Viewing Month: January 1972

Tabell’s Market Letter – January 14, 1972

Tabell’s Market Letter – January 14, 1972

Tabell's Market Letter - January 14, 1972
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TABELLS MARKET LETTER -.. j 909 STATE ROAD, PRINCETON NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCI( eXCHANGE, tNC MEMBER AMERICAN STOCK eXCHANGe – We have referred in recent letters to the fact that 1972 is a Presidential election January 14, 1972 year and suggested that this fact should be taken into account in trying to foresee the price pattern probabilities for the next 12 months.' Numerous studies have been made of-market action in such-years,and'it'ls-an indubitable fact that normal market patterns do tend to be slightly altered. In an effort to tabulate election year action succinctly, we have prepared the following table. It shows, for each year, the President elected and his party, followed by the average price for each month expressed as a percentage of the previous December's close (i.e., 110 means the market was up 10, and 90 means it was down 10). Year President Jan. Feb. Mar. May June l!!!v.. Aug. Sept. Oct. Nov De. 1900 McKinley R 101 103 .104 105 100 9B 9B 99 97 100 lOB 114 1904 Roosevelt R 102 99 99 101 99 99 103 107 112 11B 125 126 190B Taft R 105 100 105 III 117 117 123 126 125 126 134 13B 1912 Wilson D 100 99 102 106 105 105 106 109 109 109 lOB 103 1916 Wilson D 99 9B 97 96 9B 99 9B 99 102 105 107 103 1920 Harding R 99 91 97 96 91 B9 B9 B6 89 89 85 77 1924 Coolidge R 103 104 102 100 99 101 109 113 112 1I0 115 119 1928 Hoover R 99 98 103 110 113 108 108 112 120 123 131 132 1932 Roosevelt D 103 101 102 76 66 59 63 89 102 88 87 82 1936 Roosevelt D 102 108 1I2 1I2 104 108 116 1I8 120 126 130 128 !940 Roosevelt D 99 98 97 98 85 76 80 82 86 87 88 85 1944 Roosevelt D 102 101 105 101 105 109 112 110 108 III 110 115 1948 Truman D 97 92 94 101 106 110 108 104 103 106 100 99 1952 Eisenhower R 102 100 100 100 100 102 105 106 104 104 105 109 1956 Eisenhower R 97 98 104 105 103 102 107 106 103 102 100 102 196U' Kennedy-''''''D 'j. If'''-'-'99'''''-9S-gz-'93 '-92 96'—9Y'-'94 92''901—–93 9i 1964 Johnson D 102 103 105 107 109 lOB III 110 III ll3 115 ll2 1968 Nixon R 98 94 92 99 101 104 104 101 105 108 109 110 Incumbent party did not control Congress. Incumbent party not re-elected. The eighteen years to date show an approximate normal distribution. Ten could be considered bull markets, whereas three (1920, 1932 and 1940) are distinct bear-market years. In five years, the trend was flat, as evidenced by the fact that the December average price was .within 5 either way of the previous December's close. Of even more interest is the general tendency towards a flat trend or moderate weakness during the first half of the year. Ten of the IB years showed little market change through June. Indeed, only in the three years which later turned out to be full-fledged bear markets was the action in the first half predo- minantly on the downside. It is worthy of note that a downward bias tends to be introduced on two sorts of occasions. First, when the incumbent President loses the election and, second, when the incumbent party does not control Congress. This latter tendency is especially worthy of note since such a condition obtains in 1972. Despite the fact that 10 of IB election years were bull-market years, none of the 10 took place in years when the President did not control Congress. In the six years that this has occurred, the market was down sharply twice and flat four times. The first statistic suggests the market may be a good forecaster of election returns. In none of the six years when the incumbent lost the election was the market up more than 5 in the first half of those years. Thus a booming market between now and June would augur well for Mr. Nixon's chances. The most consistent fact about election-year markets, though, is the definite tendency toward'a strong second half. Indeed, as the table shows, in 15 of the IB years the average price for December was higher than the average price for June. Even in two of the three bear markets, 1932 and 1940, the market rallied in the second half from the June lows. Furthermore, in one of the three exceptions (1912) the June-Decem- ber difference was miniscule, and the market spent most of the second half in higher territory. Only in 1920 and 194B were June prices significantly lower than December's. The problem, of course, is to fit all this into the pattern for 1972. The strength of the recent recovery, it seems to us, argues against the expectation of any serious weakness during the first half of the year. As suggested above, however, the tension between the President and Congress could well produce a market that showed little essential change from December during the first half. During the second half, we would expect the normal tendency toward a strong market to take over and, in this context, it is quite probable that the year's high might be made in the Fall. Dow-Jones Industrial (1200 P.M.) 905.4B , ANTHONY W. TABELL S&P (1200 P.M.) 103.20 AWTmn DELAFIELD, HARVEY. TAB ELL No statement or expressIon of opinion or any other motter herem tonlolrled IS, or .110 be deemed to be, directly or ,ndirectly, on offer or the sollcltallon of on offer to buy or sell any ecuflty referred 10 or mentioned The mattcr .s presented merely for the converlence of the subSCriber While ….e believe the sources of our Informot,on to be reliable, we in no wov represent or guarantee lhe accuracy thereof nor of the statements mude herein Any achon to be token by Ihe subscriber should be based on his own investigation and Information Janney Montgomery Scot', fnc, as a corporation, and Its officers or employees, may now have, or mav loter take, positions or trades In respect to anv secuntle5 mentioned In thiS or any future IS5ue, and such posITIon may be different from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With Ihc SEC as on IfIvestmenl adVisor, may give adVice to Its Investment adVisory and other customers IfIdependently of any statements mode on thiS or In ony other Issue Further .nformotlOn on any security mentioned herein 15 available on request

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Tabell’s Market Letter – January 21, 1972

Tabell’s Market Letter – January 21, 1972

Tabell's Market Letter - January 21, 1972
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i I, TABELL-S I MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCI( EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE January 21, 1972 Analysis of the stock market cycle is similar, in many ways, to doing a jigsaw puzzle. Fitting of one piecallows (oLtl!e 3Icldition of further pieces, and this goes on until, finally, a coherent picture begins to take sha-pe.- Likewise;-iththe;3tock iii1irket,'-'as infiiorcanacr-nferme'cHate-cyclesunfold;'''— , – we are able to put together an interpretation of the major cycle that fits the available facts. Let us briefly recapitulate the market history of the past nine months. The Dow reached its high last April 28 at 950.82 and spent most of the Summer and Fall of 1971 declining, reaching a closing low of 797.97 on November 23, thus dropping 16.08 over a period of 156 trading days. In the 38 trading days to January 18, 1972 which followed, some 78 of the loss was recovered with the index advancing to 917.22. The advance in the broad-based indices was even more dynamic with 95 of the loss having been recovered in the S&P 500 and a similar amount in the New York Stock Exchange Index. The problem is what sensibly to make of all this. Those bearishly inclined will point to the fact that new highs have not yet been scored and will, therefore, suggest that the advance from the Nqvember lows is nothing more than an interruption in an on-going bear market. The naturally opti- mistic will point to the vigor of the December rise and assure us that bright new days are in prospect. As we look at the market's action in terms of historical precedent, however, a coherent picture begins to emerge. Let us first dispose of the theory that the action over the past month and a half constitutes Simply an interruption in a continuing down cycle. This interpretation unfortunately flies in the face of all market history. The Dow has advanced just under 15 since the November lows. There is no bear market in the post-war period that has been interrupted by an advance of anything 1ike t his magnitude', and-,it-becomes ,therefore,-qui-te' clear-inretrospect-that4a-st—November-constituted—a bottom of some importance. The degree of that importance is the next major qestion which must be examined. Was November, 1971, like May, 1970, for example, a bottom of major cyclical magnitude This must be answered in the negative. Most of the factors common to major bottoms were conspicuous by their absence last November. The reversal, therefore, assumes intermediate-term rather than major proportions. This being the case, questions are raised about the decline which preceded the November rever- sal. Quite obviously, based on the nature of the turn, the decline cannot be called a major bear market cycle. Examination of the decline itself supports this interpretation despite the 16 drop in the averages. Too many stocks resisted the decline to suggest that 1971 was a major downswing. It, therefore, must be regarded as an interruption in an on-going advance whose genesis goes back to May, 1970 and for which the highs have not yet been seen. There is fairly well-documented prece- dent for interruptions of this magnitude near the terminal stages of upswings. The most obvious recent example is January-October 1960 which almost paralleled the recent drop both in time and percentage decline. While the above exercise may seem academic, we think it is important because it fixes us, at the present time, at a recognizable point in a market cycle, 1. e., somewhere in the advanced stages of a mature bull market. If this is, in fact, the case, the following conclusions can be drawn from the history of similar market cycles. 1) The advance, now almost two years old, probably has a limited amount of both time and amplitude rema'ining. A target of around 1050 to be reached some . . – 'tlmethis Fall is plausibie,biit.even assuming'this to be the case some three–quartrs of the move — in the major averages is already behind us. 2) The remaining phase of the advance, while not par- ticularly dynamic in the averages, could be quite exciting in terms of individual stocks, es pecially those of a more speculative genre. This can be a very exciting game, of course, but the player who decides to participate should realize the risks he is taking. 3) The final probability, as the bull market reaches a mature stage, is that we will be deluged, over the rest of the year, with optimis- tic statements about the outlook for the economy. We have already begun to see this with the emergence of a standard forecast for 1972 almost too good to be believed. We think that the up- coming year will be one to view such roseate projections with some skepticism. Dow-Jones Industrial (1200 p.m.) 904.43 S&P (1200 p.m.) 103.33 ANTHONY W. TABELL AWTmn DELAFIELD, HARVEY, TABELL No statement or expreSlon of opanlon or ony other motter herein contained IS, or IS 10 be deemed to be. dIrectly Of mdHectly, on offer or the SOllCflotlon of on offer to buy or sell (lnr, seC\,lrlty referred 10 or mentioned The motter IS presented merely for tke convenienCE! of Ike subscriber WhIle we believe Ihe sources of our Informa- tion to be rellob e, we m no way repreent or guorontee Ihe OCCUTOCY thereof nor of the fotemenls mude herem Any ochon to be token by the subSCriber Ishould be baed on hiS own Investigation and Informallon Janney Montgomery Scott, Inc, as a corporal lon, and Its officer; or employees, may now have, or may oter toke, positions or trodes In respect to any securihes mentioned m Ihls or any future nsue, thiS or ony other Issue Janney Montgomery Scon, Inc, which is regIStered wllh the ond SEC such as on pIOnSvietisotmn emntoyodvblesdri,ffmeraeyntgfirvoemadaVniyce.vtioewItsS now or hereafter expreued In Investment adVISOry ond othel customers independently of ony statements mode In thIS or In any other issue Further Informottan on any security menhoned herem IS available on request

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Tabell’s Market Letter – January 28, 1972

Tabell’s Market Letter – January 28, 1972

Tabell's Market Letter - January 28, 1972
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TABELL'S MARKET LETTER .- 909 STATE ROAD. PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VORk STOCK EXCHANGE INC MEMBEfl AMERICAN STOCK EXCHANGE January 28, 1972 . ,Mtersix. consecJ.1tive days .of decline fromJhe. highreg.ched. earlJr. th!s. Il!0t,-I tock.., market again surged ahead on a broad front at the end of last week. The Dow reversed itself sharply with a lO-point gain in heavy volume in Thursday's trading and, in early trading Friday morning, had tacked on another 10 points. As has been the case recently, the Dow was actually weaker than the broader-based indices. While the senior index was still trading significantly below its high of mid-January, the S&P 500 had, by Friday, moved above that level. posting a new high for the recovery and again flirting with its April. 1971 intra-day peak which. if exceeded. would bring the index to a new high for the bull market. The really significant news, however. may have taken pIa c e two blocks west of Wall Street. as the American Stock Exchange Price Change Index, which two weeks ago surpassed its April high, surged further ahead to the highest level attained since early 1969. The recent better relative action of the American Stock Exchange Index may have more than passing significance. Another statistic of interest is the fact that, for the week ended Decem- ber 31, 1971. volume on the AMEX reached 26,090,000 shares, which figure constituted 36.2 of New York Stock Exchange volume for the same week. Since that time AMEX volume as a per- centage of NYSE volume has been hovering close to that figure. Now the 36 figure, as we shall see, is not at all high on a historical basis. It is, we think, significant. though, that this is the highest figure attained by this ratio in over two —years-'isince- JanuaryJ of19 70 …-InLother-words-.in-the.entireadvance.to-date ,activity-on ,the . AMEX has been unable to attain the levels recently reached. Yet there still appears to be further room on the upside. In the 1966-1968 bull market, AMEX volume, on a monthly basis, reached over 60 of New York Stock Exchange volume. In 1966 it reached 55 and in 1961 it got as high as 70. The recent action, in other words, could be a beginning of the sort of rise in activity in more speculative stocks which has been a feature of every bull market of the post-war period and has been conspicuous by its absence to date. It is, moreover, logical that such a phenomenon should begin to emerge at this particular point in time. We cited, last week, the reasons for the assumption that the present constitutes an advanced stage of a bull market proces s that goes back to May, 1970, interrupted, tempo- rarily, by the weakness of April-November, 1971. It is in just such advanced stages that an in- crease in speculative activity generally begins to rear its head. The prospects for a dynamic move in secondary stocks, moreover. become even greater when one looks for the major areas of buying power which could fuel a further rise in the stock market. As we have been suggesting for the past few months, the prospects for an increase in net insti- tutional purchases of equities appear, at the moment, to be limited at best. The major reserves not yet committed to equities belong to the margin trader who, so far, has steadfastly refused substantially to increase the level of his debit balances as the market has moved -ahead, despite two reductions in margin requirements since 1970. New York Stock Exchange margin debt, – as of the endof-1971, totalled S.4-billion vs; a high of 'almost 7 billionin 1968iIt'is-woitti I noting that, like AMEX volume, after being sluggish throughout most of the market advance, this figure also has begun to rise at a more rapid rate. Now, how the investor treats the prospect of a more speculative market environment is, of course, dependent entirely on his own objectives. The conservative investor is probably well advised to ignore the whole thing entirely, an easy task at the current early stages but one which will become more difficult as speculative activity becomes more obvious. The aggressive investor, of course, will probably opt to participate. It will be important for such investors; how- ever, to maintain a certain attitude of skepticism. As long as one realizes such a phase can- not continue foreover, it can be one highly productive of profits. Dow-Jones Industrial (1200 p.m.) 904.88 ' S&P (1200 p.m.) 104.10 ANTHONY W. TABELL AWTmn DELAFIELD. HARVEY 0 TABELL No statement or expressIon of opmlon or any other motter herem contOlned Is, or 15 10 be deemed 10 be, directly or Indorectly, on offer or Ihe soliCItation of on offer to buy or sell any seoJflty referred 10 or mentIoned The motter IS presenled merely for Ihe convellentt of the subscrIber WhIle we believe the sources of our information to be rellCble, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any aCllon to be taken by the subSCriber should be bosed on hiS OVin investigation and information Janney Montgomery Stet', Inc, as a corporation, and Its offICers or employees, may now have, or may raler take, poSItions or trades In respect 10 any S!!CUfitles mentioned In thiS or any future Issue, and such pOSition may be different from any views now or hereafter expressed In this or any olher Issue Janney Montgomery SCalI, Inc, which IS registered With the SEC a5 an mvestment adVisor, may give adVICe 10 lIs Investment adVisory and other customers mdependently of any statements made In thiS or In any other Issue Further Information on any sectmty mentioned herein IS aVOllable on request

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