Viewing Month: May 1970

Tabell’s Market Letter – May 01, 1970

Tabell’s Market Letter – May 01, 1970

Tabell's Market Letter - May 01, 1970
View Text Version (OCR)

Walston &Co. —–Inc —– Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 100 OffICES COAST TO COAST AND OVERSEAS TABEll'S MARKETlEUER. May 1, 1970 The market 'events–df the 'past week struck a familiar chord for the market technician Briefly, we were, once more, treated to the familiar picture of climactic price upheavals as the market engaged in the inexorable process of liquidating what shreds remained from the 1967-68 speculative boom. The action of the past week is worth describing in some detail The week began with the sort of performance which has become familiar — 1200 de- clining stocks and a 12-point drop in the Dow, with glamor issues leading the parade on the downside. On Tuesday, the first glimmer appeared when the market opened four points lower and, in the first two hours, regained its opening loss. However, by noon it became ap parent that the rally was not going to hold and the slide resumed, knocking another ten or s points-from the averages. By Wednesday, -the gyrations became-truly-wild. A firm ope-lling , and a sharp rally took the Dow up almost eight points, at which point the first inkling of the Cambodian situation appeared. Promptly, the entire gain was reversed and the market found itself off as much as 4 points when, with equal suddenness, support was met and a sharp ris with expanding volume brought the Dow to a level 13 points better than its previous close. Th rally continued for another 4 pOints on Thursday before petering out, and prices dipped lowe on reduced volume all day with some firmness at the close. On Friday, the market opened ritually lower in response to the President's speech, but erased most of the losses in later trading. The intra-day low on Wednesday was 716.74, at which level the Dow had penetrated its 1966 low and extended its decline from the December 1968 intra-day high of 994.65 to 27.90/0. This percentage figure, incidentally, exceeds the 27.5 decline of 1966, and makes the current drop the second deepest one to date of the sity only by the 29.2 drop of 1961-62. — exceeded in inten- \0' 0 As we said above, it is all familiar ground feh 'Cia e series of down- thrusts followed by sharp rallies, often on volume, natur ncomitant of bear market slides. The market sinks to a level where i t f i hees a nd a rally ensues. The de- mand, however, is insufficient to break the rd t and the market promptly turns an plunge s . panied by these multiple was finally reached in June, a t seven of them before the ultimate low in 1966. How many we will see this time around only Again, ine 11 . s continued pessimism deepened. As we indicated above last week's market ther ash of an old familiar plot and one of the most inevitable components of this plo is sh of voices who assure us that this decline is unique — that it has its own peculia of economic causes and that, therefore, past history is no guide in pointing out the bottom. We were even beginning to hear, as the week drew on, the ritual references to 1929 which habitually appear at just about this stage of a bear market. The rapid emergence of the old familiar litanies is about the only thing that adds a touch of humo to an otherwise painful process. Yet, what of the future The familiarity of the scenario, unfortunately, is of preciou little help in formulating a concrete market forecast. One factor that has been repeatedly true in all declines that have developed the momentum of the present one is that support levels and downside targets generally mean very little. The decline continues until such time as concrete evidence of a reversal takes place and, as of the end of last week, we had not seen any such evidence. The very steepness of the decline, of course, assures us that w'e are probably reasonably close to a turning point from a time point of view. This we discusse in some detail in our letter of last week. The level at which a reversal might take place is a entirely different matter. We think there is a possibility of an extension of the drop to the 690-680 area, but this is, at best, a rough estimate and could be altered swiftly by future events. In other words, despite the questionable near-term outlook, we think the most valuable commodity the investor can bring to today's market is the courage to take advantage of price weakness that may occur and to buy quality stocks on any further dips. We fee I there are few concrete grounds for optimism about the near-term course of prices, but we are convinced that, in historical context, the present prices of high-grade stocks will, over the next couple 0 years, prove to be among the best investment bargains of the past quarter century. Dow-Jones Ind. 733. 63 Dow-Jones Transp. 156.53 ANTHONY W. TABELL WALSTON & CO. INC. AWT'ambI Thill market letter l.s published for your convemence and Information and IS not an offer sell or n solicitatIOn to buy any secuntles The In. formation was obtained. from sources we heheve to be rehable, but we do not gUarantee Its occuml') Walston & Co Inc. and Its officers, director ,I emDloyees may have an mterest III or purchnse Rnd sell the secuTlues referred to helen' 8 or WNBOl

Download PDF

Tabell’s Market Letter – May 08, 1970

Tabell’s Market Letter – May 08, 1970

Tabell's Market Letter - May 08, 1970
View Text Version (OCR)

Walston &Co. Inc Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST ANO OVERSEAS TABELL'S MARKET LETTER May 8, 1970 The stock market plunged still further into new low territory last week before mak- ing another recovery attempt at week's end. It began with another blue Monday featuring a 19-point slide in the Dow to an intra-day low of 710.40. The decline continued, without much conviction, on Tuesday to a further low of 704.46. Tuesday night's reduction in margin requirements sparked a sharp recovery attempt as the Dow advanced 16 points in the first hour, lost most of the gains and then recovered sharply for an gain which was further extended on Thursday. Friday's trading, however, saw another light volume decline with prices winding up near the week's lows and the Dow reaching 713.04 conanintra-daybasis. – – – –0 –. – — —-Ii With all of the wild gyrations of the past two weeks it should be obvious that the market is probing for a bottom at least on a short term basis. Yet, we confess that, at the moment, we see no conclusive evidence that that bottom has been reached. A week or so of protracted resistance to the decline could alter the picture radically, but, until such resistance develops, we feel that prices are likely to continue under pressure. On a more positive note, though, while there is no evidence that the downward trend in prices has abated, we feel that a great many issues have reached or are close to bargain-basement levels. Walston & Co., Inc. 's research policy committee, in a state- ment issued this week, said the most positive course is to recognize that it is during bear markets that historic purchase opportunities are created. The committee went on to say that, At major market bottoms in the past, it has inevitably' been quality issues which have led the ensuing up-swing, while, with equal inevitability, favorites which have undergone liquidation in the previous bear ha e nued in downtrends or gone dormant for an extended period. We attractive due to their inherent cheapness, but that t!\e'Ywill 2major up-swing. IJ th ality issues are e leaders of the next We would like to expand on a' urther. It has long been recog- — – r is W5 enera11ytend'to-Jje above–average-in– vestment vehicles in the fina1m slump and the initial stages of the ensuing advance. ihiS ea e lar el;9- forgotten of late since the most recent severe decline, 1966, was n x ' . At t time, a great many issues in the electronics, air- lines, aircraft an e' field which had enjoyed meteori c rises in the 1965-1966 up-swing dropped sh 1 i 6 only to recover all of the lost ground and move on to new high territory in 1967. sort of performance is highly unusual and we doubt that it will be repeated. We thin hat the recovery, when it comes, will be more similar to the after- math of the 1962 stock price break. In that era, just to cite one example, Brunswick Corp. which had scored a 15000/0 advance over the preceding four years dropped sharply from a high of 75 to a low of 13. The initial recovery was dyna mic and the stock recovered to 20 within a few months. However, by early 1963, it had moved to new lows, and it failed entirely to participate in the 1963-1966 bull market. By contrast, General Motors declined relatively moderately in the 1962 break, dropping from 57 to 46. From that Iowan almost straight-line recovery took it to 110 four years later. There is a perfectly valid reason for this and it is as simple, really, as the reason the child who once burns his hand on the stove does not put it there again. Far too many people have suffered disasters in the speculative favorties of the past two yean; and it is highly unlikely that, whatever lows are reached in these issues, enough massive investment sentiment will develop to return them to anything like their former highs in the near future. Nearly all investors have lost money in the stock market over the past year and it seems quite ObVlOUS that they will gravitate, at least while the losses are fresh in their mind, to those issues where earnings stability and inherent cheapness mitigate against disastorous repetition of 1969-1970 experience. We think, in short, that an interesting buying area is approaching, but we think also that, in order to take advantage of it, the investor must assume the proper portfolio stance. The fallen stars of the past two years should be ruthlessly weeded out on any modest rally and holdings should be up-graded to include those stocks which derive their attraction, not from pie-in-the-sky growth prospects, but inherent fundamental value. Dow-Jones Ind. 717.73 Dow-Jones Transp. 154.34 ANTHONY W. TABELL WALSTON & CO. INC. This rnltrket lettel is published for conventence and \nfOrmntiOn and L, not fin offer to sell or n soliCitation to hu) any SL'(UntLcs discussed The In- , formntlon WIl'l obtamed from SOUI!'e Vol' beILcH' to be rehable, but we do not gUltT.mlee Its AccurAC \\'Rlston & Co. Inc. and Its officer'!, directors or I have an Interest lD or purchlUlc and sell the lefured to helem WN.SOt I ,I 1 .. ,,1,

Download PDF

Tabell’s Market Letter – May 15, 1970

Tabell’s Market Letter – May 15, 1970

Tabell's Market Letter - May 15, 1970
View Text Version (OCR)

1 W—-a–l-s-Itnocn—&—C–o–. Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST AND OVERSEAS lABEll'S MARKEl lETTER May 15, 1970 . The market made its most convincing attempt so far to reverse the long decline at the end of last week. After four consecutive days of plunging to an intra-day low of 673. 51 on Thursday, the Dow rallied eight points in late Thursday trading, followed this with a further rally at Friday's opening, and then, after losing most of its gains, advanced sharp- lyon heavy volume late Friday afternoon, cracking back through the 700 level to an intraday peak of 705. 58. We confess we have a bit more confidence in Thursday's bottom than in the others which preceded it. There are a number of positive factors. First of all, the rally took -place from an area, 690-680,thatwe point.foI' the Dow. This area is the bottom of the long-term downtrend channel that has character- ized the average since the 1968 high. With prices scraping along the bottom of that channel, it was possible to view the outlook with a good deal more confidence. Secondly, there were abundant signs, as the Sickening decline continued in the early part of the week, that the panic stage was being approached. Odd lot short sales increased hearteningly and other signs of weak short selling abounded. When, after a 300-point drop in the Dow, specu- lators suddenly discover short selling as a road to riches, it can only be interpreted as encouraging. Nonetheless, a few caveats should be notf'd. Even assuming that Thursday and Friday's action constituted a climactic bottom, it lS, generally, true that the initial climactic low is not the final one. We would not, in other words, rule out a further drop to new lows following an extension of the rally. 0 Although, obviously, it is too early to see whether Ii ecline has been reached, we do not think it is too early to look t m ry to make some conjectures about the stock market climate once the ket fi y turns. All too many investors, we are afraid, will go back to oc nd techniques with which they did so well in 1967-1968 despite the 's e isi pan them in 1969-1970. And, thereby, they willinevitably'come -e us e-clirilate-of to return — probably not for quarter-to-quarter ear ings 1 of the hot story, of emphasis on nt, technilogical mumbo jumbo, of fast-buck accounting and of sp pitalized issues with no real market is dead, dead, dead, and it will re it rises again from the ashes. We even thinK' p ob hat, while the second half of 1970 should undoubtedly pro- vide a better overall . climate than the first half, that a number of issues could be subject to still furth rice erosion. Let us emphasize this point by tracing the recent history of three averages, the -Dow-Janes-Industrials, Standard & Poor's 500 and the American Stock Exchange Index. All three industries made major peaks in 1966, the Dow of 1000, Standard & Poor's at 94 and the American Stock Exch,ange Index at 17. The Dow subsequently declined to 735, the Standard & Poor's to 73 and the Amex Index to 12. The percentage drop was least in the Standard & Poor's and about the same on the Dow and the Amex. On the ensuing advance to the 1968 highs, the Dow barely recovered the lost ground reaching a high of 995. The Standard & Poor's, by contrast, advanced some 48, recover- ing 170 of the ground 10 st. The Amex Index, by contrast, spent the two years from 1966- 1968 going wild, advancing to 33, an 175 advance to almost twice its 1966 high. At the moment, the Dow has declined 29 from 1968, the Standard & Poor's about the same, and the Amex, predictably is off almost 40. However, to the sharp early advanye in'the latter two indices the Dow is slightly below its 1966 low, the Standard & Poor's 500 just above it and the Amex Index still is some 66 above its 1966 bottom. Now it is at least possible to raise the question whether, if such stocks as General Motors, du Pont and U. S. Steel are today worth less than they were in 1966, the average speculative issue represented in the American Stock Exchange Index is worth two-thirds more than it was four years ago. What we are suggesting is that the price vulnerability of this sort of issue could continue even in a projected better market climate. All of this, of course, is just another rationale for our emphasis of the past month on quality issues. We think that the average high-grade stock is now selling for bargain-basement prices and that ownership of the,se.stocks will lead to investment in the new climate of 1970. Dow-Jones Ind. '702.22 ' Dow-Jones Trans. 147.66 ANTHONY W. TABELL WALSTON & CO. INC. This market letter Is publlshed for your con.. emence and mCormlitlon lind IS not an offel to sell 01 II. solicitation to buy any dISCUSsed. Th I formation was may hoabvtaeinaend from mtere8 sources t In or we belie PUl'chase vnenato be rehable. but the securltl(s we ref edrroedntoot guarantee hetCln. Its accuracy . Walston & Co Inc … and Its ffi 0 cere, dl t ree o' rtl onr Aw Tmn WN.''' . .,,, a i , .j

Download PDF

Tabell’s Market Letter – May 22, 1970

Tabell’s Market Letter – May 22, 1970

Tabell's Market Letter - May 22, 1970
View Text Version (OCR)

r Wdlston &Co. —–Inc —-Members New York Stock Exchange and Other PrincIpal Stock dod Commodity Exchange. OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER May 22, 1970 There is very liftle-new to say after a week like the last one. The stock market continued its plunge with the Dow-Jones Industrial Average reaching an intra-day low of 653.27 on Friday. Once again the slide was punctuated by rally attempts in- cluding two on Thursday, one Friday morning, and one late Friday afternoon. Buying, however, failed to stem the persistent price erosion. The persistent question, of course, is Why. The New York Times informed us Friday morning that the decline was due to a lack of confidence. It is, we suppose, as good an analysls as any. There is hardly change in the economic picture over the –past -year and ii-halfsufficieiino maKe comriloi'iStocksin the 'aggregate worth' shine ,. 250 billion less than 18 months ago. Yet, it might be worthwhile at this stage to try to pinpoint this so-called lack of confidence. Whence does it arise and how real are the fears First of all, Cambodia. Now, quite obviously, as underscored by the traglc dis- sension in the streets of late, there is room for a great deal of difference of opinion among honest men as to how and how fast we should extricate ourselves from our Southeast Asia entanglement. We do not intend to intrude our own opinion here, 'yet the fact remains that the movement of the fighting front some 21 mlles west has evoked a response on both sides worthy of a combination of Bunker Hill, Fort Sumter, the Lusitania and Pearl Harbor. A more sober view would indicate that, at the beginning of April, we were bogged down in a nasty war from government's avowed intention to remove us and, at the end of May, t s t seems to be, at wors1; no different. (0' ;, Coming closer to home, of course, we are d market fears a recession. This is hardly news. We have been 0 eaders' attention to it in this space for . t.he .pa.st six months and '\imYe yone, with the unfortunate . of econ tos in Washington, is aware of its existence. However;–it is that-the current level of stock prices has bUilt-in a f far more pessimistic than anything any responsible econo Ie envision. Inflation A i 1)f, ; ,,-e ence of rising prices into April in a period of declining busines e ( pointing. And yet, it must be asked, is this anything more than a demons atlO the tenacity of inflationary expectations fueled by a two-year policy of de' race expansion Now much is m e of the stock market's repute as a forecaster and, indeed, it has been uncannily accurate in this regard. However, it would be more true to say that the market anticipates possibilities. The market has declined prior to every business contraction in the post-war period simply because it recognized the possibilities of such a contraction's occurring. It has also declined in the past, when investors feared events that, in the future, did not actually occur. The 1966 decline was widely attributed to fears of a recession that never occurred, and, of course, the whole 1946-1949 drop, producing the on!y period in recent history when prices were a great deal cheaper than they are at the present, was due to the certainty of a post-war depression which, of course, never happened. At the moment, we have just undergone the most-severe decline of the entire post- war era. Stock prices obviously anticipate a good deal more than a mere recession. What Depression Chaos in the streets An extension of the war Repression Possibly all of these things. What seems important at this point is for the investor to try to asses as rationally and coldly as possible the probabilities of each of these disasters coming to pass. They all, admittedly, are possibilities. If they were not possibilities, it is highly doubtful that the Dow-Jones Industrial Average would be where it is today. It is only worth remarking that the most profitable opportunities to purchase common stocks have in the past occurred when prices reflected potential disaster which did not come to pass. Dow-Jones Ind. 667. 58 Dow-Jones Trans. 140.98 AWTmn ThIS mnrkct ;1'IS Iluhhh…d for )')UI ('onH'n!lIllC ,lnll ,nrO'Ill . mI,,, not ,In ofTel to ..Il 01 rnun.Lllon ,. oLLl'tln(,,1 11m -.ou!t W(' 1 1 I- lo 10 1.11 -1,1. -,l,t WI' do nut gUllolTlll'l Ihl ('mnloYI',; mny havl.' lin IlIttlcat III 01 IIUll'h.ls 'Ifill sell the lefl'fll,i to hl.'ll'llI. ANTHONY W. TABELL WALSTON & CO. INC. 'o1i(,It.lt\on tAl /HI) w,utilles fh'Cu.,s('d The in- \\'j.,tnll & CU. JU(' an,l It., I,fficl'r'l. ulll''wrs or WN.301

Download PDF

Tabell’s Market Letter – May 29, 1970

Tabell’s Market Letter – May 29, 1970

Tabell's Market Letter - May 29, 1970
View Text Version (OCR)

( Walston &Co. Inc Members New York Stock Exchange and Other Principal Siock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST AND QVEASEAS TABELL'S MARKET LETTER May 29, 1970 Last week's market performance was, at once. both typical, and yet, historically without precedent. The market's mood turned almost simultaneously at mid-week from one of unchanged pessimism to rampant optimism, and what had been one of the steepest declines of recent years was transformed into the sharpest rise ill three decades. The week began with another sickening 20-point slide in the Dow to a low unmatched since early 1963. On Tuesday, the decline continued with the Dow slowly eroding by 10-points to an intra-day low of 627.46, a figure which may yet achieve historical stature as the low point of the 1969-1970 crash. Despite the down Earket, Tuesday's action had -in it the fir-stseeds.of.a reversal as.1'7-million hands, up from 12. million in Monday's trading. What obviously was ta.klllg place was that the selling wave was being met by bids of considerable size. Wednesday's market was the inevitable climax, a 32- point rise in the Dow, the largest on record, again with 17 minion shares trading. Then, almost unbelievably, the ad\'ance was furth'r extended on Th11rsday ith a 20-point gain and yet further extended on Friday as tle Do'., crashed back through 700 in a 16-point ad- vance. As we said above,' the performance WdS, in one sense, typical. It is not being overly blase to say If you've seen one selllllg climax, y,ru've seen them all. The ingredients were all there, the slough of despond. the plunge to new lows, the pickup in volume, and, finally, the abrupt turnaround. Major downswings have ended this way in the past and they will end this way in the future. Yet, in another sense, as we said, this one was There were those who, at week's end, were shrugging of he without precedent. rl.ance as a typical technical rally. This seems to us the worst sort orrae1P i i i . e rally was, on a demonstrable basis, the strongest short-term upW! of e re post-war period and of a type that, inevitably within that ha n a iated with major market bottoms. It would be the height of folly to this c -cut message. .- Let us ce was 5. 07'on'the-Dow-and-a- '.– similar amount on the S & P of a similar magnitude has occurred since 1940. There have, occasions in the post-war period when a one-day advance in I t n place each one of these occurred at the terminal point of a major , and 1962. Over a two day period the Dow advance 8.4 and the S & .'. . his figure IS totally without precedent. To add one fur- ther statistical note, '\'n r .esday, 1312 issues or 80.5 of all issues traded advanced. This is a record fer tl. ost-war period and again, historically, an advance ratio in ex- cess of 75 has finaLy in the past been associated with major bottoms. Now, before we are taken to task for hav'll1g an unduly short historical prospective, we will admit that all of the above figures refer the post-war period only. There were, admittedly, a number of sharper one and two-day reve!'sals throughout the J' s. How- ever, it is also true that, durmg the 30's, the downswings tended to be a great deal sharper. We thlnk, at the y,),oment, it would be dangerously unproductive to assume that -the game is being played by the rules of the 30' s rather than those of the present day. I It is, in s1)y,),mary, our judgment that the effective bottom has been reached. The use drthe word effective is calculated. It would not be wihout precedent for the mar- ket to move back to or through the old lows Indeed. In every base formation that has occurred in the past, a testing of the lows has taken place and in some cases, June, 1962 being a typical example, that test involved the penetration of the former low by a signifi- cant amount In most such cases, howeyer, better- grade issues have stubbornly refused to move back to new low territory the second time around. It is highly probable, in other words, that a significant number of listed issues saw their 1970 lows at last week's prices. Quite obviously, some consolidation will be needed, and a rally which has now extended 70 points in three days cannot be extended ind(!finitely. We think the message of the rally, however, is clear-cut and investors should pay careful attention to it. Dow-Jones Ind Dow-Jones Trans. AWTat 700.44 144.46 ANTHONY W. TABELL WALSTON & CO. INC. ThIS rnnrktt l… IS fur (.llr ,'onv('nWl\r( '\1\,\ L,,(Otnmtwn !Iud h not un ,,\, , 10 it'll rot t \Ltt.ltm tu I,u\ 111\ ….. \Illt …. ..t'fl The Ul- formah')l1 '\,'5 blaln,a f1',1 'U'ct' ,,C tto \ ttl, ,hit I,ut ,I' dl) -tIll nt., It; tH'U), J,. ('0 JII ,ltH II .. Ofi,,Ib. ,h,Wr., ' have all Ifltl'rf'st III or PUn'h,l.M' ulIl 11 hl' .., III It!… .r. ,t 1 to

Download PDF