Viewing Month: December 1970

Tabell’s Market Letter – December 11, 1970

Tabell’s Market Letter – December 11, 1970

Tabell's Market Letter - December 11, 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 December II, 1970 Now that the dust has settled, it is possible to stand back and take a look at the rather amazing stock market action of December, 1970 and try to assess its probable significance. As we all are awa re by now, during the last week in,November and the first uP.–PWther'more;-umntupalot. OnNovember'rS;–just we ov ek er ;f December, 1970, the Dow closed at 754.24. It advanced for the next 12 consecutive days reaching a closing high on Mon- day of this week of BIB. 66 for a total percentage rise of almost B. On none of the last 11 days of the rally were there fewer than BOO advances on the NYSI;, and on two days the number ot advances exceeaed 1000. The 1244 rising stocks on November 30 set an all-time one-day record. Volume on the rise approached record levels and dally volume twice exceeded twenty million shares. In the process, the industrial index moved to a new high for the year, making it likely that 1970 may go down In history as an advancing year, a prospect which, In May, seemed, to say the least, remote. Comment on the performance was mixed. There is a school of thought, admittedly dWindling, which seems to feel, that, for some reason, It is Immoral for the stock market to go up at this point, and commentators of this persuasion tended to shrug off the performance. The more bullish were inclined to proclaim a new era. The true Significance of the rally can, we think, be understood by placing It in historical context. In order to do this, it is first necessary to answer two questions. (1) Was the advance really unusually large by historical standards (2) If the answer Is yes, what has been the past Significance of rallies of this magnitude In answer to the first question, the best measure of the magnitude of any short-term rise is the peak average dally advance. In the present instance, this was chalked up for the 10-day period ending December 4, during which time the daily average advance was .797 on the Dow. Scanning stock market history since 1942, we find that this is only the twentieth time in 2B years that any rally has posted an average daily advance greater than .7 for an B-12-day period. Thus, the rally was quite clearly unusual in a historical sense. — – tlle-ilistorlcalsignificance;' tiien;hat has been th-e aftermath' of upswJ;;'gS(;f -thi; type The following table lists all of the 20 rallies cited above, together with the market action which followed. PEAK AVERAGE DATE OF RALLY LOW & HIGH IN DJIA DAILY ADVANCE SUBSEQUENT MARKET ACTION !)June-July 1942 102 – 108 .73 Bull Market Ending At 212 in June 1946 2) Mar-April 1943 3)Aug-Sept 1945 4)January 1946 5) November 1954 129 – 136 160 – 178 189 – 203 353 – 3BB .74 …B3 .7''' .B2 Bull Market Ending At 525 in April 19 56 6)March 1955 7)November 1955 391 – 415 454 – 487 .74 .B8 8)December 1958 466 – 499 .73 Bull Market Ending At 744 in Nov. 1961 9) November 1960 575 – 612 .74 Final Phase of 1961 Bull Market to 744 I OJune-July 1962 535 – 590 1.14 Bull Market Ending atlOOO in Feb.1966 I lOct-Nov 1962 558 – 630 1.04 u 12) Nov-Dec 1963 13)Oct-Nov 1966 711 – 767 749 – B20 .B6 .70 Bull Market Ending at 985 in Dec. 196B 14)January 1967 785 – B47 .77 15)Mar-April 1968 I 6) October 1969 825 – 910 820 – B60 .97 .B2 Market RallIed, Then Declined to 631 In May 1970 17)May-June 1970 – 27 Rally to BI8'ln-Dec;-'1970 – – , – 18)July 1970 669 – 735 1. 23 19)August 1970 707 – 765 . B9 20)Nov-Dec 1970 754 – BIB BO 1\.0 the tAble hows, large short-term rallies have tended to occur almost exclusively at major bottoms, or in the early stages of bull markets. There are only two exceptions, January, 1946, when a rally occurred fairly near the top of a four-year upswing, and, most recently, in October of last year where a sharp rally preceded the decline to the May lows. The November, 1960 advance occurred fairly close to the end of the 1961 bull market, but It preceded that market's most dynamic phase. It is also in- teresting to note that a series of advances of magnitude equivalent to this one have occurred since the lows of last May. A repeated series of powerful short-term rallies has, recently, tended to occur around market bottoms, i.e., 1962 and 1966-1967. We thus feel that the present rise Signifies not an unhealthy condition, but the sort of latent buying power which, in the past, has fueled bull markets. We think that the strength shown In recent weeks strongly suggests a highly' 'positive market environment for 1971. Dow-lones Inc. lilOO a.m.) B25.5B ANTHONY W. TABELL SA&WPT(m1n00 a.m.) 90.18 DELAFIELD, HARVEY, TABELL No statement or expression of opinion or any other maller herein contained IS, or IS to be deemed to be, directly or mdlfectly, em offcr or the soliCitation of on offen to buy or sell any sncunty referred to or mentioned The matter IS presented merely for the convcnlence of the subSCriber While we believe the sources of our ,nformatlon 10 be reliable, we In no way reprcsent or guarantee Ihn accuracy thereof nor of the statnments made herein Any action to be talen by the subSCriber should be based on hiS own Investigation and Informatlon Montgomery, Scott & Co, as a limited partnership, and Its portnnrs 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 position may be different from any views now or hereafter expressed In thiS or any other Inue, Montgomery, Scott & Co, which 1 regIstered w1th the SEC as an Investment adVisor, may gIve adVice to lis Investment advISOry ond other customers Independenffy of any statements mode In thiS or In any other Issue

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Tabell’s Market Letter – December 18, 1970

Tabell’s Market Letter – December 18, 1970

Tabell's Market Letter - December 18, 1970
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,———————————————————————————————— ., I TABELL'S MARKET LETTER —J 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE December 18, 1970 Like any other profession, that of market-letter writing has its traditions and one of them – . isth.e..monttuo consult.the orac;les il.Jld put together a forecast…….,.,.. . . . .- .-.- — .-r.——' -…-0– …. – -.. for the upcoming year. This letter has traditionally divided this exercise into two parts — the first of which discusses the market action of the previous year, while the second attempts to look forward. The initial segment, a glance back at 1970, is offered herewith. A forecaster, it seems to us, must be ready, as his readers certainly are, to poke a bit of fun at his own forecasts, and we are, therefore, wryly amused at our own efforts of a year ago. Our thoughts centered around the fact that, as of that time, S&P 500 Stock Index was down 19 from its November 1968 high. We noted the fact that declines of this size had occurred on four previous occasions in the post-war period, and indicated that, subsequent to these declines, the market was, at worst, about the same a year later and, in most cases, considerably higher. We suggested, therefore, that the aftermath for 1970 might be, in fact, similar, and that, by the end of 1970, the Dow could well be at the same level or a bit higher than it was in December, 1969. Lo and behold, the forecast proved correct and, the Dow, then at 780, is now at 820. We would prefer, obviously, to forget the circuitous detour via 631 over which the Dow traveled in order to arrive at our forecast figure. We raise the point here for two reasons. The first is, that it constitutes, we think, an object lesson of the value of keeping one's cool even through the most trying of market times. Investors who refused to succumb to panic in the Spring of this year have, in all probability, fared better than those who quaked at the imminent end of the world last May. The second -reason-is- that–i-t-is- market .action since.,….. this pattern will, largely, determine the outlook for 1971. Let us, therefore, review the year once more. The year began with the Dow having declined sharply from a late 1969 level in the mid- 800's. As 1970 commenced, the market stabilized and the first three months constituted a series of swings back and forth between 790-800 and 740-750. There was some eVidence at that time that the monetary stringency, characteristic of the previous year, had been relaxed, and the possibility that the Dow might begin a long, slow base formation in the 750-800 range had, at least, to be considered. Then, however, panic took over, with the Penn Central bank- ruptcy and concomitant fears of a liquidity crisis being the operative events connected there- with. The l70-point slide of April-May constituted the typical final liquidation phase of a bear market — the denouement of yet another era in which investors had to learn — the hard way — that the stock market was not a royal road to riches. The recovery was also typical, and, with the August rally, the Dow was back again at the general level where it had started the year. Repeated attempts to drive below 750-740 in September-October were all turned back by evident demand at that level just as they had been in January-March. The final triumphant capstone to the year, of course, was the November- December rally in which the major indices sailed ahead to new highs for the period. Now, even the novice technician will recognize the textbook definition for the sort of action ,of'course,-the familiar bottom And ;-it – is a common formation simply because the psychological factors which caused its formation in 1970 repeat themselves with regularity. A demand level exerts itself, is temporarily over- come under the impetus of irrational fear and, on the inevitable rebound, the same demand is again manifest at the previous level. It is, in summary, our opinion that the 1970 action of the equity markets constitutes an instance of just this sort of reversal and, in order to formulate a forecast for 1971, it is necessary to understand the implications of this pattern. We intend to discuss them in next week's issue. Dow-Jones Ind. (1100 a.m.) 822.36 S&P (1100 a.m.) 90.10 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL AWTmn A VERY MERRY CHRISTMAS TO ALL No statement or expression of opinion or any other matter herein contolned 15, or IS to be deemed to be, directly or indirectly, on offer or the 5OIUllollon of on offer 10 buy or sell any seC\lrlly referred to or mentioned The molter IS presented merely for the convenience of the subSCriber While we believe the sources of our Information to be rehab Ie, we in no way represent or guarantee the accuracy thereof nor of the statements made herein Any action to be taken by the subscriber should be based on hiS own Investigation and information Montgomery, Scott & Co, as a limited partnership, and Its partners or employees, may now have, or may later take, positions or trades In respect to any secunhes mentioned In Ih,s or any future ISsue, and such posllion may be different from any VieWS now or hereofler expressed In Ih,s or any other Issue Montgomery, Scott 8. Co , which IS registered with the SEC as on Investment adVisor, may give advice to Its Investment adVisory and other customers Independently of any statements mode ,n this or In any other Issue

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Tabell’s Market Letter – December 23, 1970

Tabell’s Market Letter – December 23, 1970

Tabell's Market Letter - December 23, 1970
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TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCH ….NGE MEMBER AMERICAN STOCK EXCHANGE December 23, 1970 The stock market forecast for 1971 presents, it seems to us, a fascinating paradox. The – itseH;'l.t opfimistic'Yet; hand-,the- very nature of the forecast raises some fascinating questions about changes in the investment environment for the entire decade of the 1970' s. Let us first of all dispose of the outlook for the coming year. All the data, as we indicated above, seem to suggest that it will be a good one. In the early part of 1970, the monetary stranglehold which had been maintained on the economy was released, and, during the year, the money stock has been allowed to grow at a normal, or slightly above normal, rate. We think it axiomatic that this growth will be reflected in an expanding GNP and a better corporate profits environment by the end of 1971, albeit that growth in the first part of the year will un- doubtedly be slow and accompanied by continued rising unemployment. The existence of a substantial gap between actual and potential GNP, moreover, augurs well, in our view, for a continued expansion in 1972. This outlook is reflected perfectly, it seems to us, in the technical pattern of the stock market. We indicated last week our belief that all of 1970 constituted a head-and-shoulders accumulation formation on the DJIA. Applying classical point-and-figure analysis to this accumulation area results in a number of upside objectives, but the most plausible one seems to be a projection of 1065 or a level slightly above the all-time high posted in 1966. When might this level be reached If one projects the upward slope of the average since May forward into the future — a reasonably valid statistical procedure with an upswing as -. – well'defineoastlfe-pres ent 'th might be achieved sometime in the first quarter of 1972. This is a prospect which, it seems to us, jibes rather naturally with the economic outlook suggested above. Technical work, in other words, suggests strongly that we are now in the relatively early stages of a fairly typical bull market. This is confirmed in almost classic fashion by the type of market leadership we have been having and are apparently likely to have for the foreseeable future. Since May, the best performing issues have been those of relatively high quality, a manifestation normally, associated with the transition from bear to bull market and the initial stages of a new rise. As time goes on, and this will undoubtedly occur sometime during 1971, leadership should shift to cyclical, medium-grade issues, and, later on, of course, to secondary and tertiary speculative items. Indeed, the first faint glimmers of such a shift can now be seen on the market horizon. We are, in summary, saying that the- most plausible 1971 forecast calls for almost a text- book sort of a bull market and yet, placed in a longer term context, this forecast, as we said, raises some rather interesting questions. We indicated the probability of a modest new high on the Dow — this high possibly being reached in early 1972 — in other words, an upswing of about 60 lasting a bit under two years. It must be noted that this is in sharp contrast with the sort of upswing typical of the period between World War II and the mid 1960's. At that time, advances tended to last three to four years and involve rises of around 100. Our fore- – cast'environment -is 'more s imilar-tothe '1966-1968 upswing-in which-a3 2- advance'covered a 26-month period. It is also worthy of note that, if our forecast is correct, the Dow at the end of the year will have remained in a trading range between 600 and 1000 for a seven-year period — action quite dissimilar from the post-war experience. We think, in other words, that there is evidence to suggest that the basic market environ- ment which has characterized the post-war period is slowly changing. This new environment could well be characterized by shorter and less dynamic swings in the overall market together with a lack of support from the secular uptrend which was the basic force associated with the market for a 20-year period. We are convinced that, in this sort of environment, investment opportunities will abound but that the opportunity to achieve growth by inaction — a technique which worked surprisingly well for a long period — may well no longer be present. Dow-Jones Ind. 823.11 S&P 90.10 AWTmn ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL WE WISH YOU ALL A VERY HAPPY NEW YE'AR – ,- No statement or exprCSlon of Opinion or any other mailer herem contolned is, or IS to be deemed to be, directly or Indirectly. an offer or the SOIlCIlolion of on offer to buy or sell any security referred to or menfroned The moiler 15 presented merely for the convenIence of the subWlber Wnlle we believe the sources of our Informalion to be relioble, we m no way represent or guarantee the accuracy thereof nor of the statements mode herem Any adlon to be token by the sub scuber hould be based on hiS own Investigation and Information Montgomery, Scott & Co, as a limited partnership, and Its partners or employees, may now have, or may later toke, pasilions or trades in respect to ony securilies mentioned m thiS or any future Issue, and such pOSlhon may be different from any views now or hereafter expressed m thiS or any other issue Montgomery, Scott & Co, which Is registered With the SEC as on Investment advisor, may give adVice to Its Investment odvlsory and other cusfomef5 independently of any statements made m thiS or In any other Issue

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Tabell’s Market Letter – December 30, 1970

Tabell’s Market Letter – December 30, 1970

Tabell's Market Letter - December 30, 1970
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– — — TABELL'S MARKET LETTER I J 909 STATE ROAD, PRINCETON NEW JERSEY 08540 DIVISION OF MEM6ER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE December 30, 1970 For some years now, we have studied the familiar seasonal tendency of the stock marl'ett9 stage a year-end rally, jl.nd it !;las peen the custom oUhis lettEr eac)1December. to point out some of the conclusions that can be derived from a study of this phenomenon. We have suggested that an exhaustive study of chart patterns since the Dow-Jones Industrial Average first was computed in 1897 indicated that such a rally, however minuscule, invariably had taken place. – A number of interesting facts about the market action of the year end may be noted. (1) – As stated above, an identifiable year-end rally has taken place in every year since 1897. This rally often has been of great magnitude with advances as great as 28 having been recorded. It also, on occasion, has continued with only minor interruptions for as long as SlX months into the new year. However, on other occasions, it has been of only a few days' duration, reaching a top extremely early. Thus, in 1960, 1962 and, most recently, in 1970, the rally reached a peak in the first week in January. In 1961, 1964 and 1967, it continued into February or March. In 1965 and 1966, the rally peak was reached in early February. (2) – There has been a perSistent tendency for the rally to begin early in years when the market has been up, and late in years when the market has been down. In recent upward years, 1959, 1963 and 1967 are examples, the rally commenced from early December. In 1962, 1966 and 1969, it began late in the year. In 1970, a strong year in the second half, the rally actually began in late November. – – — -( 3) – The impertant–thing- to watch in -connection- with -rrfonlhs — — of the new year is the low for the previous December. This low has been broken in forty- three years out of the past seventy-one. However, in twenty-five of these forty-three cases, it was broken in January and February. Since 1937, it has never been broken later than mid-March, with the single exception of 1965. Thus, if the market is able to hold above its December low for the first 2 1/2 months of the year, chances become good that this low will not be broken For example, in 1960, 1969 and 19'70, the December low was broken early in January. In 1961, 1963, 1964 and 1967, it never was broken. 1965, as noted above, was unusual with the December, 1964 low of 850. 19 being broken in June when the Dow reached an intra-day low of 832.74. (4) – In years when the December low has been broken, the subsequent trend has been downward two-thirds of the time. 1960, 1962, 1966 and 1969, of course, are typical cases. Again, 1965 was an exception. 1970, of course, was a down year in the first half. (5) – The magnitude of the rally is an important clue as to the year's market trend. For example, an advance of 10 or more from the December low has been followed by an upward or neutral market in twenty-nine of the thirty-four years that such an advance has occurred. An advance of less than 10 from the December low before an identifiable cor- rection takes place has been followed by a downward market in twenty-four of the thirty- six years. In 1961, 1963 and 1964, the year-end rally approximated Q. In 196.Qk1962 and-1970, foro-example, -it was-less than thiS-figure;- …. c- – – —— – – (6) – The length of time in which the rally continues into the new year also is important. For example, in eighteen years the rally continued into March or later. In sixteen of these eighteen years the eventual trend was upward. In 1964, the year-end rally continued into March and m 1961, 1963 and 1967, into February. In the coming year, therefore, the December low of 787.45 is an important point to watch. If the present rally tops out in early January and breaks this low, it would be strong indication of probable market weakness. A like indication would be failure of the Dow to advance 10, or to approximately 865. On the other hand, if a rally continues into February or March, or reaches above 865, an extension of the upswing might be indicated. Dow-Jones Ind. 841. 33 ANTHONY W. TABELL S&P 92.27 DELAFIELD, HARVEY, TABELL AUiJT-PBrok No statement or expression of opinion or any olher matter herein contolned IS, or IS to be deemed to be, directly or indirectly, on offer or the solicitation of on offer to buy or selJ ony security referred to or mentioned The moiler 1 presented merely for the convenience of Ihe subscriber While we believe the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the made herein Any action 10 be loken by tho sub- sCClbor should be based on hiS own investigation and information Montgomery, Scott & Co, os a limited partnership, and Its partners or employees, may now have, or may loter lake, or trades in respect to any seCUrities mentioned In thiS or any futuro 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 with the SEC as on investmenl adVisor, may give adVice to lIs Investment advISOry and olher cvstomers mdependently of any siotements mode ,n thiS or In any other Issue

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