Viewing Month: February 1971

Tabell’s Market Letter – February 05, 1971

Tabell’s Market Letter – February 05, 1971

Tabell's Market Letter - February 05, 1971
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TABELL'S MARKET LETTER 909 STATE ROAD PRINCETON, NEW JERSEY 08540 DIVISION OF MEMeER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE February 5, 1971 Those who are forced to comment daily on the action of the stock market have always had our sympathy. In the bulk of instances, the significance of a given day's action is either limited or -obscure. . and, under these c..onditions, it becomes difficult to find a theme around which to build a– -;——- — —- -,– ———– 0- – – —- .h . -nomarket commentary. Over the past couple of weeks, however, such dlfficulfy-l1a-s preseiitee – , itself, since it was easy to center market comment on one obvious facet — the new record levels of trading volume. And volume has, indeed, been setting records. The 22,030,000 shares which changed hands last Tuesday constituted a new peak in daily trading activity, and, in the week ending January 29, 100,870,000 shares were traded on the New York Stock Exchange, an all-time record for a one-week period and the first time in Exchange history that weekly trading had passed the 100,000,000 mark. Indications are that this mark will be exceeded this week. Since volume statistics obviously fall within the province of the stock market technician, we feel our responsibility to comment there on, and a few preliminary thoughts are offered herewith. They can be summarized as follows 1) There is absolutely nothing historically unusual about the current high level of activity, 2) it isn't all that high anyway, and, 3) it is probably going higher. First of all, trading volume is, at least to some degree, a reflection of the total number of shares listed. This latter statistic has been a constantly increasing one ever since the 1930's. As a consequence, there has tended to be a secular rise in trading volume. The rise actually was dampened somewhat through the 1950' sand 1960' s by a sharply decreasing rate of turnover so that volume in those years did not actually increase as fast as did the number of listed shares. Since 1960, the rate of turnover has gradually increased and appears to have entered a slow secular up- trend although at current levels — an annual turnover rate of around 20 of total shares listed — it has still done no more than return to where it was in the late 1940' s. In any case, though, the conrbmation ofgrOwing-USfings anafising turnover oBviously wil1 terrene' proaUce'increased- tfa(r— ing activity. Moreover, sharp increases in volume are a normal concomitant of the early stages of almost all major upswings. The rise, so far, can even be called modest when conSidered by historical stand- ards. Our practice is to smooth New York Stock Exchange volume by conSidering it on a 25-week total basis. As of the end of last week, volume for the past 25 weeks had risen to 1,650 million shares, up moderately from the 1970 low of 1,270 million shares. Now, it is almost inevitable that this figure will rise further. If volume remains steady around recent levels, it should rise within a couple of months to above the 2,000 million share level. This 32 advance will hardly be abnormal. From mid-1964 to 1966, for example, 25-week volume doubled, and between 1953 and 1954, it increased by more than 150. We would, therefore, not be at all surprised to see activity increase sufficiently to bring the total 25-week figure to close to 2,500 million shares some time in 1971. Such a figure would imply a few peak days where daily trading approached the 30 million share level. Moreover, as we suggested above, despite the records being set on the New York Stock Exchange, total securities market activity is still well below past peaks. American Stock Exchange volume, although it has just recently started to increase, had recently been running at the 3- 4 million share level as compared to peak days in excess of 10 million shares in 1968. Over-The-Counter activity, while not measurable, is quite obviously running far, far below the level of a couple of years ago. rs-iStsi ntcreu ec'us irgr enni ft itcraandCi neg activit Some y li when ghtis cshloedse'loyntahneaSily.tzuedatiisonnio;t Yrcetailvliydianlgl tthacttsiuvriptriysinign,towuhPastitdheeann,ct-1 downSide volume. It is interesting to note that, while total volume is currently in the process of setting records, downSide volume, again measured on a 25-week basis, has been decreasing steadily and last week declined to its lowest level since early 1967. This phenomenon, also normal in the early stages of bull markets, has at least negative Significance since it strongly tends to suggest a lack of immediate vulnerability in the present market situation. Major tops in the past have inevitably been accompanied by one of two events, a sha. rp increase in downside volume while total volume remains steady, or, alternatively, a decrease in upside activity. Neither phenomenon has yet taken place, and it would take at least six months for a reversal in volume trends to be completed. The strong implication of today's volume statistics, in other words, is that the current upswing still has a relatively long life ahead of it. Dow-Jones Ind. (1100 a.m.) 872.74 ANTHONY W. TABELL S&P (1100 a.m.) 96.46 DELAFIELD, HARVEY. TAB ELL AWTmn No statement or expressIon of opinIon or ony other molter herem contained Is, or IS to be deemed to be, directly or Indirectly, on offer or the 501lcdollon of on offer to buy or sell any security referred 10 or mentioned The motter ! presented merely for the convenIence of the subscnber While we belreve the sources of our information to be reliable, we in no way represent or guarantee the accuracy thereof nor of the stotements mode herein Any action to be token by the sub scriber should be based on hIS awn rnvestlgatlon and Informatron Montgomery, Scott & Co, as a lImIted partnersh,p, 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 posrtion may be dIfferent from any vIews now or hereafter expressed In thrs or any other luue. Montgomery, Scali & Co, whICh IS regIstered WIth the SEC as an Investment advrsor, may gIVe adVIce to Its investment adVISOry and other customers Independently of any statements mode In thIS or In any other Issue

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Tabell’s Market Letter – February 12, 1971

Tabell’s Market Letter – February 12, 1971

Tabell's Market Letter - February 12, 1971
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— —— – -.. — ……… TABELL'S MARKET LEIIER ,L 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMaER NEW YORK STOCK EXCHANGE MEMaER AMERICAN STOCK EXCHANGE – February 12, 1971 The stock market continues to behave with an almost eerie normality. Three Weeks ago, we ven- tured to suggest in this space that the historical record failed to support the contention that a short- – terll!Lcprrctton .was ,neces sarilyJikelyand, that ..!Lcollttn!liIJgadvance1!!!',o!lJdnotbcunu sgal. Sin4'—-,… that time, the Dow-Jones Industrial Average has advanced some 30 points. Last week we suggested that volume, which, at that time, had just set a daily record of 22 million shares and a weekly record of 100 million shares, could probably increase still further with daily peaks approaching the 30 million share level. Two days later, on Tuesday, trading exceeded 28 million shares, and this week's total volume will probably exceed 110 million shares. The rise, it seems obvious to us, is quite soundly based. This is true, not only when purely technical factors are considered, but also, we think, based on fundamentals as well. The following table shows the 1970 earnings for the 30 stocks in the Dow-Jones Industrial Average (in some cases estimated), a consensus estimate of 1971 results for each company, the high and low pie ratio at which each stock sold between 1966 and 1970, and the price at which each stock would sell, applying these pie ratios to estimated 1971 earnings. Per Share Earnings 1970 1971-E Multiple Range Current Possible High & Low 1970 – 1966 Price Based on 1971 Earnings Allied Chemical 1.55 1.85 29 – 10 28 53 – 19 Aluminum Co. 5.20 5.50 20 – 9 65 110 – 50 American Brands 4.03 4.35 13 – 7 46 56 – 30 American Can 3 . 55 3 . 90 17 – 9 42 66 – 35 American Tel & Tel 3.99 4.30 17 – 12 53 73 – 51 Anaconda 3.90 3.00 16 – 5 22 48 – 15 Bethlehem Steel 2.05 2.50 15-7 23 38-18 Chrysler DuPont -6.76 2.00 7.65 15-7 29 l 29 12 30-14 2-21 .Ui7 Eastman Kodak 2.55 2.85 37-22 77 105-63 General Electric 3.60 4.50 32 – 17 105 144 – 77 General Foods 4.72 5.00 23 – 14 83 115 – 70 General Motors 2.09 6.50 17 – 11 82 110 – 72 Goodyear Tire 1.80 2.50 17 – 11 31 43 – 28 International Harvester 1.92 2.75 17 – 8 34 47 – 22 International Nickel 2.80 3.20 28 – 12 46 90 – 39 International Paper 1.85 2.20 18 – 10 36 40 – 22 Johns-Manville 2.02 2.40 19 – 11 44 46 – 27 Owens-Illinois 3.90 4.05 26 – 10 59 105 – 41 Procter & Gamble 2.80 3.00 25 – 14 59 75 – 42 Sears Roebuck 2.95 3.25 26 – 17 81 85 – 55 Std. Oil of Calif. 5.36 5.60 16-7 53 90-39 Std. Oil of N.J. 5.90 6.25 17 – 9 72 106 – 56 Swift & Co. 2.24 2.60 22 – 9 36 57 24 Texaco 3.02 3.20 16 – 8 35 51 – 26 Union Carbide 2.64 2.90 21 – 11 44 61 – 32 United Aircraft 4.20 U.S. Steel 2.72 -Wes-tingho-UseElecti-iC-3-0-6 4.40 3.75 4'700 n 25 – 6 38 16 – 8 33 g'(4'7'7 110 – 26 60 – 30 1 10if-'S6 – Woolworth 2.30 2.50 19 – 8 45 48 – 20 DOW-JONESIND.AVER. 52.28 61.58 885 1315 – 660 The results are interesting. According to the projection, Dow earnings should advance some 18 for 1971. Assuming it is correct, then almost half of the 40 rise in the Dow to date has been recognition of improved 1971 prospects rather than a simple advance in multiples. The projected price probabilities for the Dow are equally interesting. Even the lower end of the range is above the 1970 low emphasizing again the abnormality of last summer's prices. The median figure between the high and low multiples is 927, and, based on peak multiples, a price of better than 1300 could be justified on the basis of estimated 1971 results. Of even more interest is the fact that all but six of the 30 stocks in the average are in the lower half of their prOjected price range and 11 of the 30 are in the lower quarter of that range. The numbers strongly suggest, it seems to us, that a great part of the rise so far has been based on probable earnings recovery and that speculative mark- up is only a minor factor in the advance so far. Dow-lones Ind. (1100 a.m.) 887.46 S&P (100 a.m.) 98.10 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTlffiR No stotement or expreSSion of OPiniOn or any other moiler herem contained IS, or IS to be deemed to be, directly or Indirectly, on offer or the soliCitation of on offer to buy or sell any security referred to or mentioned The moiler IS presented merely for the convenience of the 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 statements mode herein Any action to be token by the subscnber should be based on hiS own Inveshgatlon and Informahon Montgomery, Scott & Co, as a limited partnership, and Its portners or employees, may now have, or may lafer fake, poSItions or trades In respect to any secufllies 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 Issue Montgomery. Scott & Co. which IS registered WIth the SEC as on mvestment adVisor, may give adVice to Its Investment adVISory and other customers mdependently of any statements mode m thIS or m any other issue

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Tabell’s Market Letter – February 19, 1971

Tabell’s Market Letter – February 19, 1971

Tabell's Market Letter - February 19, 1971
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TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 06540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHA.NGE February 19, 1971 It can't, we all should certainly be aware, go on forever — it in this instance being the ,..,…. meteioricrafifofstocK'rriatKetadvancewni'ahCarrietr'tlteDowJOrfe-S'Iii'dustttalAverage'tb'anoth-er -new …. high of almost 900 this week. The question, of course, is what happens next We have previously indicated our impatience with the view that the market is in need of a correction. This sort of thinking typifies a kind of perverted puritan ethic which seems to afflict many stock market observers. These commentators seem to view each stock market advance as akin to a drunken debauch which must be paid for with a hangover on the morning after — and the greater the debauchery, the greater the ensuing misery. We have suggested that this view flies in the face of all recorded market history, which, in effect, states just the opposite — that the notable feature of the early, dynamic stage of bull markets is the paucity of substantial corrections. Nonetheless, as we said, it can't go on forever, and around about now it would be logical to expect our rampant adolescent bull to start showing some of the signs of early middle age. And, indeed, a few such signs are, in fact, beginning to appear. Progress of the advance to date has been normal indeed. The number of weekly new highs reached 540 for the third week in January, and this figure has since sloughed off slightly, although it may well show another spurt after mid-March when the new-high criterion is revised to include 1971 only instead of 1970-1971. The spread between weekly advances and declines, taken on a 25-week basis, reached its peak two weeks ago and the differential has been narrowing for the past couple of weeks. Here again the data suggests that the differential will continue to narrow as 1971 progresses. Is this any cause for alarm Not at all. In fact, we selected these two indicators for discussion for the very reason that they are the most useful in pinpointing the end of the early stage of a bull market and suggesting the transition into a more- maturE,' phase. -In f963, -for- example; thE! -peak spread between new highs and new lows occurred in April and the widest advance-decline spread took place at Just about the same time. At that time, the Dow-Jones Industrial Average was at 720 and it was, ultimately, to reach 1000 some 3-1/2 years later. Similarly, both indicators reached their peak in April 1967 with the Dow at around the 900 level. It was subsequently to move to 990 over the next year and a half. There is, in other words, no hint in the available statistics that the end of the advance is in sight. There is, however, some real evidence thaJ the upswing is entering a new stage. We have previously dubbed this sort of transition, which invariably occurs around this point in a bull-market life-cycle, as the change from a non-selective to a selective phase. One of the more delightful features of the market since last summer has been the very promiscuousness of the advance Over this period, it took real genius to find a stock that didn't go up — at least a little bit. It was the sort of time when the famous dartboard approach to common stock selection, trotted out by a senator a few years ago, was probably at its peak of efficiency. In the ensuing months, we think things are going to become a bit more difficult. Many stocks are now beginning to reach upside targets and are likely to be inferior performers at least until a new pattern forms. In a minority of cases, at least, the possibilities of intermediate scale weakness are present. It is well to remember just where, at the 890 level, the Dow-Jones Industrial Average is today in comparison to its past price history. It is just underneath the trading range between 900 and 1000 which contained it from late 1968 to mid-1969. Many stocks show similar patterns in that -they. are, .currently,justunderneath -the overhead 'supply-from their-1968-1969pea'ksIn other-words;- – the panic underevaluation in these stocks brought about by the 1969-1970 bear market has just about been corrected. Now, in a great many cases, these companies, which are now testing their previous peaks, are fundamentally better situated today than they were two years ago. If this is true, they deserve to penetrate the supply and move into new high ground. On the other hand, those companies whose prospects have not markedly improved are probably as good sell candidates today as hindsight tells us they were at the same price level a couple of years back. The task of separating the truly-imprCJ,'- ed companies from those whose price advance has reflected nothing more than improved investor psychology will be a truly challenging one from here on out. Dow-Jones Ind. (1100 a.m.) 881.43 S&P (1100 a.m.) 97.22 ANTHONY W. TABELL AWTmn DELAFIELD, HARVEY. TASELL No statement or expression of opinion or any other matter herem contomed Is, or is 10 be deemed 10 be, directly or Indirectly, on offer or the 5oltcltalton of on offer to bvy or sell any seamty referred to or mentioned The matter IS presented merely for the convenience of the subscriber Whtle we believe the sources of our mformatlan to be reliable, we m no way represent or guarantee the acctJracy thereof nor of the statements mode herein Any action to be laken by the subcrlber should be bosed on hIS own Inveshgoilon and Informotlon Montgomery, Scott & Co, as a limited partnership, and 11 partnen or emplolees, may now have, or may later toke, POSitionS or trades in respect to any securities mentioned In thiS or any future Issue, and such poslilon may be different rom any Views now or hereafter expressed In HilS or any other Issue Montgomery, 5c01l & Co, which IS registered with the SEC as on Investment adVisor, may give advice to liS Investment adVisory and olher customers Independently of any statements mode In th15 or In any other Issue

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Tabell’s Market Letter – February 26, 1971

Tabell’s Market Letter – February 26, 1971

Tabell's Market Letter - February 26, 1971
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.—- '——- TABELL-S MARKET LEIIER J 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER A.MERICAN STOCK EXCHANGE February 26, 1971 We noted in last week's letter what appeared to us to be a change in character in the stock market, centering our comment on the fact that a more selective phase appeared to be emerging. As would normally be expected, this new phase seems to be ushering in a new market leadership. -One wayofkeififfngtrecICofcliang!lig'mifrJ'Elt lea-dershlp ifhesfudYbnntennectIater;;r;n' group rela- , tive strength action. The following table divides the Standard & Poor Industrial group indices into six categories reflecting their action relative to the general market over the short to intermediate term. Column I includes those groups which had recently been showing intermediate relative weakness but are now evidencing signs of improvement. The second column consists of industries where the recent improvement has been particularly sharp and dynamic, and the third group comprises those industries which have shown continued above-average relative action for a period of time with no Sign of deterioration. The last three columns are the converse of the first three. Column 4 includes those indices which had been strong but are beginning to show preliminary signs of weakness. Column 5 includes those where the weakness is more pronounced, and Column 6 lists industries where relative weakness has persisted over a protracted period. 12 3 4 5 —'6'– Alr Conditioning Aluminum Broadcasters Aerospace Apparel Agricultural Mach. Auto Equip. Air Transport Bread &Cake Appliances Autos Cigarete Mfrs. Drugs Elec. Equip. Food Banks B,scuit Bakers Business Mach. Bldg. Material Chemicals Mach-Industrial Packaging Coal Hotels Const. Mach. Mall Order Nafl Gas OiI-Dom. Canned Foods Cans-Bottles Confectionery Railroads Dept. Stores Mobile Homes OiHnt'l. Copper Com Refiners Discount aores OnProducers Rubber Distillers Life Insurance Home Fum. Oil Well Mach Soaps Grocers Machine Tools Land & Real Est. Retail Soft Drinks Heating &Plumbing – Macn .-Specnm'yC–…,…——LeIsure Time RooC&WaIlBd Investment Cos. Sulphur Meat Packing Sugar Lead & Zinc Synthetic Fibers Metal Fab. Metals Textiles Pollution Conn Paper Publishing Steel Radio-TV Telephones Shoes Steam Gen Mach Truckers The first caveat that should be noted about the table is that it should not be used as a buy and sell guide. It is, first of all, based on action relative to the overall market so that even groups showing below- average action may be in major uptrends. Secondly, a great many groups showing intermediate term de- terioration continue to show attractive long-term action and, therefore, constitute strong holds or buys on weakness, examples of this being, in our opinion, cigarete manufacturers, mobile homes, natural gas pipe- lines, etc. Moreover, groups which have been weak over the recent past may have sizable upside poten- tials which make them attractive at present price levels. Banks, grocers and selected paper issues would be examples of this category. Conversely, for reasons unrelated to relative strength. many stocks in the improving categories may be unattractive as new purchase candidates. What the table does show, however, is those areas which have, in fact, provided recent market leader- ship, and here we think a glance shows that that leadership can be summed up in one phrase, 1. e .. cyclical issues. The most meteoric relative improvement of late has been in such highly cyclical groups as aero- are-. space,' air transport,industrial 'machinery 'and 'railroads.-Meanwhile;-prelimfriary' signs'of improvement being seen in aluminums, building materials, chemicals, machine tools, synthetic fibers and textiles. Such a shift is, of course, perfectly normal at the present stage. As investor confidence slowly returns, coupled with an improved business outlook, the market tends to be more and more willing to look ahead for earnings improvement to the latter part of 1971 or early 1972. It may be argued, of course, that first and second quarter earnings for many cyclical companies will be, in fact, disappointing, but, this is a factor we feel already discounted in the present prices of a great many cyclical stocks which, despite their recent improvement, are still modestly priced by historical standards. We think, in other words, higher grade cyclical companies may well constitute attractive areas for new investment. Dow-Tones Ind. (1100 a.m.) 878.97 S&P (1100 a.m.) 96.73 ANTHONY W. TABELL AWTmn DELAFIELD, HARVEY, TABELL No statement or expression of opinion or any other motler herem contolned IS, or 1 10 be deemed 10 be, directly or Indirectly. an ,offer or the SOllCIIolion of on offer to buy or sell any security referred 10 Of mentroned rhe trlaller rs presented merely for theconvel1lence of the subscriber Whrle we belreve the sources of our Informotlon to be relIable, we In no way represent or guarantee Ihe accuracy thereof nor of the statements mode hereIn Any actIon to be token by the sub scriber should be based on hrs own Investlgatron and InformatIon Montgomery, Scott & Co, as a limIted partnersh,p, and Its parlne or employees, may now have, or may later toke, positIons or trades m respect to any securltles mentIoned In thIS or any future issue, and such posrtron may be dIfferent from any.vlews now or hereafter expressed In thrs or any other issue. Montgomery, Scott & Co, wtllch IS regIStered Wllh the SEC a an 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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