Viewing Month: October 1970

Tabell’s Market Letter – October 09, 1970

Tabell’s Market Letter – October 09, 1970

Tabell's Market Letter - October 09, 1970
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. ———————–, TABELL'S MARKET LETTER ., 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE r– October 9, 1970 As readers of this letter are by now aware, we have attempted, over the past two months, to adopt a constructive posture toward the stock market without succumbing to wild optimism as to the im- mipenQl o- La. — – – , …… — – –W—-e.-.-cQ-!llinue t9ma..i…l…–t-a–in- th-is—general attitud-.e-,.b..u..t.,..a-s- -,. –.—-,. market firmness continues, it would be imprudent not to, at least, examine the possibility that a new major upswing may have started from the May lows. The following is an attempt to consider this eventuality. To begin with, the market's behavior since May is rather neatly describable in mathematical terms. The advance has been contained in a trading channel some 60 points wide which has been rising at the rate of one point per day in the Dow-Jones Industrial Average. This rising trend has been consistent, without any indication of acceleration or deceleration. In other words, the up- ward slope of one point per day is just about the same whether one measures from the May low, the low of mid-July, or the low of mid-August. Since the trend has been perfectly consistent, it is easy to make projections into the future. If continued, the current trend would call for a Dow-Jones level between 854 and 918 six months from now and between 972 and 1035 a year from now. Conversely, the regularity of the trend channel means that its downside penetration would have a great deal of technical significance, and would lay to rest any thought of an immediate bull move. Since the downside limit of the channel, at the moment, is around 740, the risk in assuming its continuance does not appear great. Suppose, then, the market does remain in this upward channel. Is such action consistent with a, normal bull market Listed in the table below are some characteristics of all of the periods generally recognized as bull markets since 1932, with the present upswing, to date, listed for comparative purposes. As can be seen from the table, upswings are, in many respects, similar , – Their length, forexamp1e to ope trldjpg d,ws, tb.. . notable exceptions being the baby bull market of 1938, and the recent 1966-1968 advance. The percentage rise in each advance also shows remarkable conSistency with 1932-1937 (no doubt due to the severity of the previous decline) and 1966-1968 again being exceptions. (It is worth noting that the 1966-1968 advance was 48 in terms of the S&P 500 thus making it nearer the norm.) The average daily percentage rise has varied little in the post-war upswings running between 5/100 and 9/100 of 1 per day. It will be noted, of course, that the present advance is conSiderably steeper at 15/100 of 1, but bull markets tend to decelerate as they mature. Actually, the four previous bull advances were just as steep as the present one in their initial stages. of Previous No. of Aver. Daily Start DnA End DnA Adv. Loss Recovered Trading Days Rise 7-8-32 41.22 3-10-37 194.40 372 39 1390 .17 3-31-38 98.95 11-12-38 158.41 60 66 187 .24 4-28-42 92.92 5-29-46 212.50 129 181 1211 .07 6-13-49161.60 1-5-53 293.79 82 259 987 .05 9-18-53255.49 7-12-57 520.77 77 697 962 .09 1()-;2-57 419.79 12-13-61 734.91 75 312 1043 .05 6-26-62 535.76 2-9-66 995.15 85 150 912 .06 10-7-66 744.32 12-3-68 985.21 32 96 518 .03 5-26-70 631.16 10-6-70 ToDate,— 783.68 24 — 43 94 .15 – – If the present instance is, in fact, a bull market, we are thus able to make some estimates as to the sort of market action which would be consistent with past behavior. An expected length of 900 trading days would carry the upswing to the Winter of 1974. The normal daily percentage advance would call for a daily Dow rise of .32 to .54 points, a rate about one-third to one-half as steep as that of the past five months. Thus, the ultimate price objective would be somewhere in the 1000- 1200 range on the Dow. This would recover a bit more than 100 of the total ground lost — again consistent with past behavior. None of the above is meant to constitute a forecast. The evidence, while it accumulates, is not decisive. Nonetheless, it is in the nature of investing that one makes decisions in the 11ght of uncertainty. The point is that the holder of substantial amounts of cash is, at the moment, assuming the risk of not participating in a move of the magnitude described above. Dow-Jones Ind. (1200 p.m.) 774.23 ANTHONYW. TABELL S&P (1200 p.m.) 85.53 DELAFIELD, HARVEY, TABELL AWTmn No slatement or expreulon of opinion or any other matler herem contolned IS, or IS to be deemed 10 be, directly or ,ndirectly, an offer or the sollcllol1on of an offer to buy or ell ony SeCUrity referred to or menlloned The matter IS presented merely for the convenience of the subscriber While we believe the sources of our information to be relloble, we In no WJy represent or guorontee the accuracy thereof nor of the statements mode herein Any action to be taken by the sub 5crlber should be based on hiS own investigation and Informahon Montgomery, coff & Co, as a limited partnership, and In partners or employees. may noW have, or may later take, positions or trades In respect to any securltle5 mentioned In thiS or any future Issue, ond such pOSition may be different from any.vlews now or hereafter eKpressed In this or ony other Issue, Montgomery, Scott & Co, which IS registered with the SEC as an Investment advIsor, may gIve adVice to 11 investment adVISOry and ather customers Independently of any statements made In thls or In any other Issue

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Tabell’s Market Letter – October 16, 1970

Tabell’s Market Letter – October 16, 1970

Tabell's Market Letter - October 16, 1970
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,———————————————————- — – – – – – – – – – – – TABELL'S MARKET LETTER 909 STATE ROAD PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE October 16, 1970 O, nce to every man and nation comes the moment to decide, In the strife of Truth with Falsehood, for the.good()r.evil- soi.de. James Ru-ssell L owell . The st')ck market, too, has its moments of decision. Periods arise when the various forces acting on the market appear to be converging, and there exists a high degree of probability that the short-term course of prices will determine their intermediate and longer term course as well. Such appears to be the case at the moment. The decision is not whether the 1968-1970 bear market is over; we pronounced that epitaph two months ago. The question which may well be resolved fairly shortly is whether or not the 197 – 197 bull market has begun. Why is the present particularly crucial After having risen to a new post-May high at a closing price of 783.68 on October 7, the Dow proceeded to erase its entire gain in subsequent trading reacting to a clOSing low of 760.06 on Tuesday. The Index has thus returned to the broad 745-770 area within which, with the exception of three or four days at the height of the early-October rally, it has remained since mid-August. The pattern on the broader S&P 500 is only slightly different. The August-September trading range on this average was between 81 and 83 and the subsequent rise to 87 was longer and steeper than that of the Dow. Even so, at its week's low of 83.02, it was close to the upper part of the August-September sideways pattern. The lows of these trading ranges, then, 745 on the Dow and 80 on the S&P 500, now have a great deal of significance. If the work that has been done in these ranges turns out to be distribution, it is distribution more substantial than we have seen in some time. A decisive downside penetration of 745 on the Dow would indicate 710 with a possible lower objective if the pattern broadens. In the case of the S&P 500, the downside objective is probably around 76 level. -.- – – – — — ….. …..- Now a decline to 710 in the Dow, it must be noted, is hardly the end of the world. To put it in perspective, it would mean a drop of a bit more than three points from present levels in the average Dow stock. We are moreover, as we have indicated, becoming daily more con- vinced that any decline of much greater magnitude than this (i. e., continuation of the bear market) is a more and more remote possibility. The underpinnings of technical strength which have developed since May are, we think, simply too strong. What a decline to the 700 level would, of course, do, is validate the basic thesis toward which we have leaned for six months — that the market will require a more lengthy period of base building before it can mount a sustained bull move. A decline to that area would deci- sively destroy the uptrend that has been in effect since May and would indicate that every- thing that has taken place since that time was, rather than being a major uptrend. part of a broad consolidation area. So much for the evil side. What about the good one Ability to hold above 745, and then rally, would maintain the uptrend that started last Spring, and would mean that the recent decline was nothing more than another one in the series of minor interruptions which stalled the advance at various points since June. What is most important, we think, is the effect that another leg up in the general market would have on the complexion of individual stock patterns. As part of our normal routine, we analyze individually, on a weekly basis, the technical patterns for llOO listed stocks. These issues are divided into four categories, stocks that are-in long.term confiimeciuptrendsor downtrend;;, and stocKS wnich navedeveloped sufficiently large bases and/or tops so as to be considered to be potential uptrend or downtrend candidates. As of the May low, only six stocks were in confirmed uptrends and fewer than 150 had bases large enough to be considered in potential uptrends. As of last week, the situation had altered radically. 95 stocks were in uptrends, but this was not particularly im- pressive since that total constituted less than 9 of the list. However, 550 stocks had moved in t 0 the potential uptrend category. That is, they had formed sufficiently large bases so that upside penetration would indicate an advance of intermediate-or-longer term proportions. Another upswing in the overall market would undoubtedly move a substantial number of these stocks into the uptrend category, and, for the first time in a good many years, the market would have the of poteptial leadership necessary1Dmake a worthwhile major advance. Dow-fones Ind. \1100 a.m.) 767.18 ANTHONYW. TAB ELL AS&WPT(m1n00 a.m.) 84.72 DELAFIELD ' HARVEY , TAB ELL No stafement or expression of OPInion or anv other matter herein confOlned IS, or Is to be deemed 10 be, directlv or indirectly, on .offer or the 50licltotlon of an offer to buy or sell any security referred to or mentioned The matter Is presented merely for the convenIence of the subSCflber While we believe the sources of our Information to be rehable we in no way represent or guarantee the accuracy thereof nor of the statements mode herein Any adlon to be taken by the sub- SCrIber should be bosed on his own mvest,gatlon and Information Montgomery, Scott & Co, as a limited partnership, and Its or employees, may now have, or may later take, poSitions or trades in respect to any seCUrities mentioned In this or any future lSue, and such pOSItion may be different from any views now or hereafter exprened in this or any other issue, Montgomery, Scott & Co, which IS registered wllh the SEC as on Investment adVisor, may give adVice to lIS Investment advIsory and other customers mdependently of any statements made in thiS or In any other Issue

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Tabell’s Market Letter – October 22, 1970

Tabell’s Market Letter – October 22, 1970

Tabell's Market Letter - October 22, 1970
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.—————————–,– TABELL'S MARKET LETTER , J 909 STATE ROAD. PRINCETON. NEW JERSEY 06540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE October 22, 1970 TOY MANUFACTURING COMPANY Current Price 43 We have commented in the past on the growing – -, 1-;40 -;demand'for — ' Current Yield 3.3 important fact of American economic life in the early Long-Term Debt 36,501,619 part of the 1970' s. We have also noted the wide diver- Common Stock 4,629,859 shs. sity of investment vehicles affording the investor, in Sales-1970 Est. 270,000,000 one form or another, participation in the favorable en- Sales-1969 243,310,000 vironment created by this demand. One such vehnicle, Earn. Per Sh. 1970-E 2.80 which provides representation in three different areas Earn. Per sh. 1969 2.55 — all related in one way or another to the growing need Mkt. Range 1970-68 53 1/2 – 25 3/4 for energy — appears to be Toy Manufacturing Company. (Fiscal Year Ends Sept. 30) Let us consider, for a moment, some of the effects the energy shortage is likely to produce over the next decade. One obvious one is an increased demand for coal, which suffered in the 1960's from below-average exploration efforts. Development of new coal properties will be of direct benefit to Toy, almost half of whose sales are accounted for by mining equipment. In the oil area, drilling, and most especially offshore drilling, is likely to increase and, here again, some 10 of Toy sales have been in the area of ore beneficiation and oil tool products. Finally, and most fascinating, growing fuel consumption will demand increased effort in the control of air pollution. Environmental control constitutes another 10 slice of Toy's 1969 revenues. This equipment includes electrostatic precipitators, centrifugal collectors, filter systems, wet .. Thcompanyhasalso announc.,d thaLit – – ing a maior-move water pollutio;. Remaining sales from various industrial and – general products. The present price of Toy hardly appears to reflect an excessive premium, considering the attractiveness of the areas mentioned. The company is expected to report earnings in the Vicinity of 2.80 per share for the fiscal year ended September 30, and the current price of 43 represents a multiple of Just over 15 times those earnings. The 1.40 dividend provides a 3.3 yield, and the balance sheet is strong with net current assets, at the end of fiscal 1969, re- presenting more than three times long-term debt. Toy's record historically has been a good one. Aggressive management efforts- to improve the company in the early 1960's resulted in sales increasing 2 1/2 times over the period 1962- 1966. Much more dramatic, however, was the improvement in profit margins which rose from less than 3 to more than 15 in the same time span. The combination brought about a nine- fold increase in per-share earnings from 36 to 3.09. The adjusted price of the stock rose from 7 to over 50. 1967 and 1968, however, proved to be lean years. Sales growth slowed, and margins con- tracted with 1968 results plummeting to 2.02. Recently, however, there is real evidence of recovery. Profit margins last year rose to 12.7 from 10.8 in 1968 on a small increase in sales, and this trend has continued in the first three quarters of fiscal 1970, with pre-tax in- come having increased almost 15 on a 10 sales gain. For the nine months, the company has reported results of'2.06 vs. 1.85 – – -. Much of this improvement has reflected a change in the product mix. Industrial equipment sales are gradually decreasing in relative importance as environmental control and oil well equipment become larger sales factors. Furthermore, profitability in the environmental control area could well improve, as the company moves into higher-margined products in this field. While it is early to estimate per-share results for the year just started, an increase to the 3.25 level for 1971 certainly does not appear to be an impossibility. The technical pattern generally reflects the improving outlook. After reacting to strong support at around 35 last May, the stock rebounded sharply and has spent most of 1970 forming what appears to be a base in the 35-47 range. Eventual upside penetration of this base would indicate a price objective in the 80-90 area. Strong support is eVident throughout the low 40's. Further information is available on request. Dow-Jones Ind. (1100 a.m.) 758.01 S&P (1100 a.m.) 83.49 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTmn No statement or expreSSion of opmlon or any other moIler herem contained IS, or IS to be deemed to be, directly or an .offer or the soliCItation of an offer to buy or sell any security referred to or mentioned The moiler .s presented merely for the convenience of the subSCriber While we bel.eve the sources of our .nformotion to be rehoble, we In no way represent or guarantee the accuracy thereof nor of the statements made herein Any acllon to be token by the sub SCriber shovld be based on hiS own InvestigatIon and mformatlon Montgomery, ScaN 8. Co, as a llmlfed porlnenhlp, and Ih' partners or employees, may now hove Of may later toke posilions or trades .n respect to any securities mentioned In thiS or any future Inue, and such POSItion may be different from any views now 'or hereafter expres;ed In thiS or any other Issue Montgomery. Scolt & Co, whICh .s registered With the SEC as on investment adVisor, may give adVice to Its Investment adVISOry and other customers lOdependently of any statements made In th.s or In any other Issue

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Tabell’s Market Letter – October 30, 1970

Tabell’s Market Letter – October 30, 1970

Tabell's Market Letter - October 30, 1970
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\ TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON NEW JERSEY 08540 DIVISION OF MEM6ER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE October 30, 1970 We suggested in this space two weeks ago that a moment of decision was probably about to be reached in the stock market fairly shortly. Vie pointed out that the Dow-Jones Industrial Av-erage h-aC!', -of traaea7 for'tJ1host 'pilri';' oetweeri an -intraday'–' low of 740 and an intra-day high of 770 and that this trading range, by then, had sufficient significance so as to make its ultimate penetration fairly important in determining the inter- mediate-term course of prices. So far, unfortunately, the market has stubbornly refused to give us an answer. For the past two weeks, the Dow has remained in the range mentioned above and continues to hover around the lower limits of the uptrend channel maintained since the May 26 low. Periods such as this one are, admittedly, frustrating. But there is no point in trying to read into the market that which is not there. The answer as to the intermediate term direction of prices will be resolved as the pattern develops further, and the only sensible course for the forecaster is to sit back and allow it to develop. As the averages have moved sideways, there has been a noticeable change in the complexion of individual stock patterns. Short-term distributional formations have, in a significant number of cases, been formed and, moreover, in a number of cases, these forma- tions have been penetrated on the downside. What is also interesting, however, is that in a number of cases where short-term tops have, in fact, been formed, downside objectives have been or are close to being reached. In some cases, of course, patterns indicate no short- term distribution whatsoever. The growing number of minor downtrends which have manifested themselves seems to be s,cal1lr;ed, more orJess In, some cas es, certain bank stocks — wou'ld- be notable examples, minor downtrends are taking place within -the -ccmtext of n – favorable long-term patterns. In other instances, not surprisingly, the short-term weakness is developing in cases where the long-range picture was never particularly favorable in the first place. Particular vulnerability appears to exist in those high-multiple issues which have produced third-quarter earnings disappointments. All of which leads us to a few reflec- tions on the subject of technical analysis and its uses. Technical work is thought of by many investors as a s-hort-term timing device or a device for stock market trading. It is, indeed, useful in these endeavors, but it is not these particular aspects which have fascinated us the most in our own 17 years of expenence with stock market statistics. To our mind, the most productive use of technical work is to sort out those issues in which the long-term upside potential is greatly in excess of the apparent risk. Charles Dow, who is, after all, the father of technical analysis, was the first market student to recognize that short-term fluctuations were, in the first place, essentially random and difficult to predict, and a great deal of the market analysis technique that has developed since then has centered around attempts to smooth out price fluctuations so that the under- lying long-term trend could be recognized. It is our feeling that a number of industry groups have, since May, developed patterns indicating sizeable long-range upside potentials. Just a few of the groups in this category are tobacco, natural gas, textile, oil, bank, food chain, building, and some utility issues. Quite obviously, a number of mdivldual stocks not in the'above 'categories ai-so have -similar patterns We'indicated' above our thinking that the – immediate course of the market is unclear. We also think that we have reached a stage where attempts to guess this course are more or less irrelevant. The major task facing the investor at the moment, is to adjust his portfolio so as to give heavy weight to the sort of stock mentioned above — where ultimate profit opportunlties far outwelgh the shorter-term risk factors. We continue to feel that a portfolio aggresslvely committed to issues of this sort represents the best possible investment stance under uncertain intermediate conditions. Dow-Jones Ind.(lIOO a.m.)753.42 S & P (11 00 a. m .) 83.08 AWTmn ANTHQNY W, TAB ELL DELAFIELD, HARVEY, TAB ELL No statement or expr05s,on of opinion or Clny other matler herein contained IS, or Is to be deemed 10 be, directly or indirectly, an oHer or the soliCitation of an offer 10 buy or sell ony security referred to or mentioned The motter IS presented merely for the convenience of the subscriber. While we believe the sourct!s of our Informohon to be rehoble. we In no way represent or guarantee the accvracy thereof nor of the stotements made herein Any action to be token by the sub sCriber should be based on hiS own Investigation and information Montgomery, Scolt & Co, as a limited partnership, and Its partners or employees, may now have, or may later take, positions or trades In respect to any seCUrities mentioned In thiS or any future issue, and such po.sitlon may be different from any views now or hereafter expressed In thiS or any other Issue Montgomery. Scoll & Co, which 15 registered with the SEC as an Investment adVisor, may give adVice to liS Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue

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