Viewing Month: May 1971

Tabell’s Market Letter – May 07, 1971

Tabell’s Market Letter – May 07, 1971

Tabell's Market Letter - May 07, 1971
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I — …. . . . . T ——. TABELL'S MARKET LETTER – – – -'- — —– ——- — ——— 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK E)(CHANGE, INC MEMBER AMERICAN STOCK eXCHANGE May 7, 1971 Well it finally happened. The crisis, nay, the catastrophe, about which a whole generation of '-, ,. Cas sandras ohas .been 'prating 'for;lO-r-thesemany-yearsTfinallY'took'place–during -thei'irst'weekof May,1971. We had, in short, a real live run on the U.S. dollar. In the corridors of Whitehall and the Quai d' Orsay and on the banks of the Rhine, lamps were burning far into the night. In Zurich the gnomes were dancing nervously about their cauldrons. For as the European central banks this week ceased their support of the U . S. dollar, that ultimate horror against which we have long been warned — devaluation of the dollar in terms of foreign currencies — came a step closer to reality. And yet, the average perennial bear of the international money market must have felt, at week's end, much like a member of one of those religiOUS sects who are periodically predicting the end of the world on a specific date, when he awakes on the morning of the Final Judgement to find every- thing pretty much as before. The Dow-Jones Industrial Average wound up the week modestly lower than it had begun. At last reports from Washington, the dome was still on the Capitol, and on Nassau Street, Princeton, New Jersey, at least, bread lines appeared to be totally absent. What we are saying, of course, is that the stock market's response ins h ru g g i ng off the events of the week was probably the correct one. The result of this week's activity in European money markets will undoubtedly be upward revaluation of key European currencies, whatever techni- cal device for accomplishing this is finally chosen. This, in one sense, at least, will constitute the long-heralded dollar devaluation. And yet, the effect of all this on an economy where net ex- ports constitute less than 1/2 of total GNP will probably be something close to nil. A rise in the price of Volkswagens, after all, is hardly calculated to send Am e ric a n Capitalism into a tail- spin. There was, however, we think, a message buried in the events of the week and, herewith, –our'attemptto-ferretltout. . – – — – – — We suspect that it is no coincidence that the run on the dollar took place at exactly this point in time, and we think that the trigger for that run was a pronounced swing in U S. monetary policy which has become increasingly evident in the available statistics for the first four months of 1971. That this policy set off a certain sequence of events in the international money markets is a matter, to us, of little consequence. The implications of the change for the health of the domestic economy could, however, be serious indeed. Far and away the best short summary of this prospect is pOSited-by Milton Friedman in the May 3 issue of Newsweek. Dr. Friedman begins by pointing out that the rate of growth in monetary aggre- gates from January to March was the greatest for any two-month period in the past quarter century. This money explosion comes at the end of what had, in our view, been a period of highly rational and successful monetary policy in 1970, during which year monetary aggregates rose at a rate rough- ly compatible with the physical abilities of the economic system to expand. This rate of monetary growth contributed to an end of the slump in real GNP, a gradually declining rate of inflation, im- proved profits in the first quarter of 1971 and a recovering stock market. The effects of 1970 policy will undoubtedly continue through 1971, and further economic recovery along with reduced inflation should result, together with stabilized and ultimately reduced unemployment. And yet, while the essential rightness of last year's policy should have been apparent, there were and still are those, in our political society, who are continuously crying for more. To what extent recent federal policy constitutes acquiescence to these elements we cannot say. But if the trend – continues and 'we stress -the-word' if ;-it can -have, it seems to 'us 'only- tWo results, renewed 'in-' flation beginning in 1972, and/or another period of monetary restraint in order to undo the damage already done. Neither of these two effects bode any good for the stock market. Contrary to superstition, above- average inflation, in the short run at least, has tended to produce declining stock prices. And, as we learned all too painfully in 1969-1970, one of the conduits through which monetary catharsis reaches the economic main stream is the stock market. Dr. Friedman pOints out, and we agree, that two months do not make a trend and that it is entirely feasible for the Federal Reserve to return to the eminently sensible policy of 1970. With the warning of recent months already having been issued, however, future growth of monetary aggregates will bear even more than the usual close watching. Dow-Jones Industrials (1100 a.m.) 932.69 ANTHONYW. TABELL S&P (1100 a.m.) 102.59 DELAFIELD, HARVEY, TAB ELL AWTmn No Iolement or expreSoSlon of opinion or any other motler herein contOlned IS, or .s to be deemed 10 be, directly or mdlrectly, on offer or the sol,cltotlon of on offer 10 buy or sell any security referred 10 or mentioned The malter I presented merely for the Convel'lImCE of the subscrIber. While Ne belIeve the iKIurces of our Informa' tlon to be reilable, we ' no way represent or guarantee the accuracy thereof nor of the statements mode hereIn Any actIon to be talen by the subSCriber should be based on h,s own InvestigatIon and InformatIon Janney Montgomery Scotl, Inc, as a corporatIon, and Its offIcers or employees, may now have, or may laler toke, pOIIIOn5 or trades In respect to any securIties mentIoned, thIS or any future Issue, and such poslllon may be dIfferent from any views nON or hereafter expressed In this or ony other Issue Jonney Montgomery Scali, Inc, whIch IS regIstered Wllh Ihe SEC os on Investment adVIsor, may gIve adVice to It mvestment adVIsory and olner customers Independently of ony statements mode ,n thiS or m any other Issue Further Informallon on any securIty mentioned herein IS ovmlable on reqllest

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Tabell’s Market Letter – May 14, 1971

Tabell’s Market Letter – May 14, 1971

Tabell's Market Letter - May 14, 1971
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– – ….- – – – – – – – – – – – -, TABELL'S MARKET !, L E T T E RL- 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW fOAK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE r– May 14, 1971 Equity markets continued to shrug off the machinations of European central bankers and moved last week in what was, essentially, a sideways drift in the general range of 930-940 On the Dow. Actually, it – .,Js.. amos.! two we..s .no..in,-e.–,-the. cmarketmade ,gs .most rece!'tJ9w,.clo.sirlg, at 93.30. 4LonMay3Jr three days of decline from the bull market high of April 28. The present level of the average, therefore, \ has some significance from a technical point of view. It is made even more significant by the fact that the Index is now bouncing along the lower end of the uptrend channel which has contained it since last November 18. Continued ability, therefore, to hold above the recent low would suggest a new leg up in the bull market without any further correction. A downside penetration, on the other hand, would indicate a possible 912, not the end of the world certainly, but the most substantial correction so far in the up- swing and a definite indication that the bull market had reached a more mature stage. We would not care at this point to make a firm prediction as to the direction in which the breakoutfrom the current impasse might take place. However, most short term indicators are in oversold territory in- creasing the odds in favor of an upside resolution and, in addition, market psychology, as evidenced by rising odd lot sales into the decline of a week ago, constitutes another favorable straw in the wind. All in all, the market remains in a healthy state, suffering only by comparison with its unusually strong techni- cal condition last summer and fall. Fortune magazine, this week, released the latest edition of its compilation of the -500 largest industrial companies and, as always, it was fascinating reading to anyone who cared to take the trouble to peruse it in some depth. We know of no other readily-available compilation of statistics which by itself can be more productive of provocative ideas than the 500, and its analYSis not only provides stimulus for further in- vestigation but also affords insights into whole areas of American industry. An exercise which is always interesting to us, for example, is to see who made the list and who didn't. The latter is often the most in- teresting statistic. There is little surprise in the fact that General Motors, Standard Oil of New Jersey, –Ford.,General Electrlc,andI BM.areth e.fi ve-larges tiRd ustrialmpanie s,butcen sidel'ingt-heirpromiRenc e., in recent stock market volume statistics, it is worth noting that Bausch & Lomb, Telex and Memorex, to pick three is sues at random, are cons picuous by their absence. Among the most interesting statistics that Fortune computes is each company's rank in terms of growth in earnings per share over a lO-year period. It is certainly not startling news that Xerox has the best 10year growth rate of any of the 500 companies. We would be willing to hazard, however, that most investors would have trouble naming anyone of the next nine without peeking at the footnote at the end of the page. These nine companies rank ahead of Polaroid (27). IBM (36). Texas Instruments (234). One derives the im- pression that the concept of growth about which many on Wall Street are so excited is often divorced from the statistical reality of that growth. Fortune also gives, as part of its compilation, ranks in terms of various other statistical measures of a company's finances, including industrial group rankings. One table lists median profit gains for major in- dustrial groups in 1970. If asked to guess industries which might be near the top of the list, many might choose Office Equipment & Cbmputers. As a matter of fact, this industry had the second largest decrease. The best profit gains in 1970 were shown by Tobacco and Mining. Profit margins have often been used as an indicator of a company's health. Here again the leadtng in- dustry, surprisingly, was Mining. Of the 10 highest-.-anked companies in return on sales last year, six were, in fact, mining companies. (Newmont Mining, Texas Gulf Sulphur, American Smelting, Phelps Dodge, and Hanna Mining.) Two other measures often used in analysis are sales per employee and sales per dollar of stockholders equity. The first statistic measures sensitivity to rising labor costs and the second is some indication of ability.to increase sales with minimum dilution. The industry which stands out clearly.. ———..- …… —- -.. ….. ..1 –… …… – . ' —. — in b.oth the……. — se cate- gories is the meat packing industry. Five of the first six companies ranked by sales per employee are meat packers as are seven of the first eight ranked by sales in relation to equity. Now, as noted above, this sort of thing is nothing more than a stimulus to further investigation. How- ever, the facts we have noted are only random samples of hundreds of equally interesting pieces of tnfor- mation that can be gleaned from a study of the 500. In these terms we think such study is a useful exercise. NOTE The next nine companies in order of 1O-year earnings growth were Koehring Company, Colt Indus- tries, Akzona Inc, Skyline Corp, American Petrofina, Pneumo DynamiCS Corp, Loew's Theatres, Capitol Industries and Gulf & Western Industries. Dow-Jones Industrials (1100 a, m,) 935,71 S&P (HOO a,m.) 102.50 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No sfotement or expression of opinion or any other matler herein contained IS, or IS to be deemed to be, directly or IndIrectly, on offer or the soliCitation of on offe' to buy or !.ell ony security referred 10 or mentIOned The matter IS presented merely for the convellenCE of the subSCriber While we believe the sources of our informa- tion to be reliable, we In no way represent or guorontee the accuracy thereof nor of the statements mude herein Any actIOn to be token by the subcflber should be bosed on hl own investigation and information Janney Montgomery Scoil, Inc, as a corporation, and Its officers or employees, may now have, or may loler toke, poslhons or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such position may be dlfferenl from any Views now or hereafter expressed In thiS or ony other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on investment adVisor, may give adVice 10 Its Investment odvlOry and othel customers Independently of any stotements made In thiS or In any other Issue Further Informotlon on any security mentioned herein 1 available on request

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Tabell’s Market Letter – May 21, 1971

Tabell’s Market Letter – May 21, 1971

Tabell's Market Letter - May 21, 1971
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TABELL-S MARKET LETTER —— —– j 909 STATE ROAD. PRINCETON NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANOE, INC MEMBER AMERICAN STOCK EXCHANGE – May 21, 1971 We suggested in last week's letter that a downside penetration of the 930-940 range, which had contained the Dow in early May, could produce a decline to around the 912 level. The penetration, 'unfortunately;'taCfk-plcrceb-eforeth8 cletterwa sii1the' hand s of omost'read ers; with–th-emarket'break – ..1…… ing sharply on Monday morning and posting, ultimately, a IS-point decline. Reaching of the downside target of 912 was accomplished with equal alacrity. This occurred some time between 11 and 12 dclock on Tuesday whereupon a brisk rally was staged, reaching an intra-day peak of 931. 42 on Thursday. An attempt to forecast the market environment for the remainder of 1971 finds post-war market history offering a variety of models. Not all of these are clear-cut bull and bear markets. Examples of these two phenomena abound, of course, but there are equally frequent examples of markets that fit into neither category. Reviewed below are some of the shapes the market for the rest of the year might take. 1) A Continued Bull Market. This must remain, by all odds, the most probable market assumption. An impressive array of fundamental and technical arguments can be marshalled in its favor. The most plausible point-and-figure objective for the Dow remains 1065, and the market remains locked firmly within the confines of the uptrend channel in which it has held since last May. The vast majority of technical indicators are now precisely where the textbooks tell us they ought to be, somewhere in the middle stages of a major upswing. And, from a time point of View, the less-than-one-year age of the present rise is mere adolescence for bull markets as measured by post-war standards. A continued advance similar to those of 1958-1959, 1963-1964 or 1967 must, therefore, remain the most likely forecast model. 2) A Major Bear Market. This, on the basis of evidence currently available, is the least likely probability. Distribution exists but, most assuredly, at this pOint, not of the magnitude to suggest a — major drop-on the order of 1962-i966or 1969-1970- ParadoxiCally, the more the maikefwere-to-dr6p- C from these levels, the greater would become the certainty that a buying opportunity was being presented. This leads us to the third probability. 3) A Surprise Decline. This is a not-uncommon phenomenon, consisting of a sudden quick drop in the averages which is, equally quickly, erased. The most obViOUS example was 1965 where, in May-June, the Dow dropped over 100 pOints in 33 trading days and then recovered to stage the final dynamiC upthrust of the 1962-1966 bull market. We are probably early in the game for this one, but it could occur, and its probability would be signaled by a drop below the 900 level. As suggested above, if such a drop were to occur at this stage, all downside targets suggested by current distributional tops would be reached, and a strong buying opportunity would be presented. 4) A Protracted Trading Range. This has been a fairly-frequent occurrence in the past, often lasting for considerable periods of time. Such a trading range can have either an upward or downward bias. For example, after a two-year bull market into September, 1951, the market spent the Fall of 1951 and most of 1952 swinging sideways back and forth. The bias in this case was upward with each swing producing a modest new high. The whole thing was capped off by a modest 13 decline in 1953. 1955-1957 produced another market of the same sort with a somewhat more bearish bias. The April, 1956 high was later twice equalled but never exceeded and the period was culminated with the major decline of 1957. It is, in our view, not inconceivable that we might be entering into such a period, with our 1065 objective being reached or approached some time on one of the upswings. 5) A Selective Downswing.The.market from.the Summer. of 1959-through the Fall of 1-960 ,is-the best example of this one. As measured by the average, it could be called a bear market, with the Dow dropping well over 100 pOints over a nine-month period. It was unique, however, in the fact that a great many stocks totally ignored a major decline in the averages and went sailing ahead to new high territory during the entire period. Evaluation of relative probabilities of the above market environments leaves, in our mind, only one sensible investment policy at this point — a continued fully invested position. Such a position was uncomfortable last summer due to fears of a continued bear market. It is uncomfortable today in view of the 300-point rise which has already taken place. Nonetheless, the evidence, at the moment, suggests that it is the correct one. Dow-Jones Industrials (1100 a.m.) 923.83 S&P (1100 a.m.) 101.22 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or expreulon of opinion or ony other maHer nerelll contamed IS, or 15 to be deemed to be, directly or mdlrectly, on offer or the solicltollon of on offer to buy or sell ony sec.unty referred 10 or menllOned The motler I presented merely for the conVCllCnCfI of the subscriber While -Ne believe the sources of our Informotlon to be relloble, we In no woy represent or guorantee the occurocy thereof nor at the statements mude herem Any action to be taken by the subSCriber should be based on hi! own Investigation and information Janney Montgomery Seoll, Inc, 0 a corporotlon, and Its officers or employees, may now hove, or may loler toke, posihons or trodes 1M respect to any securities mentioned In thiS or any future Issue, and such position moy be different from any views now or hereafter expressed In Ihls or any olher Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to lIs Investment adVisory and other customers Independently of any statements mode In thiS or In any other Issue further Information on any security mentIOned herem IS available on request

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Tabell’s Market Letter – May 28, 1971

Tabell’s Market Letter – May 28, 1971

Tabell's Market Letter - May 28, 1971
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;——–. ——l ,' . I TABELL'S MARKET i I LETTER 1 L 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE,INC MEMBER AMERICAN STOCK EXCHANGe .. … — The 1970-1971 bull market celebrated its first birthday last week but the celebration was not a particularly happy one. Monday and Tuesday saw sharp declines, with the latter day's intraday low actually bringing the Dow-Jones Industrial Average belOW the 900 level. Moderate firmness set in on Tuesday afternoon, and trading for the remainder of the week was desultory with the market, in general, drifting slightly lower, The slide from last April's highs has now carried the Dow down just under 5, on a closing basis, making it the most important interruption in the advance that has occurred since last August. It is, indeed, the first time s'ince last summer that the market has undergone what can, in the true sense of the word, be called a full-scale short-term correction. It is interesting to note that the weakness started from the April 28 high of 950.82. 950 on the Dow is, as it happens, a level which has had unfortunate overtones for the stock market for quite some time. Last April's high constituted the fifth time in the past s even years that this level had been attained or approached and, in each of the prior cases, in retrospect, the market turned out to be a rather'good sale. The first time the level was approached, the Dow reached an intra-day peak of 944 in May, 1965 and promptly reacted to an intra-day low of 832 the following mcnth. It recovered past 950 in the Fall of 1965, but topped out at 1000 in February 1966, plunging to an intra-day low of 736 the following Fall in the 1966 bear market. In the Fall of 1967, the 950 level was again attained, and this was promptly followed by a decline to 816 in March, 1968. 950was reachd.for the 4 – ….. 'fourth-timeiJn;eptem15er, T9'6SOTI a rally 'wnich carded abbvt990 ln'Oecemoer, 1968 -'fh'eafter-'- math of that one is unlikely to be forgotten. Thus the results of attaining 950 have been,to date, two substantial declines and two major bear markets. For reasons which we have detailed in past issues of this letter, we think the chances of a more favorable outccme this time are fairly good. A moderate decline on the order of 1965 or 1968 remains a possibility, but the sort of evidence which leads one to fcrecast a major drop is not yet, at least, present. Paradoxically, the course of action which would make the analyst's job easiest would be for the market to continue lower from present levels. Were a further drop below 900 to take place, one could buy into such a decline with, in our view, a great deal of confidence. Let us detail the reasons for this. Any market drop, and the ,pres ent one is no exception, is preceed ed by the formation of distributional patterns in a significant number of stocks. In the present case, such patterns have been forming in most issues for only the past couple of months and downside objectives are only moderately below current levels. A downside mOve, say, to 850, would cause the bulk of those stccks which had developed distributional patterns to move down to their objectives. From that stage, the degree of risk would be small. By contrast, a short-term rally from present levels would leave the picture murky for some period of time. Potential distributional patterns would be broadened, thus further increasing risk, and these patterns could be cancelled only after a decisive move to new highs. ,-,-We.,are returning, .for.theJirst .time in,18,months ,really ,t0.a,period,where'stockselect-ion'iS – cif extreme importance. From November, 1969 through May, 1970, investment success was achieved by being out of equities, and since that time it has been achieved by being in them — almost regardless of which ones. We have, in short, in the past year and a half, seen the two sorts of market where stock selection is a minor factor, the terminal stages of a bear market when all stocks go down and the initial stages of a bull market when all stocks go up. We are now returning to the more normal situation, when individual patterns are diverse. The investor can protect himself against the uncertainties of a confused general market picture by restricting his holdings to those issues which are close to support or which lack potential distributional patterns. Dow-Jones Industrial (1100 a. m.) 904.79 S&P (1100 a.m.) 99.19 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expreHlon of Opinion or cny other motter herein contolned IS, or IS to be deemed 0 be, directly or mdlrectly, on offer or the sol,cltotlon of on offer to buy or sell any security referred to or mentioned The matter IS presented merely for the converlence of the subscriber While we believe the sources of our Informa tlcn to be re\.oble, we \\ f'l0 way repreo.ef'l! or guoraf'ltee the occurac,/ thereaf nor of the 5.\olemef'lt5. mud, here'!'….. Any OChof'l to be tOKen by the subSCriber should be based on ha own Investigation and Information Janney MOf'ltgomery Scott, Inc, 6s 'a corporotlon, and lIs officers or employees, may now have, or may later take, pOSitIons or trades in respect to any securottes mentIOned In Ihls or any future Issue, and such pOSitIon may be different from any Views now or hereafter expressed In HilS or any other Issue Janney Montgomery Scolf, Inc, whIch IS reglste-ed With the SEC as on Investment adVIsor, may gIve adVice to Its Inestment adVisory and othel customers Independently of ony slatemena mode 111 tIS or In ony other Issue Further Information on any security mentioned herein IS ovallable on request

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