Viewing Month: July 1970

Tabell’s Market Letter – July 02, 1970

Tabell’s Market Letter – July 02, 1970

Tabell's Market Letter - July 02, 1970
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Walston & Co. Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST ANO OVERSEAS TABELL'S MARKET LETTER July 2, 1970 There comes a time, usually in the terminal stages of bull markets, when all the available financial news is good and the clouds in the economic sky, if any, appear as only specks in the distance. Often there are vague, sub-surface indications of trouble ahead, but these become dwarfed in the prevailing euphoria of the times. Viewed with 20/20 hmdsight, the end of 1968 and the early part of 1969 obviously constituted just such a period. Earnings were mcreasing; stocks were advancing, and there,appeared limit to the price the market was willing to pay for a whole host of companies whose earnings were, with apparenf certainty, gc,niftoTIse-alrever'ac'celer – ating curve on into the infmite future. — I II To be sure, the seeds of collapse were present and could be detected with a sharp eye. Inflation was proceeding at an increasing rate, and the beginnings of the monetary stringency obviously called for to stem that inflation were beginning to be seen. The rest, as, some 300 points lower on the Dow, we are sadly aware, is history. It is interesting to contrast the situation at that time with the present one, which is almost the diametric opposite. The dominant financIal news at the moment heralds disaster or, at least, pending disaster. The most obvious example, of course, is the Penn Central bankruptcy and the accompanying concern national liquidity crisis. It is not our intention to minimize the im rt e Penn Central debacle or to ignore the very real probability that Jlo a ies equal or greater size, may well follow Penn Central into the courts. si noting that the liquidity problems now facing numerous American ow pretty well advertised ones and have had ample time to be reflecte 1 ck es. There is an old adage that i,,0;-, cctiOl1 to ,the.fr,ont is i months ago, the subtile, dimly-seen portents may be heralding . than deterioration. To take one example from the market's technical a 0 let conSider for a moment recent odd-lot statistics. Without going into detail on the in retation of these statistics, suffice it to say that, while the market has been drif – ower, the ratio of odd-lot sales to purchases has been rising, odd-lot volume as a percentage of total volume has been decreasing, and odd-lot short sales have been moving up sharply. All these are trends which, if continued, could have encouraging significance. Likewise, on the fundamental front, there are signs that all is not lost. Fortune Magazine headlines its economic forecast this month The Great Turnaround and says The U. S. economy has turned the corner on its 1970 readjustment. At the same time, the Federal Reserve Bank of St. Louis, the most respected advocate of the monetarist economic position, concludes that the current hesitation in economic activity has been more moderate than in the three previous recessions, although further expressing the reservation that recovery may be slower than in past'periods. It may just be possible that we are about to achieve the neat trick of slowing down inflation without causing an economic .d'.ownturn of u.ndue seriousness. Now all this could be cancelled out by a wide wave of bankruptcies or anyone of a number of potential economic disasters. But it remains true that many stock prices are at levels which are patently silly barring only the possibility of economic collapse. Should this collapse not materialize, the probability of many of these stocks doubling in price over not too long a period does not appear remote. But nobody talks about doubles any more. That sort of talk was characteristic of 1967 and 1968. Dow-Jones Ind. 689. 14 Dow-Jones Trans. 120.47 AWT'mn ANTHONY W. TABELL WALSTON & CO. INC. This IIHlrkct letit'f IS Iuhhsht'.\ for '''UI t(JlIH'nlt)l!'C ,(1111 lllfo!lnntlfln ,Inn not ,Ill ofTu 1'-' sell or Il '1oh'ltatm to buy ,HI) hl'(UILtll'lI 'lhe tn. (ormation ….. ns ohtnillctl flOm ;,null'e We h.-lll'v,' to he rellllllil'. hut \H. do lIot !..1.l.arante Its ,11'(UIM'V, W.\I'!ton F… Co, Ine It.. nffil'erll, dlledors or l'ITlpioyL'!s may have an mtm e9t In 01 llUll'hu'!(' .11\'\ sell the 'W' UJ rpft,! rC'tl to herem WN.30t

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Tabell’s Market Letter – July 10, 1970

Tabell’s Market Letter – July 10, 1970

Tabell's Market Letter - July 10, 1970
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Wdlston &Co. —–Inc —– Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER July 10, 1970 We chose to comment in last week's letter about the atmosphere of gloom that seemed to be pervading the financial community as the Dow-Jones Industrial Average sank toward a new low in the wake of the Penn Central bankruptcy and anticipation of unfavorable second quarter earnings reports. This atmosphere continued to be the dominant factor in early trading last week as, on Monday and Tuesday, the Dow lost almost 20 points, reaching an intra-day low of 665. 32. Then, on Wednesday, for no apparent fundamental reason, the atmosphere was sharply reversed. Sharp rallies on Wednesday and Thursday ensued, with Thursday's volume just about equaling its highest figures since the May 26th reversal. Fridg.y's advance,while less ebullient than that of the,previous,1vo days, took theDow into fUrther new high territory and on a seven-point rise,' an-intra.day high of 704-.41 wa's- . -,. attained. More surprising even than the Industrials advance was the strength shown by the Utilities which posted four-point gains on both Wednesday and Thursday and tacked on another point in Friday's trading. The abrupt reversal left many commentators at a loss for an explanation. The most plausable reason for the sudden rally probably lies in the recent action of the bond market. A heavy calendar of corporate new issues has met with astonishing success and prices for seasoned issues have risen sharply. Short term yields have been dropping for an even longer period. All of this strength had been taking place while the stock market drifted lower. Under the circumstances, it was hardly surprising that, at some stage, stocks would follow suit with leadership bemg provided by high-grade stocks and utilities which are directly affected by money rates. The problem at the moment, is to assess the JPt,eani of 0 -day rally from a techmcal point of view. The short-term . e i obably hmlted. At Friday's peak the Dow had broken out of a small a with an upside objecttve of around 712. For any further rise to be ed, \Ld'e' e penetration of 720 would ., have to take place, a penetration t arket is ready for at this stage. r't – i ords;–isfor ca-cont-inuat-ion-of-the c660– ' 1 720 trading range which has The longer-range ignifl ce the early part of June. f e vance, however, although a good deal less certain, could be con 'd t Prior to the decline in late June and early July, the Dow and most med short-term dlstributional tops. In the case of the senior index the w sid jective of that top was in the 672-665 range. The Dow reached an mtra-day low 665 this week and then sharply reversed itself. The slgnificanc lies in the fact that t' is the first time since the bear market started a year and a half ago that such action has taken place. On no fewer than four previous occasions similar 1 short-term tops had been formed, and, m each case, the downSide objective proved totally meaningless as the market plunged immediately to new low levels. If the Dow could hold . its gains of last week for any appreclable period of time, we would have one more potential indication of the demise of the long downtrend. Our reference to the much-maligned DOW-Jones Industrial Average in the above comments is a calculated one. It has been pointed out, and rightfully so, that the strength of the Dow in trading sessions over the past six weeks has, by and large, been greater than that of the market as a whole. Many have drawn pessimishc conclusions from this phenomenon whereas the fact is that such action is not only normal but is, in fact, infer- entially bullish. Strength in the Dow coupled with weakness in more speculative issues, when it takes place after a long advance, is a highly bearish phenomenon. On the contrary, after a protracted market decline, such action is the normal expectation and, generally, persists for an extended period of time. This is precisely what has been happening recently and is the reason we have been emphasizing a strategy of portfolio-upgrading in these bulletins. Dow-Jones Ind. 700. 10 Dow-Jones Trans. 123.80 AWT'mn ANTHONY W. TABELL WALSTON & CO., INC. ThIS mnrket letter IS puhlJshcd for your convc-nlenre and mfolmHllOll Rnd not ofTer to sell or a hollcltutLOIl to buy any dIscussed The 11l- – formatIon was obtained from sources we behe-ve to be reilnlJlr but we do not iO).J.rantee Its Walston IJ. Co. In(', and Its officers. directors or employE!s may have an mtercet In or purchR'IC and sell the SC(Ullties referred to herem WNsol … -..,; ;ilinliinraiJM ml,ilI1DiCaiu a-a

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Tabell’s Market Letter – July 17, 1970

Tabell’s Market Letter – July 17, 1970

Tabell's Market Letter - July 17, 1970
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Walston &Co. Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 100 OFFICES COAST TO COAST AND OVERSEAS MARrET LETTER 1 July 17(11970 As New York baseball buffs are aware, there is a fan who sits regularly in the left field seats at Shea Stadium. When the home team makes some particularly exciting play, he holds up one of a number of signs such as Very Interesting, Amazing, or, occasion- ally, Stupendous. The gentleman and his signs would have been useful in a Wall Street boardroom this week. For after a couple of days of hesitation on low volume, Monday and Tuesday of this week, the stock market rally continued with a vengeance, posting a 30-point advance in three days and reaching a new intra-day recovery high of 739.46. The Dow-Jones Industrial Average, in other words, is now over 100 pOints higher than it was at the May 26 lows less thai.two months ago, those investor;-who wereCfalling all over theiriselvei;-to dump stock during the May panic and who have nervously been hoarding their cash ever Rinc As we said in our letter of May 29, 1970, three days after the low was made, It is, 1ll summary, our judgement that the effective bottom has been reached. The intermediate- term uptrend since that bottom occurred has now been extended to a 16. 4 advance in the Dow-Jones Industrials. To a degree, this is unprecedented in the post-war experience. In no case since 1949 has the Dow advanced by 15 or more without that advance being part of a new recovery move which carried to or close to new high ground. In other words, if one looks solely at the percentage magnitude of the advance, it is possible to make the argumen not only that we have seen the lows, but that we are witnessing the start of a new bull mark Such optimism, we are afraid, would be premature. The recovery of the past 37 trad-' ing days has been the most dynamic in the past 20 be pOinted out, that,' it followed the most precipitous decline in the past 20 ye r. erally been the technicians practice to measure a rally in terms e c of s recovered. In this sense, the present advance can be fitted directly in e cont of the post-war experienc Between December 1968 and May 1970, p r o m 995 to 631, a total of 364 points. At Friday's close, it had in 28 of the total ground lost. Com t ,by-November,had , the points lost. By August, 0 lost in the 1')61-1962 slide had been re- covered. In 1957 and 1 6, tH c ara 1 Ftirures were 41 and 46. If the recovery rally were to equal 1 6 'n nce to 747 would be called for, and, if the earlier experience were e e average could sell over 800. Based on point d igg nalysis of the Dow pattern, this sort of strength would not be surprising. Since e May the index is held in a trading area bounded largely by 725 on the upside and 67 n the downside. This base was penetrated decisively in Friday's strength, and various objectives are readable, ranging from a conservative 775 to a more optimistic 825-850. We frankly think the continuation of the strength to the 775-800 area is a distinct possibility. We are unable at the moment to envision a great deal more than this, simply, since an analysis of the patterns of all listed stocks quite clearly reveals that the ingre- dients for a broad advance are not yet present. A number of stocks, notably including some of the Dow components, have the potential for substantial intermediate-term moves from this leveL The great bulk of issues, however, remain hovering around their bear market lows with very little in the way of a base having been formed. This is confirmed by the disparity in patterns between Dow-Jones Industrials and the broader Standard & Poor's 500-Stock Index. While the Dow has penetrated a base forma- tion with the objectives noted above, the S&P has failed to attain a new recovery high and, were it to do so, it would be difficult to read an objective much above 83. This would be a percent advance considerably smaller than that of the Dow, and would be a phenomenon typical of this stage of the market. We think the pattern in summary calls for a further extension of the advance after whic a new pattern will have to form, giving a clearer picture of the long-term potentiaL Since April we have been stressing that basic policy should involve the purchase of quality stocks on weakness. The recent strength underscores the appropriateness of that policy and we continue to advise it. Dow-Jones Ind. 735.08 Dow-Jones Trans. 128. 73 . ANTHONY W. TABELL WALSTON & CO., INC. II 11 This market letter III published for your convenience nnd Informnt1(m and 18 not nIl offer to sell or ,\ sohcltation to buy nny 8e('UrltJes ..hs ed Th formation was obtained from li!ourCeA we believe to be rellable. hi we do not guarantee employees may have an mterest in or pUFchase and sell the secunt., s refErrerl to hereal, its accuracy . Walston & Co .. I nco d nn t 1S ffi 0 ceerUs,99dl ,e rectors In or WNSOl

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Tabell’s Market Letter – July 24, 1970

Tabell’s Market Letter – July 24, 1970

Tabell's Market Letter - July 24, 1970
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, Walston &Co. —.;..;; Inc. Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 100 OFFICES COAST TO COAST AND OVERSEAS .TAB.EIiL.!L'S MARKET I II LETTER July 24, 1970 The stock market advance — until now a rather healthy and vigorous phenomenon — . took on a certain air of desperation ihis week. After declining on Monday and Tuesday, not unexpectedly in view of the steepness of the previous rise, it spent the latter part of the week finding reasons to go up in the pronouncements of various Oriental potentates. Remarks by Mrs. Nguyen Thi Binh of the Viet Cong triggered a sharp advance on Wednesday afternoon, and, on Thursday, President Nasser's inspirations on Middle East peace brought about another advance. Friday's activity saw prices settling back in quiet trading. . – !IChere -is no 660 to 740 in the Dow and, at the moment, as a result of last week's activity, a potential top with a downside objective of 710 exists. This level coincides with strong support at the top of the May-June trading range, and we would regard a decline to that area as a logical development. We still suspect that the current intermediate-term rally has more room on the upside and would anticipate new recovery highs following the projected short- term weakness. The news which set off the final phase of the advance a week ago had a great deal more substance to it than the somewhat spurious events referred to above. This was the July 17 announcement that U. S. real output held steady in the second quarter of 1970 ., while, at the same time, the rise in prices slowed to its lowest level in two years. These figures, suggesting that the worst of the economic decline may be over while, at the same time, we are achieving some success in the fight on I!!Pparently a surprise' to the market. While admittedly a shade better thm,mi h xpected, the economic figures were certainly not that ho observed the mone- . tary policy of the past year and who had some famiNcr.t;\ty wi e effects of monetary changes on total spending. '.;/ Quite simply, changes in the – powerfUll!' over-tne snort run on-e-c' a i at oney stock tend to act quite 'a'lagged- I effect — III other words, pull on the economy u This lag effect is a ti 'n ta do not, generally, exer,t thelr st!,ongest I, ix months to a year after they take place… – – .J n the area of prices, which have a certain amount of rigidity. Thu . change -is the mone y gr ,most important factor affecting immediate price of the previous year. I Now from the S of 1969 through January 1970, monetary growth in the United States was nil. Sin that time money supply has been growing at an annual rate of I approximately 4-1/2'70. In the light of these figures, it is perfectly possible ,to understand the recent trend of economic data and to make some projections as to the , Iremainder of the year and as to 1971. . On the prospects' of containing inflation, the data suggests a high degree of optimism, !at least for the next few months, The effect of the 1969 clampdown will remain with us for the rest of the year, and money growth, since that time, has' not been excessive. As to Gross National Product, less immediate improvement appears in prospect (real G. N. P. in the third and fourth quarters should remain relatively flat), but improvement in 1971 I,. I is certainly foreseeable. The rate of improvement will depend largely on future monetalY , policy. It would be folly at this date to repeat the error committed at the tai.l end of all -I previous recessions and apply unduly expansionary policies at a time when victory' in the -, – inflation battle appears at hand, In the kind of environment described above, corporate profits will admittedly continue under pressure throughout the early part of next year. This sort of economic environment is totally consistent with the sort of stock market we have been expecting — intermediate-term strength in reaction to the sharp 1969-1970 decline but no sustained uptrend, until the longer term course of economy becomes more apparent . Dow-Jones Ind. 730. 22 Dow-Jones Trans. 130.60 L. LJ I JI AWTmn ANTHONY W. TABELL WALSTON & CO., INC. This market letter III for yOUr convenience and mformatlOn and IS not an offer to sell or a soliCitation to buy an) diSCussed. The in- formation was obtained. (rom sources we behE'Ve to hi! reliable. but we do not guarantee its nccuracy Walston & Co Inc. and lts officers. direetora or employees may have an mterest In or purchase and sell the securltles referred to helem. WNIOI ;!

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Tabell’s Market Letter – July 31, 1970

Tabell’s Market Letter – July 31, 1970

Tabell's Market Letter - July 31, 1970
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Walston 5- Co. Inc Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OVER 100 OffiCES COAST TO COAST AND OVERSe….S \ TABELL'S MARKET LETTER July 31, 1970 As the summer doldrums set in, on the stock market as well as on the sweltering New York City streets, it is, perhaps, an appropriate time to recapitulate our thoughts as to the current position of the equity market. Often the most useful format for a fore- cast is to cover separately the long, intermediate and short-term periods encompassing, respectively, the next few years, the next few months and the next few weeks. Herewith, a few notes on the technical outlook for the market covering each of these three time spans. For the long term, the most important question relates to whether the steepest bear market of the post-war period, the 370/0 decline in the Dow which began in December, 1968 and has continued,so far, through May thinUhatit is. We are not, at the moment, able to voice this opinion with 1000/0 confidence in the absence of evidence to the contrary, that investment policy should presume the end of the bear market — that is, cash reserves should be committed during periods of market weakness. This stance can be clarified by pointing out that there are two classes of technical indicators normally used to signal major bottoms. One class has, on the record, seldom, if ever, given a false signal. This sort of indicator, in other words, has almost never turned positive without a reasonably healthy market advance ensuing. In order to achieve this sort of reliability, it is necessary to build in a time-lag, and indicators of this sort generally do not turn positive until well after a bottom has been made. Predictably enough they have not yet turned positive today. A great many other technical series are close to an actual bottom. Their reliability, naturally en g positive fairly less than that of the indicators mentioned above. These hv positive at the moment. As we have pOinted out before, the w' can be defined roughly by a 100-point wide channel on the Dow-Jones, whiyann as declining at the rate of around three pOints per week. The — Sidownswing's end. W The unanswered . at channel is now at around . of the — yo of the bear phase, is what sort of long- term pattern will Still to be define which the base wi! u gy to state that the market needs to form a base. a ower limits of that base and the -time period over . ave expressed the view before that,' in view of the severit of the declining t deal more time will be required to complete a base forma- tion than was the cas ay, in 1962 or 1966. We would not be at all surprised to see the base formation requ re as much as two to three years for its final completion. For the intermediate term, we are more unreservidly optimistic. We think that a retracement of close to 500/0 of the total decline would be normal technical action and would, therefore, set a target of 775-810 on the Dow as the objecth(e of the current rally. Were this objective to be attained, we would tend toward more caution, fearing that the necessary progress of a long-term base formation would require a moderately sizable intermediate-term decline from that level. , The short-term direction of the market will depend in large m, easure on the penetra- tion of the lateral trading area between, roughly, 720 and 740 which has contained the Dow for the past two weeks. A decisive upside breakout would indicate a continuation of the move, perhaps toward the lower part of the intermediate target mentioned above. A-dbwno side penetration, which inCidentally we would regard as more healthy from a technical point of view, would suggest a test of the support at 710-700 and a possible buying opportunity for an extended upswing later in the summer. This will be the last issue of TABELL'S MARKET LETTER under the imprint of Walston & Co., Inc., under whose aegis it has been published for the past 22 years. Durin the author's 16 years of happy association with Walston & Co. , Inc., we have made many friends through the medium of this letter. We want, publicly, to thank these friends for their readership and loyalty in the past and to express the hope that their friendship will continue into the future. Dow-Jones Ind. 734.12 Dow-Jones Trans. 130- 73 ANTHONY W. TABELL WALSTON & CO., INC. This market letter is Jlublished for your convemence Il.nd InformatIOn and l'l not an oller to ;ell or a soliCitatIOn to buy lIny secuntles dlscus;ed The In. formation v.as obtamed from !;ources we hebe,,!.' to be reliable-. but we do not gUarante-e Its aeeurac. Walston & Co. Inc. and Its officers. directors or employees mllY have an mterest In or lJurchase find sell the to benln. …. ;r-

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