Viewing Month: June 1971

Tabell’s Market Letter – June 04, 1971

Tabell’s Market Letter – June 04, 1971

Tabell's Market Letter - June 04, 1971
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, ,l————–I I TABELL'S j MARKET LETTER L – , 909 STATE ROAD, PRINCETON, NEW .JERSEY 081540 DIVISION Of' MEMBEA NEW YORK STOCK EXCHANQE. INC MEMBEA ….MERICAN STOCK EXCHANGE June 4, 1971 / ,ThLe ,is. an axiom ,.IQng ,familiarctopFact4cing'teehniciansrthat-the -market 'wtU-alwais- do – – that which makes the analyst's job the most frustrating. This week's action, which saw equity markets rebound sharply from last week's intra-day low of 899.94 on the Dow to an intra-day high of 929.60 on Thursday, proved nO exception to the old saw. We suggested in last week's letter that a market forecast would have been much simpler had the move been in the other direction, 1. e., had the Dow moved on to new lows instead of reversing its course this week. Such a decline, we suggested, would have been unlikely to prove severe and would have, in our view, provided a minimum-f'isk buying opportunity. How- ever, the market refused to accommodate and chose to rebound from the deep oversold condition which, on a short-term basis, existed at the end of last week. The psychology behind the May weakness and, by extension, last week's strength is in- teresting. The month-long 5 downswing coincided with the first major weakness in bond markets since the sharp decline in interest rates began last summer. Likewise, the market turned on news of a firming bond market and the suggestion by a number of econOmists that the decline in senior securities was about over, and prices might well be significantly higher by the end of the year. This is yet another demonstration of how deeply the experience of 1969-1970 is seared into the minds of most investors. Those years saw a major bear market in equities, caused in large part by stringent monetary pressures, skyrocketing interest rates, and chaotic bond markets. At the first sign of a repetition of these conditions, even on a drastically reduced scale, the market responded by moving lower. , claile oTthe- re'as;;;;7 ;ourse, why bear markets catch so many unprepared- is that memories are short. Investors are always most sensitive to the conditions which brought about the last bear market and tend to forget that downswings can be caused by a variety of factors. 1957, for example, was related to a rather steep business recession to a degree not paralleled by any subsequent bear market. 1962 was unrelated to anything taking place in the economy or the money markets and was purely technical,reflecting the fact that stocks had reached untenably high prices despite a fundamentally sound Outlook. What the root causes of the next bear market will be it is impossible, at this pOint in time, to say. But we are willing to hazard a guess that they will be entirely different than the factors which brought about 1969-1970. And those who sat through the 1970-197 advance nervously awaiting a return of 1969-1970 conditions will, not surprisingly, be caught unawares. Meanwhile, whither away The time has COme, we think, when a little mild hedging is in order. Mter the first full-scale technical cc.rrection in 10 months, we now have a benchmark by which to measure the equity market's future performance. Were the present rally to continue on good breadth and volume, ultimately forming the sort of base that would indicate a move to new highs, the continuance of the major upswing would be strongly indicated. On the other hand, as we have been suggesting for the past two weeks, potential distribution does, in fact, exist and wc.uld be further broadened by a weak rally. This distribution could make the upswing more vulnerable than it has been at any time in the past. – – For the pres'erit,-at leaSt; weare willlng;-fro'm'a pOlicY1Joint'of'-view,-to-operate- onthe-.–,-I- . assumption that the present test will be passed successfully and that,after some conSOlidation, new highs will be duly recorded. Part of this optimism is centered around the largely spuriOUS nature of the recent weakness — spuriOUS, in that, as suggested above, it was based on fears that were essentially unreal. Another cause for optimism is the fact that the nascent business recovery has not, in our view, been reflected in the price of a good many issues, notably those cyclical stocks which have the most to gain from a business upturn. This is, interestingly enough, reflected in the technical patterns of a great many cyclical companies, which withstood the decline well and are rallying smartly. Such issues deserve a place in portfolio policy, a policy which still, in our opinion, should center around a strong commitment to equities. DOw-Jones Industrial (1100 a.m.) 920.53 S&P (1100 a.m.) 101.07 AWTmn ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL No Iotemenl or expression of opinion or any other motter herelr contained IS, or IS 10 be deemed 10 be, dlrec'Jy or indirectly, on offer or the sollcllallon of on offer 10 buy or s.ell any security referred fo or mentioned The molter IS presenled merely for the conveflenct of the subSCriber White oNe believe the wurces of our mformotlon to be reliable, we In no W'lY represent or guorantee the accuracy thereof nor of the statements mude herem Any 'let Ion to be token by the s.ubscrlber sholild be based on hiS own investigation and ,nforma!lon Janney Montgomery Seo!, Inc, os 'l corporotlon, and lis offICers or employees, may now have, or may later take, poSitIOns or tr'ldes In respect to 'lny secufilies mentioned In thiS or any future Issue, and such pOSition may be different from any views now or hereafter expressed m thiS or any other luue Jonney Montgomery Seoll, Inc, whICh IS registered with the SEC as on Investment 'ldvisor, may give adVICe to la mvestment adVISOry and othel cvstamers Independently of any ilatemena mode In Ihn or m any other Issue Further information on any security mentioned herem IS aVailable on request ———

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Tabell’s Market Letter – June 11, 1971

Tabell’s Market Letter – June 11, 1971

Tabell's Market Letter - June 11, 1971
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TABELL'S MARKET \ I LETTER L! . eo. STATE ROAD, IDRINCETON, NEW JERaEY 08540 DIVISION 0 .. MEMS' NEW YO ..K STOCK EXCHANGE. INC MEMSEft AME ..ICAN IITOCK EXCHANQE — '-111 a-move whilih-attracted 'very lithe nOtice- (a exception''was hexc'clle/i!'b91- ', Alfred L. Malabre, Jr., in Monday's Wall Street Journal) the prestigous National Bureau of Economic Research has officially designated the 13-month period from November, 1969 through November, 1970 as a recession. It was the 27th recession since the N.B.E.R. began recording them back to 1854 and the fifth official recession of the post-World-War-II period. The timing is interesting. The recession was not officially recognized around the end of 1969 when it began. It was not recognized in the Fall of 1970, at which point real GNP had been flat or declining for four quarters and corporate prcfits had been sliding fer almost two years. It was not, in fact, recognized until six months after the whole dreary affair was over. Now this is no criticism of the N.B.E.R., whose function, after all, is to keep the histori- cal record straight. What it does illustrate, however, is the total folly of attempting to relate economic developments to the intermediate-term course of the stock market and of trying to forecast the course of stock prices on the basis of the business cycle or the short-term trend of corporate profits. Again, recall the timing. The recession began in November, 1969. At that pOint, the Dow-Jenes Industrial Average was 11 months past its high, having peaked out around 995 in December, 1968 and having dropped over 220 pOints to around 770 by the end of Novem- ber. Indeed, by that time some two-thirds of the total drop was over with, the last third com- ing with the final fall to 631 in May, 1970, which, it will be recalled, was six months before the recession was finally over. By the time the recession actually ended,in November.of la!;t – year, tlieD-ow was up f60 pOints trom its low, and when the end was finally recognized in May, . – it had moved up another 160 pOints. Nor was there anything unusual about this process. The 1953-1954 recession began in July, 1953 and ended in August, 1954. Stock prices peaked in January, 1953, six months before the recession began and bottomed in September, 1953, just two months after it started and 11 months before it was over. By the end of the recession, the Dow had moved from 195 to 354. In 1957-1958 prices peaked two years before the onset of thecontraction and bottomed six months before it had ended. At the recession's end, the Dow had already moved from 416 to 456 and within six months had moved 100 pOints higher still. The same sort of record was shown in 1960-1961. As measured by the S&P, stock prices peaked almost a year before the re- cession commenced and, by the time it was over in February, 1961, most indices had already moved to definitive new highs. Thus, the 1970-1971 experience is a perfectly normal one with- in the context of the post-war period. Yet, despite all this, we were being assured repeatedly, as stocks hit their Iowa year ago, that equities were poor investments because we were in a recession, and we are being assured, with equal convinction, today that stocks are a buy because the current outlook calls for continued expansion. For ourselves, we prefer to be guided by the historical record. In 1954-1956, stock prices continued to move ahead for almost two years after the end of the recession and in 1958-1959 they continued expanding for about a year and a half. In 1960-1961, the expansion continued .,. 'f021O -months a-fter'thecemlOf the economic'down-swing'– –.- —.,….- .o- – —– – Now one obvious conclusion from the figures above is that the periods of expansion following the reversal of economic downturns seem to be getting shorter. This is, in our view, an acceleration of the anticipation process suggested above, Le., prices are discounting re- coveries a great deal faster than they have in the past. Even so, the record does suggest that the discounting process is not yet fully completed. It is only, after all, six months since the now-recognized centraction came to an end thus suggesting, at a minimum, a continued good market on into the Fall. By that time, no doubt, the economy will have improved even more markedly and the outlook for 1972 earnings will be excellent. We will prefer, however, to allow the market itself, through its own technical condition, to tell us what the prospects are for continued advance. Dow-Jones Industrial (1100 a.m.) 917.28 S&P (1100 a.m.) 100.88 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL AWTmn No statement or expression of opinion or any other molter herem contolned 15, or IS to be deemed to be, dlreCliy or Indirectly, on offer or the Olleltotlon of on offer to buy or sell any security referred 10 or mentioned The motler IS presented merely for the convellenc of the subSCriber While oNe believe the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the Iotement mude herein Any ocllon to be token by the subSCriber should be based an hIS own investigation and information Janney Montgomery 5011, inc, 05 a corporation, and lIs officers or employees, may now have, or may later take, POSitiOns or trades In respect to any SKurttles mentioned In thiS or any future Issue, and such pOSition may be different from any views now or hereafter eprcued In thiS or any other Inue Janney Montgomery 5ott, Inc, which IS registered With the SEC 05 on Investment adVisor, may give adVice 10 ItS .nvestment adVISOry and other customen Independently of any statements mode In thiS or .n any other Issue Furlher IfIformotlon on any seamty mentioned heretn IS avolloble on request

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Tabell’s Market Letter – June 18, 1971

Tabell’s Market Letter – June 18, 1971

Tabell's Market Letter - June 18, 1971
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TABELL'S MARKET LETTER I I 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEM8ER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE June 18, 1971 . There are times, and the present, we freely admit, is one of thE)m, when.themaret analyst ''' ould prefer to tie spared the task-offssuing'aforecasto2' t'fC;ced tssue one-;- tc-s;;-rrc'und ' said forecast with enough hedging so as to leave an out for almost any possible contingency. There can be little doubt, indeed, that the mood of the equity market has changed dramatically from the heady days of the last half of 1970 and the Spring of 1971. Part of the lassitude stems from the fact that almost two months, 37 trading days, have passed since the market last made a new bull market high at the end of April, making the present period the longest interruption in the advance since the May, 1970 lows. But there is more to it than that. It is only necessary to glance at the chart of the Dow Jones Averages in the Wall Street Journal to see that the period from March to date looks suspiciously like somebody's textbook example of a head-and-shoulders top. Now of course, since technical analysis, fortunately or unfortunately, has become popular, everybody and his little brother has learned to recognize textbock head-and-shoulders tops. This tend s to make the formation somewhat more of an object of sus picion than it might have been a decade ago. But widely recognized or not, it is there nonetheless. More sophisticated indicators, unfortunately, tell the same story. Readers are aware it is our practice mathematically to COmpute and identify trends on the major averages. It is now quite evident that the uptrend which existed from May 26 to the end of April, carrying the Dow ahead some 50, has now been decisively violated. Now, of course, it is quite possible that such a violation Signifies nothing more than the fact that the advance will continue — albeit at a slower rate, Such has been the outcome of like trend violations on a number of previous occa- siQns,,–Xet,violat1ons,oithisature.hayealso,ilL.the.pa!t,beenam9ngtheearliestharbingers of major difficulty developing in the stock market. As such, we are inclined to treat them with respect. And yet, despite all this, we find ourselves unable to suppress the feeling that the market is acting a great deal better just beneath the surface than is apparent at first glance. Market breadth, of course, has deteriorated since April, but breadth figures are a great deal better than One would expect them to be at the termination of an upswing. Public skepticism, as odd lot sales rise in the face of each decline, is evident, A healthy number of Sizeable blocks continue to trade at upside price concessions. And, most importantly, the amount of distribution that has taken place in individual stock patterns remains surprisingly small cOnsidering the action of the averages. The market, in summary, gives us the impression of looking for an excuse to go up. We are reminded, in a way, of the Spring of 1968 when the market had displayed an even more prctracted (6 months) period of dullness. During the period, so-called Peace stocks tended to show out- standing technical action. And when the event to light the fuse, the announcement that President Johnson would not seek reelection, occurred, the resultant April Fools Day rally was truly dynamic. Looking at individual technical patterns, the operative catchilhrase at the moment appears not to be Peace but, Industrial Recovery. The stocks showing the best current technical action tend to be heavy-industry, cyclical issues, together with a sprinkling of classic growth stocks, whose,growth rate has temporarily slowed and can be expected to improve under conditions of a – – cyclical'recovery.-It' is 'hard' to 'imagine'the nature-of a' single event com'parable;to the' Johnson– announcement which could touch off a rally in stocks of this ilk, but this, of course, is what lends such events their surprise quality. Perhaps the most convincing argument for cautious optimism at this stage is that it isn't likely to cost too much. Let us assume the conventional interpretation of the head-and-shouldens top mentioned above. The worst possible downside objective if the top is violated (and the violation is real — false breakouts from widely-recognized formations are a notoriously common occurrence) is nOw the 860-850 level, a decline of a bit more than 5 from current prices. This would hardly constitute Armageddon. Moreover, there are enough stocks around where little distribution appears in eVidence, that we find no want of areas where we are comfortable about having money invested. The bull market has unquestionably been down for the past couple of months, but we suspect it may be a bit early to start counting it out. Dow-Jones Industrial (1100 a.m.) 901.43 ANTHONYW. TAB ELL S&P (1100 a.m.) 100.10 !,WTmn DELAFIELD, HARVEY, TAB ELL No statement or expression of opinion or any other matter he'e'n con'alned IS, or .s to be deemed to be, d,rely or II'Idnectly, on offer or the sol,c,lollon of on offer to buy or sell any secunty referred to or ment.oned The matter .5 presented merely for tre convellenc of Ihe subscrober While -Ne believe Ihe SOlJrces of our .nformo lion to be reliable, we ,n no way represen' or guarantee the o'Curocy thereof nor of the statements rTude herem Any action to be loken by Ihe subcnber should be based on hiS own inVestigation and Informal Ion Janney Montgomery Scoll, Inc, os a cor;orc!lon, ond Its o'fleers cr employees, may now have, Of may later toke, positions or trades In respect to any secvrilies mentioned In tts or O'ly future Issue, and such 005,t,0'1 may be d,ffe'ent fro'll any views now or hereafter expressed In Ih,s or any other IHue Janney Montgomery Scot, Inc, which 15 registered With the SEC as C'1 mvestment ocvlsor, may gIVe adVice to lIS Investment adVISOry and othel customers Independently of any statemenls mode In thiS r In anv o'her Issue Further In'ormO'ICI' on any security mentIOned herein IS aVailable on requesl

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Tabell’s Market Letter – June 25, 1971

Tabell’s Market Letter – June 25, 1971

Tabell's Market Letter - June 25, 1971
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGe June 25, 1971 .y.re cSJrtedlast.ee!.s,ClIket, coml)1eDt b,,-, expres,sing,the-Owishthat we,could ,completelyc,…., hedge our market forecast. We would 'have been better off had we done so. While we noted that a potential head-and-shoulders top existed on the Dow, we suggested that the top formation might be false and expressed cautious optimism as to the possibility of the market's recovery. Approximately half an hour after the letter went to press, the May mutual fund figures show- ing an excess of redemptions over sales were released, and the mar ket plunged into its steep- est drop in over a year, plummeting 17 pOints on Friday, 12 on Monday, and another couple of points in wide gyrations on Tuesday. The market firmed at midweek. We noted last week that the conventional interpretation of the head-and-shoulders top would call for a downside objective of 860-850 and now, obviously, any forecast model should be based on the assumption of a decline to that area. Again, in last week's letter, we stated that a tendency toward optimism was not likely to be too costly and we are still inclined to feel that way, since the distribution which took place between March and May, both in the averages and individual stocks, does not appear to be great enough to justify a decline of much greater magnitude at this time. In summary, while we are doubtful that the drop from the April highs is yet complete, we would be willing to use any further extension of the decline to make further purchases. The market, as always, is no respecter of man's leisure. As we are about to leave on a three-week vacation, we find it in the midst of the largest drop since the bull market began 13 months ago. Nonetheless, we are little worried about disaster occurring in our absence. Our ;;; 'b-e'stlr,s-S-isth1'frwl1l.lFtl'Mm'arket mayoelower at some PbintUr1ng oursoloutn, it is iik'el-!y''- to be at about the same level on our return. In our letter of May 21, we outlined five different courses the market could take over the short to intermediate term. These were 1) A Continued Bull Market, 2) A Major Bear Market, 3) A Surprise Decline, 4) A Protracted Trading Range, and,S) A Selective Downswing. Sub- sequent evidence indicates the liklihood of the third scenario, the so-called surprise decline. In Discussing that possibility last month, we said The most obViOUS example was 1965 where, in MaY-June, the Dow dropped over 100 points in 33 trading days and then recover- ed 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 oppor- tunity would be pres ented. We see little reason at the present time to change that conclusion. As things have devel- oped, the resemblance to that 1965 pattern is, in fact, eerie. The present drop began from a clOSing level of 950.82. The one in 1965 began from 939.62. The former high was reached on May 14, 1965 whereas this year it was just two weeks earlier, on April 30. The ultimate low reached that year was 840.59 on June 28, whereas our low to date has been 876 on June 21. Except for the fact that the current decline has taken a bit longer, the patterns of the two .. …, correction,s,bear.an,almost.exact similarity,,.-,,–,,-. – '- — Looking ahead, we tend to think that the aftermath will be similar. In 1965, the market continued ahead modestly to score the top of the 1966 bull market in February of that year. At that time, the leadership of this terminal phase was purely speculative and, while the Dow moved ahead only modestly, Fairchild Camera, to pick one example, went from a June low of 36 to a February high of 217. Based on the current evidence, we would expect a similar re- covery at this stage, if one occurs, to feature less speculative leadership and better relative action on the part of the Dow. However, the pattern, as the correction and the subsequent base formation unfold, will give us a better clue as to the precise source of such leadership. NOTE The next three issues of this letter, in our absence, will include reviews by our aSSOCiate, Ronald Baron, of stocks with attractive fundamental and technical patterns. Dow-Jones Industrial (1100 a.m.) 875.88 SSP (1100 a.m.) 97.94 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or expreSton of opinion or any other molter herein contolned IS, or IS 0 be deemed to be, dIrectly or tndlre!;lly. an offer or the SOllCllotlon of on offer to buy or sell any security referred to or menhoned The motler IS presented merely for Ihe Convellena; of the subscriber While Ne believe the sources of our mformo- lion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the sto'emenls mude herein Any aellon to be token by the subscnber should be based on hiS own mvesllgatlon and Informallon Janney Montgomery Scott, Inc, 0 a corporal lon, and ,Is officers or employees, may now have, or may laler loke, pOlttons or trades In re1pect 10 any seCUrities mentioned In thiS or any futvre Issue, ond such pOSition may be d,fferent from any views now or hereafter e)'pressed III thiS or any other Issue Janney Montgomery Scott, Illc , which 1 registered With the SEC as an mvestment adVisor, moy give ad\/lce 10 lIs Inveslmel'll adVisory and Olhel customers mdependently of any STatements mode 10 Ih,s or 10 any other Issue Further mformatlon on any secunty mentIOned herein IS available on requet

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