Viewing Month: November 1971

Tabell’s Market Letter – November 05, 1971

Tabell’s Market Letter – November 05, 1971

Tabell's Market Letter - November 05, 1971
View Text Version (OCR)

, ..- r – ! L TABELL-S MARKET LETTER '– –' 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCI( EXCHANGE. INC MEMBER AMERICAN STOCK eXCHANGE It was a hair-coloring product which popularized the phrase Does She or Doesn't She. Last week Wall Street was playing the game of Was It or Wasn't It. The question in this case referred to whether the intra-day low of 814.69 reached on Tuesday constituted the final culmination of the dizzy slide in stock prices which had brought the Dow down from 950 last April and 920 just two months ago. Those hoping for a definitive pronouncement from this quarter will, we are afraid, be disappointed. We will go so far only as to ansv.er It might well have been. The rebound, for example, was nowhere as near definitive as, say, those last few days of May, 1970, during which the Dow plunged some 75 points over a seven-clay period and then recovered all of the ground lost over the next four days. At that point, it was obvious to almost anybody that something important had certainly occurred. Nonetheless; last week's action, if short of totally convincing, was highly impressive . .Mter a precipitous 13-point drop on Monday, the market continued its slide with a further seven-point decline on heavy volume in Tuesday morning's trading. Then, with the tape running late on the upside, the entire decline was erased, and prices remained firm on light volume throughout the afternoon. On Wednesday, as major institutions which had been closed for the election-day holiday returned to work, prices were strong from the opening bell and, by the end of the day, the DJIA had managed to post a 14-point gain. The gain was further extended to an intra-day high of 855.21, forty points above the low, 1 -2!1..!I!.urE.sIy;, bef9rllness.st inJ!.E.!!!ursday and Friday, —I It is not stretching a point too much to say that the action at mid-week met the classic technical requirements for a selling climax. Such a climax requires the following pre-conditions. 1) The market should decline on heavy volume. 2) A rally on equally heavy or heavier volume should then take place. 3) The rally should follow through in subsequent trading. Most of the requirements were met. Heavy volume is, of course, an imprecise phrase and Tuesday's 13 million shares was hardly impressive by m 0 s t standards. It did, nonetheless, represent an increase from recent levels, especially during the early part of the day when 7.6 million shares changed hands in the first two hours vs. only 10.9 million shares the entire day before. Allowances must also be made for the fact that Tuesday was, for many, a holiday. Furthermore, the Wednesday rally, the second biggest of 1971 to date, was also impressive. Now so-called multiple-climax declines are not unknown, and it would certainly not be unprecedented for the drop to resume and repeat the whole process undergone last week on a more grandiose scale at some lower level. It may, for example, be significant that a number of indicators of public bearishness, such as odd-lot short-selling, had not, last week, reached levels normally characteristic of major bottoms. More important, oscillator-type indicators, while deeply oversold, were stubbornly refusing, a,s of Friday, to suggest an imminent reversal. In the present instance, time is likely to be on the investor's side. Before too long, the indicators referred to above will have either signalled a definite reversal or, by their failure to do so, have indicated a continuation of the decline. Furthermore, we have, in the past, pointed out that the,rally.in.a,bear.market is,one.of.the,great,mythical,beasts.of steck.marketTtheory.-Bear—- -markets tend to get to where they are going with very little in the way of intervening rallies. Therefore, the longer the market can hold and consolidate its gains the better shape it would be in. One of the final tests of the May, 1970 bottom was a small decline in early June which, unlike previous declines, did not plunge through prior support levels but ihstead quickly reversed itself. Such a test in the next week or so would be impressive eVidence in the present case. Dow-Jones Industrial (Noon) 836.67 S&P (Noon) 94.14 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement Of expression of opinion or any other matter herein conTolned is, or is to be deemed to be, dIrectly or indIrectly. on offer Of Ihe sollcltollon of on offer fa buy Of sell ony secuflty referred to Of mentioned The motler IS presented merely for the convcr,ence of the subscriber While -Ne believe the sources of our Informaon to be reliable, we In no …..oy represent or guarantee the atcurocy thereof nor of the statements mude herein Any action to be token by the subscriber should be based on hiS own Investigation and mformatlon Janney Montgomery ScOIl, Inc, as a corporollon, Clnd Its offlters or employees. may now have, or may laler lake, poSitions or tradcs In rcspect to any securities mentioned In thiS or any future Issue, and such position may be different from any views now or hereafter exprcssed In thiS or any other Issue Janney Montgomery Scott, 1m , which IS registered with the SEC as on Invf!stmenl adVisor, may give adVice to Its Investment adViSOry and other cvslomers Independently of any statements mode In thiS or In any other Issue Fur1hcr Information on any SCWflty mentioned herem IS available on request

Download PDF

Tabell’s Market Letter – November 12, 1971

Tabell’s Market Letter – November 12, 1971

Tabell's Market Letter - November 12, 1971
View Text Version (OCR)

,——————— – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – .——,— TABELL-S MARKET LETTER , I t -, 909 STATE ROAD. PRINCETON, NEW..JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK eXCHANGE, tNC. MEMBER AMERICAN STOCK eXCHANGE – Issuance of a market forecast at this time is, actually, a fairly easy task. November 12, 1971 Now that statement 1s not made simply to raise the hackles of investors who watched their port-folio values erode' Iurtherlast weeK, as the' DrIApluriged to 'a riew 1971low. -It Is;father, inea'iini-' – – suggest that periods of sharp price erosion such as the present one are relatively rare in mar k e t history and, on those occasions when they do occur, a number of reasonably consistent behaVior patterns are recognizable. It was recognition of this fact which led us purposely to equivocate, last week, as to whether the rally which started on November 2, constituted the bottom of the 1971 price slide. We indicated that, indeed, a number of classic technical requirements for a selling climax had been fulfilled on that upswing, but we also suggested that there was ample historical precedent for bottoms to take place with more than one such selling wave. We pointed out that a number of indicators, while deeply oversold, had, as of lst week, refused to suggest an imminent reversal and noted, Before too long, (these indicators) will have signalled a definite reversal or, by their failure to do so, have indicated a continuation of the decline. Quite obviously, that continuation is suggested by last week's action. The first thing a study of previous markets as deeply oversold as the present one tells us is the absolute futility of trying to pinpoint exact downSide objectives. Quite obviously, from this point, selling momentum should continue to build until that level is reached at which demand for stocks will be sufficient to turn the market. What we can recognize from a study of market history is that whatever low is going to be reached is likely to be reached fairly soon. The market has been in a deep oversold condition for more than two weeks now and a period of much longer than a month in such a condition,is a fairly rare phenomenon. Furthermore 'owe have now reached the stagewhre—f the ultimate rebound, when it comes, is likely to be more powerful the lower the market goes. Thus, the market climate, near term, may not be pleasurable, but it is almost certain to be exciting. As to what happens after the ultimate reversal takes place, it is, of course, too early to make any but the most speculative guesses. It is not too early, however, to suggest a couple of factors which we think will be crucial to determining market action in the first half of 1972. As we all should be aware by now, the basiC forces behind the stock price weakness since last Spring have been continued public 'disenchantment with the equity market and a reduced institutional participa- tion which was not sufficient to take up public selling along with the rising level of new issues. Thus, to a great extent, in our view, the prospect for better future stock prices will hinge upon a reduced supply of stock coming from individuals and/or an increase in overall demand for U.S. equites. It is easy to suggest the factors that might produce these two phenomena. Quite obviously, public funds have been diverted from the stock market in recent years by, among other things, record yields available from bonds. Were bond prices to continue their recent improvement, it seems to us axiomatic that the level of public equity sales might well be substantially reduced. On the demand side of the equation, the investor most conspicuous by his absence from the recent stock market scene has been the foreign buyer, obviously due to the uncertainty surrounding international monetary conditions. It seems, therefore, reasonable that continued lower long-term interest rates, coupled with a solution to international monetary problems, could exert a powerful upward force on the stock market over,thenext,year , .. '-' Meanwhile, a few unanswered questions remain as to the present decline. One of this downswing's pronounced characteristics to date has been the miniscule extent to which it has affected a substan- tial number of stocks. Despite the fact that the averages are now at the lows of a vicious drop, now more than six months old, a substantial number of issues are within a few points of their 1971 highs. It may be, of course, that the final phase of the downswing will catch up to these relatively resistart stocks and eventually sweep them along with the tide. There is certainly -ample precedent for this in the past. And yet, another unique factor about this decline, and indeed about the advance which pre- ceded it, was the complete absence of any speculative phase — the sort of thing that normally brings about the final wave of liquidation. It is, therefore, at least, possible that a fairly substantial number of issues will weather what remains of the current debacle relatively unscathed Dow-Jones Industrial (Noon) 807.68 S &P (Noon) 91. 48 ANTHONY W. TABELL AWTmn DELAFIELD, HARVEY, TABELL No statement or expreu,on of oplnlo'n or any other motler herein contc.ned IS, or IS 10 be deemed 10 be, directly or indirectly, on offer or the 501lc,lo1I0l of on offer to buy or sell cny seamty referred 10 or menlloned The moiler IS presented merely for the converlenq; of the subscriber While we believe the sourres of our Informo- han to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any achon to be taken by the subSCriber should be oosed on hIS own InvestIgation and Informallon Janney Montgomery Scoll, Inc. 05 a corporation, and Its officers or employees, may now have, or may later toke, positiOns or trades In respect to any secufltles mentioned m thiS or any future Issue, and such position moy be dIfferent from ony views now or hereafter expressed m thiS or any other Issue Janney Montgomery Scali, Inc, whICh IS reg.ucred With the SEC as on Investment adVisor, may gIve adVice to Its mvestmenl adVISOry and other customers mdependently of any statements mode In thIS or In any other Issue Further mformatlon on any scamty me'ltloned herein IS aVailable on request

Download PDF

Tabell’s Market Letter – November 19, 1971

Tabell’s Market Letter – November 19, 1971

Tabell's Market Letter - November 19, 1971
View Text Version (OCR)

– – ,–….- —– . . , ,I , TABELL'S , MARKET LETTER I , I , 1-.-.- . ………-.-. -, -' – ,, .J l) ,Y'&'J'Ily,. !TakII 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF , fo,ney o./l'imeI'Y Y/.,a Y1!C. MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE November 19, 1971 Stock prices attempted to firm in the early part of last week but that strength was aborted with weak- – e nes s-T'hursdayand'ear-IyFriday'–The -rally ,attemptswere unimpres sive.and certainly' insufficient to ,signal, any sort of major reversal. The immediate course of least resistance is apparently downward but, we think, at current levels, the amount of risk is limited — perhaps 5-8 in terms of the popular averages and less for a great many individual stocks. Since periods such as the present generally produce visits in market leadership, stock selection will be important and we are, therefore, continuing in this letter our review of the technical position of maj or industrial groups. OILS – Both the international and domestic segments of the industry have been showing inferior action relative to the market since the end of 1970. This unfavorable action has been particularly marked in the case of the international issues. Although SOme internationals are available at substantial discounts from their early 1971 prices. and appear fairly valued fundamentally, further downside risk appears possible and we would be inclined to defer new investments at this time. Domestic oils such as Phillips Petroleum(28) and Cities Service (41) have returned to long-term base areas and, although near-term action may be slow, they could be candidates for accumulation. Amerada Hess (37), down from a high of 71, appears cheap although rebasing will be required. PAPER – As a group, action has been average but patterns are mixed. Union Camp (33) has returned to the support in the low 30's and, although short-range softness is possible, the long-term base pattern re- mains intact suggesting higher levels. The same is true of International Paper (29) now selling near the low end of its trading range for the past three years. PUBLISHING This group has shown above-average action and has remained, to date at least, highly re- sistant to the bear market. However, most stocks in the industry have returned to the heavy overhead supply area around their 1968 and 1969 highs. Ability to penetrate this supply would be encouraging, but the issue remains' lnaOtrllt-anhmnorrrent. RADIO-TV BROADCASTERS – Recent action has cast some doubt on at least the near-term outlook for these issues. After moving upward sharply in early 1971, the stocks have been moving laterally since that time and potential tops exist. We would be disturbed at downside breakouts below 40 in the case of American Broadcasting (46), 39 in the case of Capital Cities Broadcasting (41), and 32 in the case of Taft Broad- casting (36). RADIO-TV MANUFACTURING – Most issues at recent highs were running into overhead supply. However, they appear to have corrected sufficiently and risk appears limited at the present time. RAILROADS – By and large, group relative action has been good. The Dow-Jones Transportation Average ,has reached its most plausible downside objective at 221 and the most likely eventuality is that it will rebase in the broad 220-230 area. Southern Pacific (42) presents one of the more interesting indiVidual patterns in the group. RAIL EQUIPMENT- Most issues in this group continue to show above-average action. General American Transportation (47) appears attractive, and Pullman Inc. (45) has returned to a strong support area in the mid 40's. RETAILING – Relative action of this group during 1971 has featured above-average action on the part of department and variety stores, action more or less, in line with the market from disounters and mail- order issues and sub-par action on the part of food retailers which are down sharply from their April highs. By and large, most issues in this latter group appear to have reached support levels and are attractive on a long-term basis. In the department-store field, such issues as Federated Department Stores (46) and May' s (42) have so far continued their good relative action and resisted the general market decline. Continued abilityof the foriner io hold 'aDoe4 2 'and'the'latier- to' nold'above 39 would' be-constructive–' ' , Gimbel Brothers, Inc. (26), down from a high of 45 earlier this year, has returned to a strong area of potential support. In the mail-order area, Sears, Roebuck&Co. (92),thequalityissueinthegroup, is selling close to its all-time high and distribution so far appears minor. We suspect it may be high for new purchases, however. Further downside risk in Marcor, Inc. (29) appears probable. In the discount field, Vornado, Inc. (23) would appear interesting, especially were it able to break above 30 under im- proved market conditions. Among variety chains, Kresge (S.S.) (88), one of the leaders of the 1970-1971 bull market, appears to be forming a potential top and is probably best avoided for the moment. Wool- worth F. w. (46), on a short-term basis, might return to the support in the low 40's where the stock would appear attractively priced. Dow-Jones Industrial (Noon) 809.94 S&P (Noon) 91. 55 ANTHONY W. TABELL AWTmn DELAFIELD, HARVEY. TABELL NQ statement or elpreS510n of opInion or any other mOiler herein ContOined 1, or IS 10 be deemed 10 be, d,reClly or ,dlreClly, an offer or the soliCitation of on offer to buy or sell any security referred to or mentioned The moiler 1 presented merely for the converlencE of the subSCriber Whde we believe the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the stotemenlS mude herein Any ocllon to be loen by the subSCriber should be based on hiS own m ….est'gollon and information Janney Montgomefy Scolt, Inc, 0 0 corporal,on, and lIS offIcers or employees, may now have, or may laler Toke, poSitions or trades In re1pect To any securities mentioned In thiS or any future Issue, and suen poslhon may 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 as on Investment adVisor, may give adVICe to Its Investment adVISOry and other customers mdependently of any Slolements mode ,n thiS or In any oler Issue Further information on any security mentioned he-rem IS available on request

Download PDF

Tabell’s Market Letter – November 26, 1971

Tabell’s Market Letter – November 26, 1971

Tabell's Market Letter - November 26, 1971
View Text Version (OCR)

TABELL-S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF' MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE November 26, 1971 There is an old vaudeville routine, now relegated to well-deserved obscurity, where one member of a – comedy d uo'beginsby'asking' the' otherr-Boyou want'the go.od,news f-i!st-'orthebad newsHrst -. –The- question serves well to introduce a discussion of the present state of the stock market. Let us, then, get the bad news out of the way first. It is that the market is, in our opinion, in all probability headed lower. Now we are as optimism-prone as anybody else and as inclined to find bear markets distasteful, but we have lived through enough of them to realize the hard fact that, once they get underway, there is very little point in glossing over the hard realities of the situation. As we have been suggesting since last July, the market is in the grips of a highly unhealthy supply-demand situation and that situation shows little sign of being immediately resolved. Moreover, the downside momentum that has been building in recent weeks is absolutely typical of the all-too familiar scenario typical of past downswings. The most convincing attempt at a rally took place during the first week of this month and, since that one failed to hold up, the more recent attempts have been unconvincing. This is equally true, at least until mOre evidence becomes available, of the strength shown on Friday morning. If the market is, in fact, headed lower, the next logical question is How much lower. The market has aided us over the past few months in formulating a plausible downside target. In contrast to the situation a few months ago, all of the major averages now present similar distributional patterns. The following table presents the downside objectives based on these patterns for four of the most popular market indices. As can be readily seen from the table, the targets on all of them are roughly 4 to 9 below current levels and show fair consistency among the four indicators. Recent 1st Downside 2nd Downside -;r-.1iPrice.Ob!ective,Change Objective,Change Dow-Jones Industrial Average 798.63770 -3.5 730 -8.6 S&P 42s-Industrial Index 99.57 96 -3.6 95 -4.6 S&P sOO-Stock Index 90.33 — — 86 -4.8 N. Y.S. E. Index 49.67 46.80 -5.8 45 -9.4 Now the good news, although it may not be at first apparent, is contained in the above tabulation. A decline to the area suggested above, while it most assuredly will not be pleasant, is hardly gOing to con- stitute a major disaster. USing the 730 target on the Dow, for example, it is worth noting once again that such a decline could be produced by a drop of 3-7/8 pOints in each of the 30 individual components. This would hardly constitute Armageddon. The present situation, furthermore, is dramatically unlike that of say, 1969-1970. At that point, the existing distributional pattern was highly ambiguous, and it was possible to read any number of downside targets, in addition to the 630 on the Dow, which ultimately turned out to be the Iowa year and a half ago. It was only possible to pinpoint the bottom when the obvious selling climax of May, 1970 quite clearly signalled that something important had, in fact, occurred. By contrast, the distributional patterns exist- ing at the moment lend themselves to only one interpretation and that is the interpretation suggested in the table above. We do not, in short, agree with those forecasters of gloom and doom, who generally get a good press at times like the present, that we are in some sort of a super bear market cycle which is going to carry on to disaster levels. The proponents of this theory are fond of suggesting that 1969-1970 constitutes the largest bear market rally in history. This is like a forecast that the sun is not gOing to rise tomorrow morning. It is a dra- matlc'statement;-almost certainto be widely quoted;but it tends to be somewhat at variance with history. The fact is that there has never been a bear market rally which lasted for II months or moved up 50 as the 1969-1970 advance did. This was a separate market cycle, just as the present downswing, when it ultimately runs its course, will be regarded as such a cycle. Bear markets by their very nature tend to be irrational periods, and, during such periods, a rational assessment of probabilities is the only intelligent course. The investor is now being bombarded with talk of uncertainty as to the economic outlook by many of the same people who were assuring him last summer that that outlook could not be better. The controlling factors at present, however, are not econo- mic but emotional, just as they have been in all downswings in all free markets throughout recorded history. And, as always, the coming bottom, when it arrives, will produce prices that will caUSe many investors later to wonder why they lacked the courage to take advantage of them. 1D0w-Jones Industrial (Noon) 809.94 &P (Noon) 91.28 ' iAWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or e)l;pression .of opinion or any other moHer herem contained IS, or IS to be deemed to be, directly or indirectly. on offer or the sollciiotlOn of on offer to buy or ell any security referred to or mentioned The mOIler IS presented merely for the conveT'lentt of the subscriber. While -lie believe Ihe sources of our Informa tlon to be reliable we In no way represent or guarantee the accuracy thereof nor of Ihe statements mude herem Any action 10 be loken by the subscriber should be bosed on hiS own'mvestlgatlon and Informallon Janney Montgomery Scot!, Inc, as a corporation, and its officers or employees, may now have, or may later lake. poSitions or trades 10 respect to any secuTilles mentioned 10 thiS or any future Issue, and such posihon may be different from any views now or hereafter expressed In thiS or any other Inue. Janney Montgomery Scali, Inc, which IS regIstered with the SEC as on mvestmenl adVisor, may give odlilce to Its If\eslment adliisory and other cvstomers Independently of any slalemenl1 mode In IhlS or 10 any olher issue FUrlher IOformalion on any seCtmty mentioned herein IS available on requesl

Download PDF