type of

Upside Non-Confirmation Issue 1 Jan. '78

25

17 Speed Resistance Lines in Bull Markets Issue 2 co-authored with Richard C. Robinson May, '78

DICKSON, Frederic H. New Daily Technical Market Indicators

co-authored with William P. Livesey Issue 10 Feb. '81

51

15 Relative Strength Divergence Analysis Issue 13 May, '82

DiIANNI, William Buy Low, Sell High (Book review) Issue 6

Nov. '79 67

47

23

41

37

60

61

Dow-Theory Index Issue 14 Aug. '82

Elliott Wave (Cycle IV) Issue 2 May, ‘78

Elliott Wave Principle (Key to Stock Market Issue 4 Profits Reviewed) Feb. '79

Psychology and the Stock Market Issue 1 Jan. '78

Stock Market Strategy Issue 2 May, '78

Technical Analysis Explained Issue 7 Feb. '80


DOANE, William S. Broad Bottom Configurations Issue 8

May, '80 21

57 A Technician's View of Indexing Issue 2 May, '78

ECKARDT, Walter L., Jr. Options Index Information as an Indicator of Subsequent Stock Market Performance

co-authored with James M. Yates

Issue 11 May, '81

13

53

29

9

Stock Index Futures: Technical Analysis and Issue 15 Arbitrage Opportunities May, '83

FARRELL, Robert A Market Technicians Association Roundtable

co-authored with Charles Kerdock, John Mendelson, John Schultz

Issue 1 Jan. '78

An Analysis of Market Performance Based on Annual Rate of Change, 1872-1978

co-authored with Robert R. Prechter, Jr.

Issue 2 May, ‘78

Is Traditional Market Timing Passe? Issue 8 May, '80

49

11

35

Some Contrary Thoughts Issue 13 May, '82

Fifty Years of Market Volatility Issue 4 co-authored with Robert R. Prechter, Jr. Feb. ;79

FRASER, James L. Professional Opinion and Common Sense Issue 6

Nov. '79 43

11 The Theory of Contrary Opinion Issue 14 Aug. '82

FREMERMAN, Bernard A Random Walk Through Random Numbers

co-authored with Morton Jacobs, M.D. Issue 9 Nov. ‘80

35

19

23

53

Cycles in Consumer Sentiment Issue 6 Nov. '79

Cyclical Phenomena Issue 7 Feb. '80

Issue 8 May, '80

Solar and Economic Relationships


GLICKSTEIN, David The Principle of Confirmation: A Study of Two Technical Indicators

Issue 12 Nov. ‘81

GRUBER, Fred R. Integrating Technical Analysis with Fundamental Issue 13 Analysis May, '82

HEBERT, Howard Portfolio Management by Robot: The Ultimate Put-Down

Issue 4 Feb. '79

HOLT, David The Enigmatic Stock Option, A Constant Challenge

Issue 13 May, '82

JACOBS, Morton, M.D. A Random Walk Through Random Numbers

co-authored with Bernie Fremerman Issue 9 Nov. ‘80

JAMES, Francis E., Jr., Ph.D. Reinvestment Averaging - An Unexplored Factor in Portfolio Management

Issue 5 May, '79

KERDOCK, Charles A Market Technicians Association Roundtable

co-authored with Robert Farrell, John Mendelson, John Schultz

Issue 1 Jan. '78

KERRIGAN, Thomas J. The Short Interest Ratio and Its Component Parts Issue 4

Feb. '79

KIRKPATRICK, Charles D., II Is the Four-Year Market Dead?

Reassessment of the Speculative and Conservative Cycles

Issue 8 May, '80

Issue 7 Feb. '80

KOENIG, F. Martin Does the Tail Wag the Dog

co-authored with D. Bruce McMahan

Does the Tail Wag the Dog - Revisited co-authored with D. Bruce McMahan

Issue 5 May, '79

Issue 8 May, ‘80

KRASIN, Victor Call/Put Ratio for Individual Stocks Issue 14

Aug. '82

LACKEY, Steve When to Buy and When to Sell

co-authored with Ned Davis Issue 11 May, '81

49

57

19

81

35

23

29

13

61

19

33

9

57

41


Le FEVRE, William M. The Quadrennial Market Cycle Issue 3

Nov. '78

LEUTHOLD, Steve Bottom Fishing with Relative Strength Issue 5

May, '79

The Stock Market as Inflation Hedge - Issue 10 Myth or Reality Feb. '81

LIPSTADT, Stan Interest Rates and Stock Prices Issue 6

Nov. '79

Lowry Without Tears Issue 2 May, '78

LIVESAY, William P. New Daily Technical Market Indicators Issue 10

co-authored with Frederic H. Dickson Feb. '81

McAVITY, Ian International Perspectives: The Canada vs. Issue 13 U. S. Market Cycle May, '82

One Aspect of the Popular "4" Year Cycle Issue 5 May, '79

The Percentage of NYSE Issues Trading Above Issue 3 Their Own lo-Week and 30-Week Moving Averages, Nov. '78 As Published by Investors Intelligence

McGINLFX, John R., Jr. Computer Don'ts (All Computers Have Lots of Them) Issue 13

May, '82

New Chart Patterns Issue 12 Nov. '81

Non-Member Short/Specialist Short Ratio Issue 5 co-authored with Walter R. Deemer May, '79

The Short-Term Trading Index Issue 3 Nov. '78

McMAHAN, D. Bruce Does the Tail Wag the Dog

co-authored with F. Martin Koenig Issue 5 May, '79

Does the Tail Wag the Dog - Revisited Issue 8 co-authored with F. Martin Koenig May, '80

MENDELSON, John A Market Technicians Association Roundtable

co-authored with Robert Farrell, Charles Kerdock and John Schulz

Issue 1

Jan. '78

27

45

29

9

51

51

23

51

11

75

45

15

7

33

9

29


MENDELSON, John A. Commentary on the Relationship Between Recessions and the Stock Market

MERRILL, Arthur DFE, Deviation from Expected (Relative Issue 14 Strength Corrected for Beta) Aug. '82

Federal Reserve Rediscount Rate: (Charted)

Four New Indicators

Funds - Cash Position

Indicator Accuracy

Issue 5 May, '79

Issue 3 Nov. ‘78

Issue 16 Nov. ‘83

Issue 4 Feb. '79

Issue 1 Jan. '78

Indicator Vision 23

Logarithmic Point and Figure Charts Issue 14 Aug. '82

M and W Wave Patterns Issue 7 Feb. '80

Percent Change in One Year - S&P 400 and D.J.I.A. Issue 4 Feb. '79

Significance: What Is It?? Issue 10 Feb. '81

Trends and the Log Scale Issue 15 May, ‘83

Two by Merrill -- Plus a Letter Issue 14 Aug. '82

METZ, E. Michael Why Certification??? Issue 12

Nov. '81

MURPHY, John J. The Use of Intra-Day Price Charts for Stock Issue 16 Index Futures Nov. ‘83

The Weekly Rule in Commodity Futures Trading Issue 14 Aug. '82

65

21

51

27

39

5

29

43

37

21

33

19

21

11

41


MURHPY, Thomas T. New Caveats in Relying on Traditional Stock Market Statistics

co-authored with Stan West

NARAYAN, Jack Y. Ph.D. Indicator Synergy

NOONAN, G. Edward Relative Price Analysis - With a Twist

Technical Analysis, an Objective Discipline for Fundamental Investors

NOTLEY, Ian S. Forces of Cyclicality (excerpted)

NUROCK, Robert J. An Explanation of the Wall Street Week Technical Market Index

Option Premium Ratios and Member Trading - TWO New Indicators of Investor Sentiment

ORR, Richard C. In Praise of Panics

co-authored with Nancy A. Rooney

Indicator Synergy co-authored with Jack Y. Narayan, Ph.D.

The Timely Demise of the Random Walk

The Use of Volume as an Early Warning Signal

PAVLICK, Rosemarie I. A Dow Theory Update

co-authored with Ralph J. Acampora

PRECHTER, Robert R. An Analysis of Market Performance Based on Annual Rate of Change, 1872-1978

co-authored with Robert J. Farrell

R. N. Elliott's Most Famous Call

Fibonacci in the Dow - Some Examples


Issue 3 Nov. ‘78

Issue 10 Feb.. '81

Issue 8 May, ‘80

Issue 13 May, '82

Issue 2 May, '78

Issue 15 May, '83

Issue 11 May, '81

Issue 14 Aug. '82

Issue 10 Feb. '81

Issue 7 Feb. '80

Issue 15 May, '83

Issue 1 Nov. ‘78

Issue 2 May, ‘78

Issue 8 May, ‘80

Issue 13 May, ‘82

53

13

31

61

33

11

29

33

13

33

27

19

9

57

49

PRECHTER, Robert R. Fifty Years of Market Volatility

co-authored with Robert J. Farrell

A Rising Tide: The Case for Wave V in the Dow Jones Industrial Average

Wave Personality (Excerpt from The Elliott Wave Principle--Key to Stock Market Profits)

Issue 4 Feb. '79

Issue 15 May, '83

Issue 3 Nov: '78

PRING, Martin Global Financial Markets and the Business Cycle Issue 13

May, '82

PRUDEN, Henry O., Ph.D. Catastrophe Model: A Model for Technical Analysis

Catastrophe Theory: A Practical Application

Elliott Impulse

Price/Volume Divergence

Issue 6 Nov. '79

Issue 8 May, '80

Issue 7 Feb. '80

Issue 16 Nov. '83

ROBINSON, Richard C. Speed Resistance Lines in Bull Markets

co-authored with David L. Diamond Issue 2 May, '78

ROGINSKI, Thomas M. The Story of the Sheep and The Shepherds, or How the Stock Market Really Works

Issue 13 May, '82

ROONEY, Nancy A. In Praise of Panics

co-authored with Richard C. Orr Issue 14 Aug. '82

SCHULZ, John A Market Technicians Association Roundtable

co-authored with Robert Farrell, Charles Kerdock, and John Mendelson

Issue 1 Jan. '78

A Twenty-Year Business Slump? Not a Ghost of a Issue 4 Chance Feb. '79

SHAW, Alan R. Point and Figure Charting Issue 8

May, '80

SLIVKA, Ronald T. Covered Call Swapping Issue 7

Feb. '80

35

19

23

31

27

69

31

35

17

37

33

29

31

39

55


TOWER, Kenneth G. Overbought Can Be Bullish

UNTERBRINK, Larry V. Put/Call Ratios -- The New Odd-Lot Short Index?

UPSHAW, David L. Alec Ellinger: England's Pioneer Technician

Buy Side, Sell Side, All Around the Town

Hew to Turn Fundamentalists Into Friends

Keeping Score on Inflation

The March of Timing

Smoother is Sharper

VANDELL, Robert F. Applied Modern Portfolio Theory: Its Fundamental and Technical Aspects

WEINSTEIN, Stan A Contrary Opinion

Simple Yet Effective

WEST, Stan New Caveats in Relying on Traditional Stock Market Statistics

co-authored with Thomas T. Murphy

WILLIAMS, Roger, Ph.D. Stock Market Analysis with Industry Groups

Stock Market Forecasting Through the Interrelating of Bond Prices and Stock Prices

WINELL, Howard Intraday Demand/Supply Analysis - A Ground Up Approach to the Market

co-authored with David Bostian, Jr.


Issue 10 Feb. '81

Issue 11 May, '81

Issue 8 May, ‘80

Issue 9 Nov. ‘80

Issue 3 Nov. ‘78

Issue 16 Nov. ‘83

Issue 6 Nov. '79

Issue 4 Feb. '79

Issue 15 May, '83

Issue 7 Feb. '80

Issue 11 May, '81

Issue 3 Nov. ‘78

Issue 5 May, '79

Issue 4 Feb. '79

Issue 6 Nov. '79

45

35

81

43

31

47

35

24

61

13

55

53

63

YATES, James M. Options Index Information as an Indicator of Subsequent Stock Market Performance

co-authored with Walter L. Eckardt, Jr.

ZWEIG, Martin E., Ph.D. Ending Confusion on the Short-Term Trading Index

Issue 11 May, '81

Issue 11 May, '81

13

59


INDEX OF TITLES Issue 1, January 1978, through Issue 16, November 1983.

AN ANALYSIS OF MARKET PERFORMANCE BASED ON ANNUAL RATE OF CHANGE, 1872-1978

by Robert R. Prechter, Jr. & Robert J. Farrell Issue 2 May, '78

9

APPLIED MODERN PORTFOLIO THEORY: ITS FUNDAMENTAL AND TECHNICAL ASPECTS Issue 15

by Robert F. Vandell May,. '83 61

BEARISH SENTIMENT INDEX Issue 1 by Abraham W. Cohen Jan. '78

15

25

45

21

67

43

BEARISH SENTIMENT INDEX UPDATED Issue 10 by Abraham W. Cohen Feb. '81

BOTTOM FISHING WITH RELATIVE STRENGTH Issue 5 by Steve Leuthold May, '79

BROAD BOTTOM CONFIGURATIONS Issue 8 by William S. Doane May, '80

BUY LOW, SELL HIGH Issue 6 Book Review by William DiIanni Nov. '79

BUY SIDE, SELL SIDE, ALL AROUND THE TOWN Issue 9 by David L. Upshaw Nov. ‘80

CALL/PUT RATIO FOR INDIVIDUAL STOCKS Issue 14 by Victor Krasin Aug. '82

57

27

69

37

15

CATASTROPHE MODEL: A MODEL FOR TECHNICAL ANALYSIS Issue 6 by Henry 0. Pruden, Ph.D. NOV. '79

CATASTROPHE THEORY: A PRACTICAL APPLICATION Issue 8 by Henry 0. Pruden, Ph.D. May, '80

CENTERFOLD: MAJOR MARKED INDEX (XMI) Issue 15 May, '83

CERTIFICATION, A REPORT TO THE MEMBERSHIP Issue 12 by Bernadette M. Bartels Nov. '81

COMMENTARY ON THE RELATIONSHIP BETWEEN RECESSIONS AND THE STOCK MARKET

by John A. Mendelson 65

75

13

Issue 5 May, '79

COMPUTER DON'Ts (ALL COMPUTERS HAVE LOTS OF THEM) Issue 13 by John R. McGinley, Jr. May, '82

Issue 7 g5 Feb. '80

CONTRARY OPINION by Stan Weinstein MTA Journal/February 1984

COVERED CALL SWAPPING Issue 7 by Ronald T. Slivka Feb. '80

CYCLES IN CONSUMER SENTIMENT - A NEW CLUE TO THE 41-MONTH CYCLE

by Bernard Fremerman Issue 6 Nov. '79

CYCLICAL PHENOMENA Issue 7 by Bernard Fremerman Feb.' '80

DFE - DEVIATION FROM EXPECTED (RELATIVE STRENGTH CORRECTED FOR BETA)

by Arthur Merrill

DISCUSSION OF APPLIED MODERN PORTFOLIO THEORY: ITS FUNDAMENTAL AND TECHNICAL ASPECTS

by Roger G. Clarke

DOES THE TAIL WAG THE DOG? by D. Bruce McMahan and F. Martin Koenig

DOES THE TAIL WAG THE DOG? - REVISITED by D. Bruce McMahan and F. Martin Koenig

DOW THEORY UPDATE by Ralph J. Acampora and Rosemarie I. Pavlick

DOW-THEORY INDEX by William DiIanni

ELLINGER, ALEC: ENGLAND'S PIONEER TECHNICIAN by David L. Upshaw

ELLIOTT IMPULSE by Henry 0. Pruden, Ph.D.

ELLIOTT'S MOST FAMOUS CALL by Robert R. Prechter, Jr.

ELLIOTT WAVE (CYCLE IV) by William DiIanni

ELLIOTT WAVE PRINCIPLE - KN TO STOCK MARKET PROFITS Book review by William DiIanni

ENDING CONFUSION ON THE SHORT-TERM TRADING INDEX by Martin E. Zweig, Ph.D.

ENIGMATIC STOCK OPTION, A CONSTANT CHALLENGE by David Holt

Issue 14 Aug. '82

Issue 16 NOV. ‘83

issue 3 May, '79

Issue 8 May, '80

Issue 1 Jan. '78

Issue 14 Aug. '82

Issue 8 May, ‘80

Issue 7 Feb. '80

Issue 8 May, '80

Issue 2 May, '78

Issue 4 Feb. '79

Issue 11 May, '81

Issue 13 May, '82

55

19

23

21

23

33

9

19

47

81

31

57

23

41

59

81


AN EXPLClNATION OF THE WALL STREET WEEK TECHNICAL MARKET INDEX

by Robert J. Nurock

FEDERAL RESERVE REDISCOUNT RATE: (CHARTED) by Arthur A. Merrill

FIBONACCI IN THE DOW - SOME EXAMPLES by Robert R. Prechter, Jr.

FIFTY YEARS OF MARKET VOLATILITY by Robert R. Prechter, Jr. and Robert J. Farrell

FORCES OF CYCLICALITY (excerpted) by Ian S. Notley

FOUR NEW INDICATORS by Arthur A. Merrill

FUNDS- CASH POSITION by Arthur A. Merrill

GLOBAL FINANCIAL MARKETS AND THE BUSINESS CYCLE by Martin Pring

HOW TO TURN FUNDAMENTALISTS INTO FRIENDS by David L. Upshaw

IN PRAISE OF PANICS Issue 14 by Richard C. Orr and Nancy A. Rooney Aug. '82

INDICATOR ACCURACY by Arthur A. Merrill

Issue 1 Jan. '78

INDICATOR SYNERGY by Richard C. Orr, Ph.D. and Jack Y. Narayan, Ph.D.

Issue 10 Feb. '81

INDICATOR VISION by Arthur A. Merrill

Issue 12 Nov. '81

INTEGRATING TECHNICAL ANALYSIS WITH FUNDAMENTAL ANALYSIS

by Fred R. Gruber Issue 13 May, '82

Issue 15 May, '83

Issue 3 Nov. '78

Issue 13 May; '82

Issue 4 Feb. '79

Issue 2 May, '78

Issue 16 Nov. '83

Issue 4 Feb. '79

Issue 13 May, '82

Issue 3 Nov. '78

11

51

49

35

33

27

39

31

31

33

5

13

23

57


INTEREST RATES/STOCK PRICES by James D. Anderson

Issue 5 May, '79

57

9 INTEREST RATES AND STOCK PRICES Issue 6 by Stan Lipstadt Nov. '79

INTERNATIONAL PERSPECTIVES: THE CANADA VS. U.S. MARKET CYCLE

by Ian McAvity 23 Issue 13

May; '82

INTRADAY DEMAND/SUPPLY ANALYSIS - A GROUND UP APPROACH TO THE MARKET

by David Bostian, Jr. and Howard Winnell Issue 6 Nov. '79

63

61

49

IS THE FOUR-YEAR MARKET DEAD? Issue 8 by Charles D. Kirkpatrick II May, '80

IS TRADITIONAL MARKET TIMING PASSE? Issue 8 by Robert J. Farrell May, '80

KEEPING SCORE ON INFLATION Issue 16 by David L. Upshaw, CFA Nov. ‘83

47

LOGARITHMIC POINT AND FIGURE CHARTS Issue 14 by Arthur Merrill Aug. '82

29

51

61

LOWRY WITHOUT TEARS Issue 2 by Stan Lipstadt May, '78

LUBIN LECTURES Issue 12 by Bernadette M. Bartels Nov. '81

MARCH OF TIMING Issue 6 by David L. Upshaw Nov. '79

35

29 MARKET TECHNICIANS ASSOCIATION ROUNDTABLE Participants: Robert Farrell, Charles Kerdock

John Mendelson, John Schultz

Issue 1 Jan. '78

37

13

43

MARKET TIMING PANEL Issue 3 Reprinted from the Wall Street Transcript Nov. ‘78

MTA AND CERTIFICATION: WHENCE & WHITHER Issue 12 Nov. '81

M and W WAVE PATTERNS Issue 7 by Arthur A. Merrill Feb. '80


NEW CAVEATS IN RELYING ON TRADITIONAL STOCK MARKET STATISTICS

by Stan West and Thomas T. Murphy

NEW CHART PATTERNS by John R. McGinley, Jr.

NEW DAILY TECHNICAL MARKET INDICATORS by Frederic H. Dickson and William P. Livesey

NON-MEMBER SHORT/SPECIALIST SHORT RATIO by John R. McGinley and Walter R. Deemer

ONE ASPECT OF THE POPULAR "4" YEAR CYCLE by Ian McAvity

OPTION MARKET -- EARLY TRFNDS by Bernadette M. Bartels

OPTION PREMIUM RATIOS AND MEMBER TRADING -- TWO NEW INDICATORS OF INVESTOR SENTIMENT

by Robert J. Nurock

OPTIONS INDEX INFORMATION AS AN INDICATOR OF SUBSEQUENT STOCK MARKET PERFORMANCE

by Walter L. Eckardt, Jr. and James M. Yates

OVERBOUGHT CAN BE BULLISH by Kenneth G. Tower

PERCENT CHANGE IN ONE YEAR - S & P 400 and D.J.I.A. by Arthur A. Merrill

PERCENTAGE OF NYSE ISSUES TRADING ABOVE THEIR OWN lo-WEEK AND 30-WEEK MOVING AVERAGES, as published by Investors Intelligence

by Ian M. T. McAvity

PERFORMANCE SIMULATION OF TECHNICAL ANALYSTS by Clinton M. Bidwell III

PERFORMANCE SIMULATION OF TECHNICAL ANALYSTS, SECOND YEAR, MARKET TIMING

by Clinton M. Bidwell and Peter Backus

POINT AND FIGURE CHARTING by Alan R. Shaw


Issue 3 Nov. ‘78

Issue 12 Nov. ‘81

Issue 10 Feb.. '81

Issue 5 May, '79

Issue 5 May, '79

Issue 9 Nov. ‘80

Issue 11 May, '81

Issue 11 May, '81

Issue 10 Feb. '81

Issue 4 Feb. '79

Issue 3 Nov. ‘78

Issue 6 Nov. '79

Issue 14 Aug. '82

Issue 8 May, ‘80

53

45

51

15

51

13

29

13

45

37

11

49

51

39

PORTFOLIO MANAGEMENT BY ROBOT: THE ULTIMATE PUT-DOWN by Howard Hebert

PRICE/VOLUME DIVERGENCE by Henry 0. Pruden, Ph.D.

PRINCIPLE OF CONFIRMATION: A STUDY OF TWO TECHNICAL INDICATORS

by David Glickstein

PROFESSIONAL OPINION AND COMMON SENSE by James L. Fraser, CFA

PSYCHOLOGY AND THE STOCK MARKET Book review by William DiIanni

PUBLIC/SPECIALIST SHORT SALE RATIO REVISITED by Walter R. Deemer

PUT/CALL RATIOS - THE NEW ODD-LOT SHORT INDEX? by Larry V. Unterbrink

QUADRENNIAL MARKET CYCLE Issue 3 by William M. Le Fevre Nov. '78

RANDOM WALK THROUGH RANDOM NUMBERS by Bernie Fremerman and Morton Jacobs, M.D.

REASSESSMENT OF THE SPECULATIVE AND CONSERVATIVE CYCLES

by Charles D. Kirkpatrick II

REINVESTMENT AVERAGING - AN UNEXPLORED FACTOR IN PORTFOLIO MANAGEMENT

by Francis E. James, Jr., Ph.D.

RELATIVE PRICE ANALYSIS - WITH A TWIST by G. Edward Noonan

RELATIVE STRENGTH DIVERGENCE ANALYSIS by Frederick H. Dickson

SHORT INTEREST RATIO AND ITS COMPONENT PARTS by Thomas J. Kerrigan

SHORT-TERM TRADING INDEX by John R. McGinley, Jr.

Issue 4 Feb. '79

Issue 16 Nov. '83

Issue 12 Nov. '81

Issue 6 Nov. '79

Issue 1 Jan. '78

Issue 6 Nov. '79

Issue 11 May, '81

Issue 9 Nov. '80

Issue 7 Feb. '80

Issue 5 May, '79

Issue 8 May, '80

Issue 13 May, '82

Issue 4 Feb. '79

Issue 3 Nov. '78

19

35

49

43

37

15

35

27

35

19

23

31

15

13

7


SIGNIFICANCE: WHAT IS IT?? Issue 10 by Arthur A. Merrill Feb. '81

SIMPLE YET EFFECTIVE by Stan Weinstein

SMOOTHER IS SHARPER by David L. Upshaw

Issue 11 May, '81

Issue 4 Feb. '79

SOLAR AND ECONOMIC RELATIONSHIPS by Bernard J. Fremerman

SOME CONTRARY THOUGHTS by Robert Farrell

Issue 8 May, '80

Issue 13 May, '82

SOME PERSPECTIVE ON A DIFFERENT TYPE OF UPSIDE NON- CONFIRMATION

by David L. Diamond Issue 1 Jan. '78

SPEED RESISTANCE LINES IN BULL MARKETS by David L. Diamond & Richard C. Robinson

STOCK AND THE COMPANY by Ralph J. Acampora

Issue 2 May, '78

Issue 13 May, '82

STOCK INDEX FUTURES: TECHNICAL ANALYSIS AND ARBITRAGE OPPORTUNITIES

by Walter L. Eckardt

STOCK MARKET ANALYSIS WITH INDUSTRY GROUPS by Roger Williams, Ph.D.

STOCK MARKET AS INFLATION HEDGE -- MYTH OR REALITY by Steven C. Leuthold

Issue 15 May, '83

Issue 5 May, '79

Issue 10 Feb. '81

STOCK MARKET FORECASTING THROUGH THE INTERRELATING OF BOND PRICES AND STOCK PRICES

by Roger Williams, Ph.D. Issue 4 Feb. '79

STOCK MARKET STRATEGY Book review by William DiIanni

Issue 2 May, '78

STORY OF THE SHEEP AND THE SHEPHERDS, OR HOW THE STOCK MARKET REALLY WORKS

by Thomas M. Roginski Issue 13 May, '82

STREAM OF TRADING Issue 13

21

55

24

53

11

25

17

55

52

9

29

7

60

37

43 by Richard W. Arms, Jr. May, '82


TECHNICAL ANALYSIS, AN OBJECTIVE DISCIPLINE FOR FUNDAMENTAL INVESTORS

by G. Edward Noonan Issue 13 May, ‘82

TECHNICAL ANALYSIS EXPLAINED Issue 7 Book review by William DiIanni Feb. '80

TECHNICIAN'S VIEW OF INDEXING Issue 2 by William S. Doane May, ‘78

THEORY OF CONTRARY OPINION Issue 14 by James Fraser Aug. '82

THIRD ANNUAL MARKET TECHNICIANS ASSOCIATION Issue 2 SEMINAR PROGRAM May, ‘78

TIMELY DEMISE OF THE RANDOM WALK Issue 7 by Richard C. Orr Feb. '80

TRENDS AND THELOG SCALE Issue 15 by Arthur A. Merrill May, ‘83

TWENTY-YEAR BUSINESS SLUMP? NOT A GHOST OF A CHANCE Issue 4 by John Schulz Feb. '79

TWO BY MERRILL -- PLUS A LETTER Issue 14 by Arthur Merrill Aug. '82

USE OF INTRA-DAY PRICE CHARTS FOR STOCK INDEX FUTURES

by John J. Murphy Issue 16 Nov. ‘83

USE OF VOLUME AS AN EARLY WARNING SIGNAL Issue 15 by Richard C. Orr, Ph.D. May, ‘83

WAVE PERSONALITY (Excerpt from the Elliott Wave Principle - Key to Stock Market Profits)

by Robert R. Prechter, Jr.

WEEKLY RULE IN COMMODITY FUTURES TRADING Issue 14 by John J. Murphy Aug. '82

WHEN TO BUY AND WHEN TO SELL. . . Issue 11 by Ned Davis and Steve Lackey May, ‘81

WHY CERTIFICATION Issue 12 by John C. Brooks Nov. '81

WHY CERTIFICATION??? Issue 12 by E. Michael Metz Nov. ‘81

Issue 3 Nov. ‘78

61

61

57

11

8

33

33

31

19

11

27

23

41

41

19

21


journal of technical analysis (jota). issue 17 (1984, february)

Economy & Finance

mta letter

education mta journalfebruary

jarrett john

mahoney john

dowse market letter

monthly mta newsletter

technical market opinion

group john mcginley