Viewing Month: September 1971

Tabell’s Market Letter – September 03, 1971

Tabell’s Market Letter – September 03, 1971

Tabell's Market Letter - September 03, 1971
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————————————————————————– Vr– TABELL'S MARKET LETTER I, I .————————– 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK EXCHANGE – September 3, 1971 The dust has now settled a bit in the three weeks that have elapsed since PresIdent Nixon's economic message, and the state of the stock market has changed from one of frenzy to one of come–. nOr!llality, ollowing,c;;ppside,geetration of 840-900 ar, th..!mc;! of last week reacting and testing the upper part of tnat-a-rea. In'tile peoce'ss, most snort term maicat-o'rs–,.-I- have returned to moderately oversold territory, and the normal expectation, after further digestion, would be for the advance to resume, first penetrahng last week's peak at 910 and later making an as- sault on the April 28 high of 950. Of course, forecasting an improved market climate is one thing, and determining proper invest- ment behavior should the forecast materialize is yet another. Recent readers of this letter will no doubt , have noted a tendency toward increasing skepticism as prices advanced for some time and which we enun- ciated as long ago as last December in issuing our forecast for 1971. In that forecast we suggested that the Dow might well attain a new high — moderately above 1000 — in early 1972, and indeed the current picture makes it possible, at least, that this forecast will be attained. However, in making the forecast, we said 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 forecast environment is more similar to the 1966- 1968 upswing in which a 32 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 qUlte dissimilar from the post-war experience' Another way of looking at the same phenomenon is to observe that, five times in the past six years, the DJIA has penetrated the 950 area on the upside. In each one of the five cases, the penetration has been followed shortly by a decline of 100 points or more, the most recent instance, of course, being April-August 1971. Why should this be One's answer to the question will depend on his view of what, fundamentally, \ – –ot!term–rnllS'th'gejr1 al-l'tivel''i''stc-C-k–prlc;s. Wlllrmll'owrltech''rilcian's'llias, ofC01ltse, we are prone to point to supply-and-demand factors rather than the conventional factors of earnings and economics. We think this is particularly true when talking about the general level of stock prices. We think that earning projections, in other words, may go a long way toward explaining the prices of different stocks relative to each other. We think they have precious little to do with the prices of all stocks taken collectively. This price level, it seems obvious to us, will derive ultimately from the upside or downside pres- sure placed on the stock market by the net inflow of new funds available for stock market investment. This will derive, m turn, from the rate of personal and corporate savmgs. The portlOn of these savings directed to common stocks will depend in great degree on investor attitudes toward stocks vis-a-ViS other investment media. From the resultant amount of money available for stock mvestment, one must deduct the number of new stock issues which will absorb this demand. The residual will then be the factor which tends to move prices up or down. Now it is a fact that for the past six or seven years there has apparently been very little upward pressure on the general level of stock prices, and, it is very difficult to see, in presently available statistics, anything that would cause such upward pressure to resume. The level of new stock issues is approaching all-time peaks, and senior securities at current levels present the highest return rela- tive to equities available m years. And there is, moreover, abundant eVIdence that the level of demand for equities characteristic of the 1950's and 1960's may no longer exist. Two commonly cited pieces of evidence are the sluggish rise in debit balances from last summer's lows — despite the reduction in margin requirements — and, of course, the swing of the last three months to net redemptlOns of mutual .fund shares,. The,impact.oLthis ,cancbe demonstratedTbYTGil-lngTthe fact,thahthroughoutl'968andI'969– net new purchases of stock by the mutual fund mdustry frequently exceeded an annual rate of 2.5 bil- lion. Yet, for the past 12 months, the net new money available to the industry has been less than 1 billion. All of the above, it should be noted, IS not a bearish forecast. Indeed, we purposely led off this letter with a discusslOn of the market's Improved intermediate-term techmcal health. The reason we have been repeatedly ralsmg the issue of the apparent change in the long term market pattern is that we think the eVidence calls for a radical change in investment strategy and investor behavior. The entire hIstory of the 1960's has been one of increasmg acceptance of stocks as permanent growth vehicles and of the concomitant theory that one could achIeve investment success by Simply buying and holding the conventional growth favontes and Ignoring stock market swings. This IS a theory which will have to be altered radically if the pattern established in the latter part of the 1960's IS in fact a per- manent one. ANTHONY W. TABELL Dow-Jones Industrial (1l00 am) 903.48 DELAFIELD, HARVIY,TABELL S & P (ll' 00 am) 99.64 AW'fNoSsetallt.ement or expression of opInion or any other motter herein contCllned 15, or IS 10 be deemed 10 be, directly or mdlrectly, on a ffer or t he soIICltotlon a f on aff er to buy or sell any security referred to or mentIoned The mattcr IS presented merely for the converlenC6 of the subscrober. While 'lie believe the sources of our Informa tlon to be rehable, we m no way represent or guarantee the accuracy thereof nor of the statements mude herem Any action to be taken by the subSCriber should be bosed on hiS own InvestIgatiOn and Information Janney Montgomery Scott, Inc, as a corporahon, and ItS offIcers or e'T1ployees, may now have, or may later lake, positions or trades m respect 10 any seCUrities mentioned In Ihls or any future Issue, ond such position moy be different from any views now or hereofter expressed In thiS or any other Issue Janney Montgomery Scali, Inc, which IS registered With the SEC os on Investment adVisor, may give adVice to lIs ,vestment adVisory and other customers Independently of any statements mode In thiS or In any olher Issue Further Information on any security mentIoned herem IS aVailable on request

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Tabell’s Market Letter – September 10, 1971

Tabell’s Market Letter – September 10, 1971

Tabell's Market Letter - September 10, 1971
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———————————— TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW .JERSEY 08540 DIVISION OF MEMBER NEW YORI( STOCK eXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE September 10, 1971 The central theme of our past few letters has been that, while the baby bull spawned in May, 1970 the is .apparentlyinJeas onably ,good .health.still ,he .hascertainly.Iostthe,bloom .OJ .Y9l!tn ,arlq.ls Jal,p1llPf,I approaching maturity. The first conclusion, that of bull ma;kt' s ;';ntin;'ing existence. can deduced from the excellent technical action of the market, which continued last week prior to a minor correction at week's end. The second conclUSion, regarding approaching maturity, derives from the occurence of the recent II intermediate decline. Aliments of this sort have not afflicted past advances in the bloom of their youthful, vigor. They have been far more prone to occur in the later stages of a bull market's life. Now, a maturing bull market is, historically, a reasonably well-defined phenomenon. As old age begins to set in, more and more individual stocks and groups begin to lose their technical health and move from uptrends into downtrends. This process begins well before a bull market reaches its high, continues during the top formation and indeed does not reach its completion until a fairly mature stage of the ensuing bear market. A study of individual group action at the moment confirms that this histori- cally inevitable phenomenon is undergoing its normal evolution. A simple definition of an uptrend is that condition in which a stock or index remains above its rising long-term moving average. Of 95 Standard and Poors Industrial Group Indices, as of last March, 93 were in such a state. As shown by the following table, that situation has changed radically. The indices in group one are those which never, during the recent decline, moved substantially below their moving averages, while the second group includes those which did break their moving averages but have since recovered sufficiently to be again classified as in uptrends. Those indices which have had some recovery but not enough to indicate definite uptrends are in group three, and group four includes those indices where there has been no recovery whatever and where the trend is now down. Auto Parts Machine Tools Leisure Time Auto Trucks Mach- Construction Mach. – Agricultural Food-Pkg. Foods Beverages-Soft Drinks Mach-Industrial Mch. Steam Gen. Forest Products Chemicals Mach-Specialty Metal Fabricating Gold Mining Drugs Pollution Control Publishing Home Furnishing Electrical Equipment Radio-TV Mfgs. Real Estate Lead & Zinc Elec. Household App. Railroad Equipment Retail Stores-Disc. Metals Misc. Food-Dairy Retail Store – Depart. Textiles Products Motion PIctures Food-Meat Packers Steel Tobacco Cigarette Office Equipment Machinery – Oil Well Textiles-Syn. Fiber 4. No Recovery Oil – Domestic Mobile Home Savings and Loan Aerospace Oil -International Offshore Drilling 3. Partial Recovery Aluminum Paper Oil-Crude Producers Air Freight Atomic Energy Retail Strs. – Food Radio- TV Broadcasting Air Trans port Bldg. Mat. – Air Con. Shoes Restaurants Automobiles Bldg. Mat. – Cement Sugar – Beet Retail Stores – Mail Order Beverages-Brewery Bituminous Coal Sugar – Cane Retail Stores – Variety Beverages-Distillers Confectionery' Sulphur Soap Bldg. Mat.-Heat & Plumb. Cont.-Metal, Glass Textiles-Apparel Tire & Rubber Bldg. Mat. – Roofing Containers-Paper Toys Truckers Conglomerates Copper Utilities – Elec. Vending Machines InsuranceLife . EI'!'ctronicMajor2. , Csmtics U t i l i t ie s-' Nat. Gas – s. ….- Finance Cos. Food-Biscuit Bakers Utilities – Telephone Insurance-Multi Line Insurance- Prop. & Liab. Finance-Small Loan Hotel-Motel Food-Bread & Cake Food-Canned Foods Banks – NYC Banks – Outside NYC As can be seen, a total of 39 of 95 indices are in confirmed downtrends versus only 2 SlX months ago, and, in 60 cases, the technical condition is at least questionable. Only 35 of the 95 groups can now be considered in distinct rising trends. This situation will no doubt improve, of course. The recent advance is barely a month old, and as it continues, more and more groups will progress from the fourth through the third and into the second category. Nonetheless, as we observe these individual components of the market, the process of aging is clearly established. ANTHONY W. TABELL Dow-Jones Industrial (1100) 909.54 DELAFIELD, HARVEY, TABELL S&P(1100) 100.23 AWTSem No statement or exprClSSlon of opinion or any other motter herein contOlned IS, or IS 10 be deemed 10 be, directly or mdlrectly, on offer or the sollcltotlon of on offer to buy or sell onr. security referred to or mentioned The mOiler IS presented merely for the convelfenCfJ of the subscriber While Ne believe the sources of our Informo lion to be rei lob e, we In no way represent or guarantee the accuracy thereof nor of the stotemena mude herein Any action to be token by the subscTlber should be based on t1l1 own investigation and Information Janney Montgomery coli, Inc, as 0 corporation, and 115 officers or emplQyees, may now have, or may laler loke, positions or trades In respect to any secuntles menhoned In Ihls or any future Issue, and such poslhon may be different from any vieWs now or hereafter expressed m thIS or any other Issue Janney Montgomery Scott, Inc, whllh IS registered With the SEC as on Investment adVisor, may give adVice to Its Investment odvlsory ond othel C\lstomers Independently of any stolements mode In thiS or In any other Issue Further information on any secuTity menTioned herein IS ovalloble on request

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Tabell’s Market Letter – September 17, 1971

Tabell’s Market Letter – September 17, 1971

Tabell's Market Letter - September 17, 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 September 17, 1971 f,. Stoek-market.,foreeasting7we cS hould'cons tantly remind-oursetves,is, an,art.asmucha a .. science. This is a fact which has occasionally proved frustrating to those who believe reality does not exist unless it can be quantified. Unfortunately, it is totally impossible precisely to quantify a great many stock market phenomena which, nonetheless, the vast majority of the in- vestment community would agree, exist. Take, for example, the commonly-used terms, bull m-arket and bear market. How are we to define these Should the definition be in terms of percentage move, length in time, or a combination of the two It is easy to agree, for example, that the period December, 1968-May, 1970, when the DJIA declined 37 over a period of 18 months,was a bear market or that 1962- 1966, when the average almost doubled in value over 3-1/2 years, was the opposite number. However, what about January-September, 1960, which saw an 18 decline over a ten-month period, or, for that matter, 1966-1968, during which time a relatively small 35 advance was strung out over 26 months As soon as we start applying precise definitions based on time or amplitude, we see ourselves either including periods which most people agree should not be classified as separate bear or bull markets or leaving out periods which most observers feel merit that classification. Since we have difficulty defining what a bull or bear market is in the first place, it is hardly surprising that we should often have equal difficulty defining where we are at any given point in time. It is impossible, for example, to say with certainty that we are, at any given moment, 1 – -iR-b,J.I-mar-k-et-linles-s-t-le.-m-mQv-ing–into-new.hig!l.ground.xepeatedLyforsome…..—tl-II fairly-protracted period of time and we have, on the previous day, just made a further new high. Each day that goes by without a new high being posted, quite otviously, increases the pOSSi- bility that the last high made was, in fact, the high for the swing. Now it is not necessary to be all that restrictive in our defimtion. It can be agreed, for example, that bull market conditions exist when a high has been made fairly recently and prices lately have not been substantially different from that high. There are, unfortunately, many situations where even this state of affairs does not exist, and the present Is a beautiful example of one of them. Certainly a central question to investment policy at the moment is, Are we in a bull market or bear market. Yet it is totally impossible to answer the question in light of the criteria outlined above. It was possible to say with absolute certainty, as of last April 28, that a bull market exis1Ed. At that pOint the Dow had just closed at 950 after an ll-month, 50 advance. Unfortunately, that day five months ago was the last time a new high was posted, and there have been prices over the interim substantially lower. The certainty of the bull market's existence, therefore, is somewhat diminished. What about the opposite conclUSion Are we in a bear market Well, the last new low was over a month ago now on August 10 — at 840 after an 11.7 decline. It is, however, not custo- mary to call declines of this magnitude bear markets and, furthermore, we have since rallied smartly from tha!)ow.reachinga;high of.920a.couple.of.weeksago…….Unfortuna.tely,eyenAhe………..— post-Nixon-speech rally looks a little bit questionable at the moment, with the Dow having eased off from 920 to a low of 901 in the past couple of weeks. By this pOint in the exercise, the reader should be thoroughly confused, so he will no doubt pardon the forecaster if he also confesses to a bit of confusion. The dilemma can be partially resolved if we can admit of yet another type of market besides bull and bear markets — that tranSitional phase during which a bull market begins to lose momentum and eve n t u all y swings over to a downturn or consolidation. Such a phase commonly begins well before a high is made and continues well beyond the posting of that high before any serious decline occurs. We think the evidence, at the moment, is fairly persuasive that such a phase, in fact, exists. We are inclined to believe that we are in the early stages of such a phase and thus would regard a new high above the April 28 level as a distinct possibility — indeed a probability. We think it imperative to recognize, however, that the conditions of a clear-cut bull phase, which characterized the market as of last April, are no longer with us. Dour JQR'ilS IAQ1!&triEll (UOQ a. me) 90S. 57 A;WTMOJY 3'. T41lElL S &P Nblllltottrl'lntpT wP rq;slQQf cm,lon or any other matter herem contained is, or IS to be deeme, 1,l'lf()ftW..oHndlr1I.rif or Ht4oIi40on of on offer AWTI'rrntqtd-M1 'drielPcmt'!etl-ntT' f!fo Or mentioned The motter IS presented merely for the converIMtr6.liJ1,l; L..L-k.Jblr, vilLU.WIte1leve I'.bi our mformo- be reliable, we In no way represent or guarantee 'he accuracy thereof nor of the statements mude herem Any aellon to be token by the subSCriber should be ooseaon hIS own Investlgotlon and mformatlon Janney Montgomery Scali, Inc, as a corporation, and Its officers or employees, may now have, or may later toke, positIons or trades m respect to any securities mentioned m thiS or ony futufe Issue, and such posliion may be different from any views now or hereafter expressed m thiS or any other Issue. Janney Montgomery Scott, Inc, which IS registered With the SEC as on II'lvestment adVisor, may give adVice to Its II'lv(!slment adVISOry and othel customers Independently of ony statements mode In Ihls or In any other inue Further Informahon on any security mentioned herein IS available on request

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Tabell’s Market Letter – September 24, 1971

Tabell’s Market Letter – September 24, 1971

Tabell's Market Letter - September 24, 1971
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i TABELL'S -ARKET ETTER 009 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE. INC. MEMBER AMERICAN STOCK EXCHANGE September 24, 1971 Short term weakness On low volume continued to be the dominant feature of equity markets for theJirUQl1r ys .9t.WJ..w. eek ,-Qe91yIl…TIldy ,'!J29br().thr''lghe-,JO level, reaching a closing low of 891.28 and an intra-day low of 884.64 in Thursday's trading. At that point it had pushed deeply into the 900-890 support zone, and the downside objective of the minor top formed at 920-900 had been reached. In the light of these facts, Friday morning's rally, following President Nixon's clarification of Phase 2 of his Economic Plan, was hardly surprising. There are now two benchmarks to watch in an attempt to forecast the intermediate-term course of stock prices. The first is the 920 level on the Dow, where the post-Nixon-speech rally peaked out. Inability to better this high would broaden a potential top and increase the near- term downside risk considerably. Were 920 to be surmounted, the next logical step would be a test of the April high of 950. It is, parenthetically, interesting to note that the present pattern of the S&P 500 diverges considerably from the Dow and is, in fact, somewhat more constructive. Ability of this index to move above 101. 50, not too far from its present level of 98.91, would clearly suggest a move into new high territory, a suggestion not necessarily implicit in the pattern of the senior average. It is thus apparent that we have reached a market stage when diversity and s e 1e c t i v i t Y among individual stocks is increasing, and the averages tend to give a less and less fair picture of what might be the performance of an average portfolio. The following table may serve to indicate the extent of this diversity. It is based on a study of 3,193 New York and American Stock e listed ues which s each as a of as a group to percentile and shows the performance of the best acting 10, the next best acting 10, etc. CHANGE FROM 1971 HIGH CHANGE FROM 1971 LOW PERCENTILE 1 – 10 PERFORMANCE – 0 – – 5 PERFORMANCE 53 or Greater 11 – 20 – 5 – 8 37 53 21 – 30 – 8 – – 11 26 37 31 – 40 -11 – – 14 20 26 41 – 50 – 14 – – 17 14 20 51 – 60 -17 – – 22 10 14 61 – 70 -22 – – 27 7 10 71 – 80 81 – 90 – 27 – – 33 – 33 – – 43 4 2 7 4 91 – 100 -43 or More 0 2 The figures are interesting. As of Thursday's close, the Dow was selling for just under 94 of its 1971 high. However, as the table indicates; more than 80 of all stocks were off from their highs by a greater percentage. More than one-half the list had declined at least 17 or more from peak 1971 figures, and at least one stock out of 10 had dropped 43 or more from its high for the year. ..- – The'same diversity 'is-apparent'in .individual 'ls sties . measured 'againsfthe year' s'low . Dow, again, is a bit over 7 above the low for the year, posted in early January. Yet almost one-third of all listed stocks have failed to better its upside performance and one-half the list is within 10 of its year's low. ConSidering the fact that 1971 has been a fairly good year for equities, it is at leaSt interesting that only about one-third of all issues are currently selling for 25 or more above the year's lows. Inspection of individual chart patterns, moreover, strongly suggests that this sort of diversity is apt to increase rather than decrease. This is absolutely normal at this stage and indicates that rigorous portfolio selection will become a more and more important part of the investment management process. Dow-Jones Industrial (1100 a.m.) 896,98 ANTHONY W. TABELL S&P (1100 a.m.) 98.91 DELAFIELD, HARVEY, TABELL AWTmn No statement or expression of opinion or ony other motler herein COntolned IS, or IS to be deemed to be, drrooly or IIld,rectly, on offer or the sollcitahon of an offer 10 buy or sell ony secunty referred to or mentioned The matter IS presented merely for the c.onvellence of the subSCriber While He believe the sources of our ,formahan to be reliable, we In no way represent or guarantee the atcuracy thereof nor of the statements mude herein Any aChon to be laken by the subscriber should be based on h' own Inveshgohon and Information Janney Montgomery Scali, Inc, as a corporation, and lIS officers or employees, may now have, Or may later toke. POSitiOnS or trades In respect to ony securttles menhoned In. thiS or any future Issue, and such positron may be different from ony views now or hereafter expreSsed tn thiS or any other Issue Janney Montgomery Scott, Inc, Which IS regiStered With the SEC as an mvel/mel'll adViSor, may gH'e adVICe 10 115 Investment adVISOry and other customers Independently of any statements mode III thiS or In any other Issue Further informatIOn on any secunty mentioned herein IS oVOllable on request

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