Viewing Month: August 1970

Tabell’s Market Letter – August 07, 1970

Tabell’s Market Letter – August 07, 1970

Tabell's Market Letter - August 07, 1970
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, ,- 't …, . ' ., , …. – ' , 9M srAT ROAD. . 085..0 ;., ' EM.at HEW YORk nOCK ElItCHNU .DlaEft .AIlItICAN aTOQt EXCKAJIK '!'l … …… 4. –f . – . -'1L August 1. '1970 With these we are, at the same time..; startlng a new -Venture and continuing an old tradition. ;'i'-'.k., ,. …. ,S .. '. ;!, ' ,- , . ThIs is 'the first 'lABELL'S MARKET 'the Delafreld,- Harvey, Tabell DivIsion of Montgomery, .scott 6. Co. It represents. however, the continuation of a letter that bas been published weekly since 1944. During this period. the letter has appeared under the imprint of three different firms and under the by-line of two authors, the current one and his late father. Edmund W. Tabell, who founded this publication 26 years ago,and who pioneered many of the analytical concepts stlll referred to herein. We commence our new venture, we confess, with the usual feelings of trepidation which must accompany the launching of any enterprise. Despite this uncertainty, however, we are convinced that the economic and stock market environment for the 1970's should favor our endeavor. It is perbaps appropriate at this politt to begin by sharing our thoughts ,on tbis environment with our readers. We have come through a trying period over the past 18 months., Stock prices have . plunged more precipitously than at any time since the 1930's. Meanwhile. the financial press informs us on a daily basis of the multitude of problems besetting the economy. We are all by now famiUar with the list — decreasing corporate liquidity, deterioration in the quality of profits, rising unemployment, the possibility of a monetary crisis rand still-perni- cious inflation. Nor are our problems confined to ,the financial sector. War in Vietnam and the Middle East, racial tensions and the alienation of large segments of society are hardly factors calculated to produce stock-market or any other kind of optimism. – It Is. in other , — 'I11..t.oO'-easy-tG–FeClte .the-lltany-of problems that beset us and, trembling to slink away from the stock market in order to lick the painful wounds of 1969-1970. Yet, to all of the problems, there is another side. Illiquidity, beyond a doubt, exists,as the recent wave of bankruptcies all too eloquently attests. But what of the companles with balance sheets strong enough to weather any fore- seeable storm which the bear market has dragged down to record-low multiples of proven . earning power' We can all recite the familiar instances of gimcrack accounting. Does thls explain the present bargain prices of a host of issues whose books are impeccably conser-', vative. Unemployment Is rising to be sure — but Is still at low levels comp,ared to the mld- slxties2 And, as to the Scylla and Char1bdis of monetary crisis and we do -not think It incredibly naive to suggest that Incumbent monetary authorities are aware of the problem and have at least some of the expertise and tools required to deal with it. Thus it is hardly our intention to daim that our economic difficulties are not real. They exist — all too tragically so. But, with most stocks having declined anywhere from 30 to from fairly-recent highs, it Is smy to pretend that the market Is salling along totally obllvious to surrounding deterioration. It is our basic thesis, in other words. that the current prices of many stocks provide unique and exciting investment opportunities. ThIs is not to forecast a new bull market. We .frankly do not see one immediately in the offing. It is simply to state the bellef thatJ.ntenslVe investn)ent management can produce above- average results in the months and years al)ead, and in this period, the equity market might be a pretty interesting. place in Which to be. Our technical work, at the moment, supports this view. We have said in the past that iswe think the climactic nature of the May 26 low cannot be ignored, and that probab1l1ties favor the contention that the stock market now entering a new investment phase. The precIse shape that this phase may take is as yet unclear and it wUl be our task In this letter to eomment on it. It Is our beUef, ,bowever, that it will usher In an era propitious for Delafield, Harvey, Tabell and, m. uC,,h,m,o- re importantly, our clients .,'.. DOW-Jones Ind. (llOO a.m.) 722.28 ' ; ANTHONY W. TABELL S&P 500 (1100 a.m.) 77.07 -, ;.\;0;,' ' AWTmn , .;r.,;,' – J/iJ-.,;', 0-/ .r- DELAFIELD, HARVEY. 'TABELL ,,,T —

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Tabell’s Market Letter – August 14, 1970

Tabell’s Market Letter – August 14, 1970

Tabell's Market Letter - August 14, 1970
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909 STATE ROAD. PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE August 14, 1970 Last week's market was characterized by orderly weakness in the bulk of the list as the Dow moved down toward our short-term target in the 705-690 area. Not unexpectedly, the still- .,…. ' — 'exploited'glamour-segment of ',,, Market action since the Dow reached its intra-day low of 627.46 on May 26 is worth review- ing. Over a nine-week period the index advanced a bit over 16 to a high of 742.40 on July 29. This advance occupied 45 trading days, and the central question for determining investment policy is whether this advance constituted a rally in an ongoing bear market or the initiation of a new market phase. We indicated last week our tentative belief in the latter conclusion. It may be helpful to conSider some of the evidence. First of all, the so-called rally in a bear market is, historically, pretty much of a mythi- cal beast. The 1968-1970 bear market was interrupted by three major rallies on the way down — in February-May, 1969, in July-November, 1969 and in January-April, 1970. These rallies lasted 54, 73 and 47 trading days respectively making them, timewise, similar to the 45-day rally in May-July, 1970. However, none of these three rallies was able to push the Dow up as much as 8 while the recent advance carried the average over twice as far. It seems apparent that some new force not present in the previous rallies was at work in the summer of 1970. Advances of this magnitude within a bear market trend are extremely rare. In the 1966 bear market, the largest rally on the way down was 5 and the longest one 26 trading days. In 1961-1962 a 5, 32-day rally was produced, and, in 1957, a 3, 5-day rally was the best upside effort throughout the entire decline. Going further back in time, a 17 rally punctuated the middle of the 1937-1938 bear market, but that one lasted only 38 trading days. And in the . – – of them all', 1929-1932,- – — –' – ' – – – – — – nO' rallying phase of longer t-ha- n 52 tradin-g- days- — occurred ' after the 1930 advance. A similar pattern emerges in study of bear markets going all the way back to 1900. What we are saying is quite simply that bear markets have a tendency to run their course with very little interruption. Thus, the longer a rallying phase extends and the greater the percentage advance from the low, the greater become the odds that a given rise marks the end of a major downswing. At the end of last month, we were approaching the stage when the advance was unlikely to be part of the bear market continuum, and another assault to and through the July highs would indicate we had reached that stage beyond a doubt. Meanwhile, market phenomena compatible wit h a major bottom continued to emerge. Last month's short interest was 1. 96 times average daily volume, a level that has been associated with major lows ever since the 1930's. Cash in the hands of institutions continues to rise, and heavy mutual fund selling in June was, again, consistent with the thesis that an important low had been reached. Odd lot behavior was also consistent with normal action at market lows. And ASE volume for July declined to 21 of NYS E volume, the lowest level in 20 years and a normal concomitant of the final wringout of speculation. The pieces, in other words, fall slowly into place. Having said this, it is again worthwhile cautioning the reader against undue expectations. A close inspection of 2,000 indiVidual chart patterns shows that only the smallest minority of stocks possess what can be called significant upside potential. Furthermore, the technical patterns of the great.bulk.of ,pres.ent, it ,mus.t.be.noted.,absolutelyno redeeming qualities ;hatsoever'- Yet those of uS-who have watched market for some time k-now that such a phenomena is perfectly normal at this stage. A minority of stocks are probably now in significant uptrends, but a much larger number have probably just entered a period of base building, and a significant portion will most likely continue on to new lows before the basing phase is completed. Selectivity is a word that we have been accused, in the past, of abusing but we warn that, in the market environment we foresee,we expect to be.abusing it further. Dow-Jones Ind. (1l00 a.m.) 709.68 S&P 500 (1l00 a.m.) 75.00 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL AWTmn No slatement or eo;preulon of opinion or any otner matter herein contained Is, or is to be deemed to be, directly or Indirectly, an offer or the soliCItation of on offer to buy or sell any security referred to or mentioned The matter Is presented merely for the convenience of the lubacrlbet WhIte we believe the sources of our mformotlon to be reliable, we in no WflY represent or guarantee the atturacy thereof nor of the Ifafements mode herein. Any action f1) be taken by the sub- sCflber should be based on his own investigation and Information Montgomery. Scott & Co. as a limited partnership, and Ih partner. O! employees, may now hove or may later ,ake position. or trades In respect to any secunties mentioned In this or ony future I.,ue, and such position may be different from ony views now'or hereofter in thl. or any other Issue. Montgomery. Scott & Co, which IS regblered wllh the SEC as an Investment advisor, may give advice to its Investment adviSOry and other customers of any Ifatemenh made In this or in any other Iswe. ——..—..I

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Tabell’s Market Letter – August 21, 1970

Tabell’s Market Letter – August 21, 1970

Tabell's Market Letter - August 21, 1970
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…. . …. .-, ,.. '.of' , 1 90!) ROAD PRINe-ETON nIV'SION or- JERSIV 00'40 MlLMorR NEW STOCK MEtlER AMeRICAN STOCK CXCHANGC August 21, 1970 One major recent change in the technical action of the ,stock market is that it seems to have become a bit more reliable. Short-term downside projections which, during 1969-1970, 5mer.o.,way, t.atipn s.. t9 downside objective of the Ju y top in the the Dow reached an intra-day low of 702.83, moved sideways for a couple of days, and promptly produced a four-day advance which took the index to a new recovery high. As we noted last week, the market is now approaching a very interesting and crucial test, and we have some confidence in that test's being successf1JI. Our upside objectives for the Dow center on the 775-825 area, and recent technical action has given us no reason to think that this target might not be attained. Vve are assuming, therefore, that, within the next six weeks, concrete evidence of the bear market end may be at hand. Assuming th1S evidence does emerge, the problem becomes to guess what shape the new stock market of the early 1970's will take. If one were to rely on the predominant experience of this century, the end of the bear market should signal, quite simply, a bull market — in other word s, a move by the popular indices to and through the old highs. It is interesting to contemplate thi s prospect, sin c e it is, at the moment, the one possibihty almost nobody ilppeilrs to be hedged against. The number of investment milllilgers who accumulated cash at the bottom and who would be further embarrassed holding that cash through a protracted up- swing must be legiol1, However, while the thought is emotwnally satisfying, it must be admitted that ',here is nothing in the present tecpnJcal pattern which would suggest that a major advance is in the offing. OUf reading of this pattern leads us to go along with the populilr view that a protracted period of base building is required, -a'pp-e-iiI'st5'be-wnat ,-fflCluCli'figours-elves'; ore, fact, forecasting, it is worthwhile trying to get some idea of just what such a period might look like. There are, over the past 50 years, only two instances of a protracted reaccumula- tion formation following a severe decline. These are 1938-1942 and 1946-1949. We have, therefore, constructed '. in the tables below, two forecast models which show where the Dow would be at various dates in the future, if the percentage retracement swings of these two eras were precisely duplicated. 1938-1942 MODEL 1946-1949 MODEL Rate DJIA Date DJIA June 1970 713 September 1970 784 July 1970 664 November 1970 630 December 1970 852 februalY 1971 801 May 1971 715 September 1971 647 October 1971 842 December 1971 847 July 1972 679 November 1972 620 December 1972 776 June 1973 692 September 1973 747 June 1974 609 A few interesting facts may-be noted. first-is the accuracy oLbathmodels todate. ,The 1938-1942 model forecilst a rise to 713 in June, and the actual high was 720. It then called for a July decline to 664 and the actual July low was 669. It is also interesting to note that both models suggest a continuation of the present advance over both the near and intermediate terms. The 1946-1949 model would have us at 784 next month, and the 1938 model would call lor 850 by the end of the yeilr. The 1946 model would take! u8 above 800 by carly 1971. Both models would indicate that, while prices below current 1evel s arc probabl e, they are unlikely to be seen for some time. Certainly we are not forecasting either model will be duplicated precisely. Markets SImply do not behave that way. But, in view of the larClC numbC'l of analysts claiming thilt il protructed basing. penod is needed, the models glve us an Ideo of precisely what we orc talking about when we speak of such a period. Dow-Jones Ind. ( 100 a.m.) 735.90 8&1' (J100 I.m.l 78.29 AWTmn ANTHONY W. Tl\BILL D ILAFl CLD, BflRny, 'fflIlCn' Il.t n, P'f'fil 01 01011 01 (I',,! Qt; , 1'1'111'-' 1''''Clfl rr)II'nI,' I. D, ,\ to I,, t dl'c!,. Of ,d,r.rlly. 'Ill r,If, fir 11,,, 'OI,roIol',,1' .,1 nil (,tt(' 10 It' or Ullf i'(,llty r;f ..pd 10' or U'lcr.\!olwd lhf' m'l Itoupo!,,,n 1,1 rl' 1'.I,r,hl!', W'J …. 110 \'.t1 0' oun,on\N' In,.,,,(y 1'11,, lil,.,,! (or 11 Ifr lhc Gf ffln ,hrroi,,r 1,,,I,,,v,' file ,,( ,,..,d, I,eln '.n'! (IeIIO'1 to lit' I. f Ih,' 'h , .-,, r''''(1 'nV',rll,jj,of1 lnd ,I .,,,)II')I /,\clq'''''''Y', rICO'. . '-0. In lilli'''!'' fl(l,,,,,,,dl1f'. nile! !,oIm'I' r ,,,, y ',,,' il' m,,), hhr jrJ\r, C. f,,'If'nllt.!r e, 'n 10 eml i,' 111 m lny vll,Pf 1,'11 Mffljf'Clm('ry. n.''''.'I'''.! ,., ' f. (, .. \'10 1 secm onrl Sl.rh wllh Ihe un muy bf' d,\I('I'''( f,,')n onl .''' …. wlQ 1'1(11 gl'/e wI … 10 ,j. ,,,I… ,I II r md'lp.-d,, Iy of ully s' 'no, Ie 1 e, 1 th,', .. …

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Tabell’s Market Letter – August 28, 1970

Tabell’s Market Letter – August 28, 1970

Tabell's Market Letter - August 28, 1970
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.. – ' . ! iJ.. f-… .. .,..,… ………,. …… .. … .Oil &TATE ROAD. rnINCc;TON, N.VI .UruU.y oe,.o CIIVI.,Off 9,',,1, 0.. p, .. e., .. Nrw ,0.1l, 'TQCOI l;.eUAHOIE 1U111. '''''.'C'''' II.H…,.11 ., .' t, – .Tn Memoriam August 28, 1970. ' Born Dcccrr.bcr 3, 1968 THE 1968-1970 BEAil. MARKET Dic.d MJY 26, 1970 Flnnl Rites August, 1970 R. I. P. The epitaph, we think, c..n finally be pronounced. The broad and convincing rally on of la!t wee;' a-.d ),.ondJ.Y of this, with g.l!ns holdwg In the I,tter part of this trc'!!i.,),h.-. f'xtor!.!cd -CC'()'C!'l 1n thr, Dc.\',' to 13S pomts rl,lil.t-.C MrlY 2(,th cr eln advollce of To an advance of thls Mngr.ltudc as an crdl1aT'l fully within a hC'.tr marJet is, In our OP1'llOn, totJ1!y to ignore all historical cxpcncnCE. Let 1..5 r.L.lmmNize the evicence. The lOTI';; meorket d'.cline could be described by L1 100- polnt-\.. lac trend wiilct, for IS months, hJ.d Lcen dc!'ccl1dlng the rate o( .G7 r-omts per doy on the Dow. Just lbout every Dow-Jones fIgure SInce December, 19GB hQd !olJcn ….merc within that channel. ThIs week, the upper 11mit of the dwnncJ, r,owat eround 738, '.'J3S decisl\,(..'ly penet!lltC'd. AL the same tii.1C, a nurr.ber of typlcn of boaoln;, cm!rgIng. The rat'lo of short interest to nYc! age dolly trQd- 10g volumC ;)s of August 14th clhr,bca to a fIgure of 2.08—a level thut has been with culminltlons E'VE'r Since the edrly 1930';.. Cash in the hcmds of muttlll fLHld; rof,C' in JL1ly to In astronomical 11. of assets with the funds having dizposcu of ovm 500 mUlion worth of stock in the June-July period. The reinvestment demand thu. crcatcc. cannot he ignored. The udvoTlcc, as we noted a of weeks ago, has lasted longer than any bear-mark.ct rally nincc the Spring of 1930. The p'.!rccntagc risc far vutstdppec. that of any such r(llly -in the entIre postwar PCI.iOJ.. In .ther words I 1n the- (ontext of forty years of fin.lnc1el expcrJcncc, we have ;.C'en no bear mmkct rally with the stlcngth and Igor dIsplayed over the P.lst thrce months. There lie, to be sure, caveats, il1d th'y will he otlly noted here. No market trend revcrsal thut VIC arc c……;!rc of hos ever tuken place with al1 technical indicators pointing with crytal c.1any in the airectlon. In the p'cscnt car-e a number of lu'';llllC Indlcutors wluch,in the past, heve major have not yet turned positIve, although it Viould not tbke much for then to do 0. 1hc Stand.a.d & Poor's SaO-Stock Index un!. other hroader inl1ces not yet ollo;-cd the Do\ in brcckmg out of thcJr d)\'nttcnd channel.; — v' Cl1though the Cl1rre;!t upG1dc ohJC'ctivc for the S& would indicatc that It could do so !.hortly. rclttlvely better -r\arkct pcrformuncc on the purt of the stable blue cl)lps rcprc- cntt'd hi' the DJIA Is u nortf'ul cnartctcllst!C of markets dt H.lS stage. Vic therefore, fer the lmg-tcrm. Lut we thin\';' it would be the hclCJht of folly ilt lIds polnt to succumb to overoptimism. It is one thillCJ to prOllounct! thc pJllcnt on the road to rccov('ry and quile unothcr to sUljgest he Is completely cured. It WtlS notcri h,;ore ju;.t t ….o .'C'cks ago that t1,c tccnillCill p1ttcrns of the great bulk of listed pr.!!;cnt no r('deem1n,) fCNurcs wnC'ltsC'evcr. hclS not oecuned In tl-.c (o,tnlght. VIC' continue to (cel, 1n other ….ord!., tli(lt the procv;s o( b.Jsc bu!ldlllf) 110 (JoIn') to r''-f'ulre a Cc.J of tfrllC, 'lI1d it to remind the fCr'def th.lt such il requiP'!' vn-ll Uf)\\'i-'Js. Only 1 nworiry of J;uJI','Jdllul (;'lll, .11 thc mOIJ'cnt, bc to h.J./,,) citced Lito k,n!) tpfra Ui'liC';,CIS. 1ht. ;.('n;lhc C(lllff.-, ….. c think, Is not to g('t cel,Jed tl.-ny bi' tIle CUi'hLlr!'1 of tIll' CH1','ni. . but to the '-,lr'-IlQtli d cl1rn!1.Jtc t1l0'–c 1.!.uc!. .. – .)11 too prcc,cnt, \C' 11 c'/cry — \'/nCH' the- IflInwdlltc cipJtcJl orC! IIIcdloCIC. If cur the;I!. J; (.(lITCct, tlll' rhort-term clccltnc cliJo\'dflCJ for clccufOlul.;lt1on o( mOle Cv('Irduly .1tuLllcd 1!;5l1c''; wJII, tncvltduly, …. ('Iccur i)(w-)onco Ind. (1100.10.) 7GI.S7 se.!' (1100 a.m.) 61.2G , /I.\VTmn … ANTIIONY \'I. l,',ml.L PI.I.AfIf.LD, flflRVI\', Ti,OEI.L , 1 I j. ! I …..

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