Viewing Month: February 1972

Tabell’s Market Letter – February 04, 1972

Tabell’s Market Letter – February 04, 1972

Tabell's Market Letter - February 04, 1972
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I TABELL'S MARKET I LETTER , I -.J 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMOER AMERICAN STOCK EXCHANGE February 4, 1972 ReguTar readers orthhdelterwlll no doubt be aware'thatwe'a's'-market technfcians, 'have alwayS– been more than a little dubious about the applicability of economIC forecasting to stock market fore- casting. Thus, m recent months, while not denying the great technical strength shown by the market itself, we have remained skeptical about some of the recent economic forecasts which have been offered as a rationale for the market rise. Nonetheless, it IS always desirable, we thmk, to keep an eye on the economic background as it develops and to try to guess what surprises could be in store for us. In terms of potential uncertainties, the present situation is especially interesting. Economic writers (just as, we suppose, stock market writers) often appear to be frustrated authors of fiction. There is a tendency to create heroes and vllhans, good guys and bad guys, and, if, later. the good guys fall from grace, why, this is the stuff of which great fictIOn is made. In much of the writing about the economy m 1968 and 1969, the good guys were unquestionably the o-called mone- tarist economists, those who tended to emphasize the Importance of fluctuations in monetary aggre- gates as being important to the course of the economy. Their academic dean, Dr. Milton Friedman, was assumed to have the ear of the Nixon administration and George Schultz, one of their number, was firmly implanted in that administration's inner circle. Such bastons of monetary theory as the Federal Reserve Bank of St. Louis and the First National CIty Bank of New York were widely quoted, and weekly money-supply figures regularly supplied lead stories for financial pages. All this was not without reason. It was the monetarists who had first forecast that the sharp ex- pansion of monetary aggf8;atEs throughout 1967 and 1968 suggested the dangers of a record-setting inflation. The subsequent contraction m the money supply in 1969 also correctly forecast the 1969- 19 Zp. ceces sion . .Moreover, themoneJarists .as.sured .us., .this .contraction.would. help .to.bring abouta- slowdown in the inflation which plagued the economy in the late 1960's. As 1971 emerged, however, dIsenchantment set in. The recession — which the monetarists had correctly forecast and a great many others had not — had arrived on schedule. But the slowdown in inflation, by early 1971, had totally failed to materialize, and the administration was severely taken to task, especially by non-monetarist critics. for bemg in the uncomfortable position of presiding over a recessIOn and an inflation at one and the same time. Thus the impOSItion of the Phase 1 wage- price freeze in August and the Phase 2 price controls m November were widely mterpreted as the formal castmg out of the monetarists from the administration temple. By the end of 1971, John K. Galbraith, mirablle dictu, was saymg kmd words about RIchard Nixon, and conventional economists were emerging from the woodwork armed with rosy forecasts for 1972. MeanwhIle, back in the banking system, there continues to be a money supply, and ItS action during 1971 has been interesting. For the first seven months of 1971, demand deposits and currency mcreased at the annual rate of II. 6, just about the most rapId mcrease for such a period in modem times. Smce that time, the mcrease in monetary aggregates has been just about mI. All this has received scant attention from a financIal community busily concerning itself with Phase 2. What it all means, of course, is sub j e c t to varying interpretations. If we SImply measure the money'supply increase for the entire year 1971, it turns out to be a more-or-Iess normal 6. Very recent behaVIOr of the monetary figures ind,cat3s mild expansion, suggesting that the 6 rate might continue. Yet the slowdown of late 1971 at least raises some questIOns. Comparable slowdowns have occurred seven times-in the'-pa-st-cgince 1947 and five-of the seven; with' lead times generally running around a year, have led to recessions. Yet that ugly word would certainly be the last to occur to us as we listen to the deluge of optimistic 1972 forecastmg. Now lead times, as monetarists learned in theIr erroneous forecasts of slowed mflatlon for 1971. are notoriously imprecise, and we have no way of knowmg whether the erratIc growth of money supply m 1971 will have i'my effect at all or, assuming an effect, how long it WIll take to become manifest. We think It would be folly, however. to proceed on the assumption that the imposition of price controls has ushered in some sort of new era and that fluctuations in monetary aggregates can Simply be Ignored. Dow-Jones Industrial 11200 p.m.) 904.80 S&P(1200 p.m.) 104.68 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTmn —. No statement or expression of opinion or any olher moHer herein contamed 1, or IS to be deemed to be, directly or IIld.rec;tly. on offer or the SOI,c,lotlon of on oHer to buy or sell cny security referred to or mentioned The matter 15 p-esenled merely for the converlenee of The subKl'lber While we beheve The sources of our Informohon to be reliable, we In no way represent or guarantee Ihe accuracy Thereof nor of Ihe slolements mude herein Any aellOn 10 be token by the s\lbscrober sho\lld be based on hiS own InvesTigation and Information. Janney Montgomery Scott, Inc, a a corporation, and lis offlce or employees, may now have, or may laler lake, positrons or trodes In respect to any sec\lrltles menltoned In thrs or any f\llvre ISS\le, and S\lch position may be different from af'ly views now or hereafter epressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice To Its Investment adviSOry and other customers Independently of any statements made In thIS or In any other Issue Further Information on any seo.mtv menhoned hereen IS avalloble on feque!

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Tabell’s Market Letter – February 11, 1972

Tabell’s Market Letter – February 11, 1972

Tabell's Market Letter - February 11, 1972
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''–. TABELL'S MARKET LETTER , – – —-'— — …. –J 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, lNC MEMBER AMERICAN STOCK EXCHANGE February 11, 1972 Last week's market behavior should have been surprising only to those die-hard few who stil stubbrnly refus to b.e!iey that the presept era represents an extended bull market. Havingdeclinedmildly inmid'J1muaryand consofidated duringtlle endaf JariuarYand'eayFebruaiy, – the major market averages shook off their lethargy and spurted ahead in Wednesday and early Thursday's trading until mild profit-taking .set in at noon Thursday. Most major indices, the Dow Utilities being a notable exception, m 0 v e d ahead to new highs for the rise from their November lows. The broad-based indices continued to outperform the Dow, however, in that they moved decisively above their highs of April, 1971 made more than nine months ago, thus confirming the interpretation which this letter has been sUJgesting for the past month that the bull market, which began in MlY, 1970, is, though mature, still intact with the weakness of the Summer and Fall of 1971 constituting no more than an interruption of a basically rising stock market environment. The following table, giving recent 'peaks for the Dow and S &P 500 — which is reasonably re- presentative of the behavior of most broad-based indices –, indicates the distinct downward bias of the Dow vis-a-vis the S&P over recent years. At its recent high the 500 was 3 above its peak of September following the Phase 1 announcement. It had moved slightly above its April, 1971 high and stood only 2.5 below its all-time high scored in November, 1968. It was also, interestingly enough, 12 above its February, 1966 peak which was scored coincidentally with the famous 1000 peak on the Dow Industrials. By contrast, the Dow,at its recent high, was 7 below its February, 1966 level, 3 below its high of April, 1971 and had just barely managed to equH!.he figure attail1d last Sp!;.mber. It is inte;esting to nte!hat !.f the D.11ad uic;ated 1.-. the action of the S &P over the past six years, it would have sold for 1153 in 1968 and arOlina the 1120 level in April of last year and again today. Feb. 1966 Nov.-Dec. 1968 April 1971 Sep. 1971 Recent DJIA 1001.11 994.65 958.12 925.67 931. 81 S&P 94.06 108.37 104.85 102.25 105.59 The better performance of the broad-based indices has, parenthetically, some significance for the market. While not totally reliable (the S&P outperformed the Dow just prior to the 1961 top), better performance by these averages has generally tended to occur during strong advancing phases rather than close to market peaks. There is, thus, some indication in this performance that the advance still has a fairly substantial future. If we are ready to assume that we are, in fact, in a continuing bull market, comparison with past such periods becomes useful and instructive. If one fits a trend line to the action since May, 1970, one finds that the Dow has been advancing at the approximate rate of .06 per day over the past 435 trading days and the S&P has been advancing at the somewhat faster rate of .078. These rates of advance are roughly comparable to the upswings of 1962-1966 and 1957- 1961. In the former the daily rate of percentage advance was. 07 and it was. 05 in the latter. Interestingly enough, the present advance, to date, has been a great deal more dynamic than the bull market which preceded it, that of October, 1966 to December, 1968. For that period, the rate of advance was only .025 for the DJll and .04 for the S&P. – It wil(be interesting to see which model proves more-accurate in terms of time. Thei966- 1968 rise lasted only 519 trading days and the current one,as noted above, is already 435 trad- ing days old. Thus, if the most recent model were conformed to, barely four months of life would remain in the present rise with a price target of not much better than 975-1025. If we were to duplicate the experience of 1957-1961 or 1962-1966, a good year and a half would remain in the advance with a probable ultimate target in the 1100-1200 range. Despite the current similarities of the present market to the earlier upswings, we continue to be inclined, for reasons repeatedly expressed in this' letter, to suggest that the current ad- vance may wind up more closely approximating that of 1966-1968 than the earlier more dynamic bull markets. Dow-Jones Industrial (1100 a. m.) 917.07 S&P (llOO a.m.) 105.10 AWTmn ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL No statement or expression of opinion or any other matter herein contained IS, or'IS 10 be deemed to be, directly or indirectly, an offer or the Solrcltatlon af an affer 10 buy hon to or sell any security be reliable. we In referred no way 1r0eporresmenetntoirongeudaraTnhteeemathtteeratIScuprraesyenttheedremoferneolyr for Ihe canverlente of the subsrlber While we belreve Ihe sources of our Informaof the statements mude herein Any oellon to be taken by the subSCriber should be bas.ed on hiS own inVestigatIOn and information. Janney Montgomery Scott, Inc. as 0 corporallon, and Its officers or employees, may now have. or may later lake. poSitions or trades In respect to any securlhes mentioned In HilS or any future Issue, and slJch pOSlhon may be different from (Iny views now or hereafter elpressed In thIS or (Iny olher U,ue Jonney Montgomery Scott, Inc. which IS registered With the SEC os on Investment adVisor, may give adVice to lIs Investment advisory (Ind othel customers mdependently of any stotements mode In Ibtls or In any other Inue. further Information on any security mentioned herein is aVailable on request

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Tabell’s Market Letter – February 18, 1972

Tabell’s Market Letter – February 18, 1972

Tabell's Market Letter - February 18, 1972
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– – – – – .i I, TABELL'S MARKET LETTER '-. ' 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MeMBER AMERICAN STOCK EXCHANGE February 18, 1972 We touched lightly a few weeks ago on the recent behavior of margin debit balances. We think these figures are of more than passing interest at the moment by reason of their behavior, both over the pastfew months and the past few years, and also for their implications as to market action in 1972. 'Let us first dispose of the most recent'action'; In December,-1971-, margin-debt held bycNYSE member firms advanced 490 million, which rise constituted the largest month-to-month rise since the series has been computed. Performance in January was almost equally spectacular with an additional 300 million being added to total debit balances. This sharp advance of almost 800 million over two months was especially interesting in that it may suggest a reversal of the way the margin speculator has been behaving ever since 1968. This post-1968 behavior moreover itself constituted a dramatic change in the way the debit balances series had acted prior to the 1968-1970 bear market. Date High No. Months Next High as of Date High Date …!&!y. Decline Exceeded Later of Previous High Jan. 1957 2,918 Dec. 1957 2,550 13 May 1958 5 147 Dec. 1961 4,294 Jul. 1962 3,592 16 Feb. 1963 7 123 Jun. 1966 5,310 Jan. 1967 4,850 9 Jun. 1967 5 125 Jun. 1968 6,690 July 1970 3,780 43 Never 22 (to date) The table above outlines the behavior of NYSE margin debt shown in millions of dollars during and sub- sequent to each of the major bear markets from 1957 to date. As can quite clearly be seen, each of the first three downswings involved some liquidation of margin debt, with declines between 9 and 16 taking place during each market drop. In general, debit balances tended to peak out almost coincidentally with the market's high and to reach their bottom a few months after the low was made. As the table shows, how- ever, liquidation of margin debt in the bear market of 1968-1970 was a great deal mor!, extensive, with a decline of 43 being posted. The sharp drop of that period involved the liquidation of almost 3 billion of sucfi -debt, certainlytne iiITgeSt such-liquidation ever seen in the post\Var period 'The- decline in nUl11ber of margin accounts was equally dramatic. From a high of 945,000 such accounts in the Fall of 1968 the total continued to drop to 650,000 as recently as November, 197L The table also shows, quite obviously, that the recovery from the lows of July, 1970 has been far les s dramatic than that of previous bull markets. Invariably in the past, the debit balance series recovered all of their los ses within five to s even months of their low. Now, 22 months into a bull market, NYSE margin debt remains almost 1 billion below its high of June 1968. The current debit balance figure appears even lower when viewed as a percentage of total market value of all listed stocks. At the 1957 and 1961 highs, the old net debit balance series reachedl.3 of total mar- ket value and, at the 1966 and 1968 highs, the slightly-lower NYSE margin debt series peaked out at 1.1 of total market value. For January, 1972, debit balances of 5.7 billion constituted just. 7, of an estimated 800 billion total market value. Thus, were the series to rise to the l.1 figure attained 'in 1966 and 1968, it would mean some 3 billion of new purchasing power for common stocks. It will also involve a rise in margin debt to some 130 of the old 'high, a figure which the table above shows to be in line with past action. Another confirmation of the potential inherent in margin accounts is found in NYSE figures on potential buying power in such accounts. For January, un de r the stimulus of the recent margin requirement reduc- tion, this figure jumped to almost 10 billion, by far a new record. Moreover, the number of accounts had recovered to only 685,000 at the end of January vs. the old high of 945,000. Thus, if the December and January figures are any indication of a desire on the part of the margin spec- ulator to return to a market where he has obviously been a minor factor over the past few years,.the impli- cations could be important. One might almost say, in fact, that it is crucial that he does return. Net new purchases by mutual funds for 1972 will likely be little different from 1971, and there is reason to suspect that growth in pension fund net purchases may also slow. Meanwhile, new issues of common stock are expected to continue at record levels. Thus, a further awakening of public stock interest could be the crucial factor in determining the course of prices over the next year. If the margin speculator does return,moreover, it will have important implications for the character of market leadership. Historically, he has tended to prefer low-priced stocks to high-priced stocks, secondary issues to blue chips, and has shown a greater-thaverage interest in the American Stock Exchange. If his purchases continue to increase, these preferences should become manifest in market action. NOTE Statistical series on debit balances have been revised three times in the recent past. The old Cus- tomer's Net Debit Balance series was superseded in 1965 by the NYSE Margin Debt series which, in turn, was slightly revised in May, 1970. All figures above represent the series in use at ,the time. It is believed that the statistical comparisons are valid. ANTHONY W. TAB ELL Dow-Jones Industrial (1200 p.m.) 917.37 DELAFIELD HARVEY TABELL K&MP(1200p.m.)105.15 ' ' 0 statement or expreUlOn of opinion or any other matter here'n contolned IS, or '5 to be demed to be, directly or indirectly, on offer or the sollcltotlon of on offer to buy or sell ony security referred 10 or mentioned The moiler 15 presented merely for Ihe convel'!lenC'f of the subscriber While we belleve the Ources of our information to be rellOble, we In no way represent or guarantee the accuracy thereof nor of Ihe statements mude herein Any actIOn to be token by the subscrober should be hosed on hls own Investigation and information Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, may now have, or moy loter toke, positions or trades in respect to any seamlles mentioned In thiS or any future Issue, and such position may be different from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scoll, Inc. which IS registered With the SEC as on Investment adVisor, may give adVice to Its Investment adVISOry and othe, customers mdependently of ony statements mode m th,s n In any other Issue further mformahon on any secuflty menhoned herein '5 ava.lable on request

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Tabell’s Market Letter – February 25, 1972

Tabell’s Market Letter – February 25, 1972

Tabell's Market Letter - February 25, 1972
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TABELL-S MARKET LETTER J 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORI STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE February 2S, 1972 As part of our effort to follow industry group action, we regularly examine the chart patterns of the various Standard & Poor's Industry Group Indices in an attempt to determine whether each group'is in an torup.nd or owntrend . A fairlobje!!ve set of standards can be applied. A group whose long-term mov- fng a-verage-has been rising someflmecall be saidt6 be in- if uptrendIf -ash()rterfriil ili9 – .. .-.. average moves below the long-term one, early stages of weakness can be noted and, if the long-term average itself begins to turn down, that weaknes s can be said to be pronounced. Downtrends and rever- sals of those downtrends are, of course, a mirror image of uptrends and uptrend reversals. The table below divides the group indices into six classifications which we find useful. The groups listed in the first three columns maintained uptrends throughout the 1971 weakness, and the stocks in the three right-hand columns moved into downtrends during the 1971 correction. Their current status is as indicated by the column headings. GROUPS IN UPTRENDS Some Pronounced Continuing Weakness Weakness Air Trans port Auto Parts Automobiles Roofing NONE Auto-Trucks Finance Brewers Distillers Variety Stores Savings & Loan Soft Drinks Air Cond. Chemicals Ins.- Multi-Line Ins. Prop & Liab Drugs ' Electrical Equip. – HousehidAppC — Small Loans Biscuit Bakers Dairy Oil Well Mach Mobile Homes Offshore Drlll' g Pollution Cont'l Broadcasters Restaurants Dept. Stores Mail Order Soap Truckers Vending Life Ins. Continuin!l Confectonery Meat Packing Forest Prod Synthetic Fib GROUPS IN DOWNTRENDS Some Pronounced Stren!lth Streng!h Aluminum Atomic Energy Heat & Plumbg Cement Coal Containers – Conglomerates Paper Containers – Cosmetics Metal & Glass Bread & Cake Copper Coal Mining Electrical Mach Home Fum. Canned Foods Hotel/Motel Corn Refiners Lead & Zinc Packaged Foods . -Leis-ure Time Machine Tools Mach-Agricul Const. Mach Mach-Speclty Industrial Mach Metal-Fabrica1e Steam Gen. Mach Motion Pictures Metals -Misc Office Equip Oil Producers Shoes Oil Domestic Steel Oil Int'l Sulphur Paper Textile Apparel Publishing Textile Prod Radio-TV Mfrs Tobacco Railroad Equip Toys Real Estate Banks – NYC Discount Stores Banks-Outside Food Stores NYC Sugar-Beet Investment Cos Sugar Cane Tire & Rubber ……. . -..i . Utilities-Elec Util. Nat'lGas Util Pipeline ….. —– Util. Telephone An analysis of the list is interesting. It is a curious bear market throughout which one-third of all groups remain in uptrends, but this is precisely what happened in 1971, thus.- reinforcing the theory that the decline was no more than intermediate-term in scope. What is most interesting, however, is the sharp reversal that has taken place since November. At the worst stage of the downswing, some 61 groups had moved into downtrends. Of those only four continue in those downtrends today, and S7 have at least suggested the possibility of reversal with the possibility being particularly strong in 2S of those cases. Meanwhile, of the 33 groups that emerged from the 1971 experience unscathed, only seven are now show- ing signs of weakness, and none are showing that weakness in advanced stages. Now it is axiomatic that, for a bear market to occur, stocks must go down, and the point of the above analysis is that precious few are now doing so. The process of top formation generally consists of a growing number of individual groups showing signs of deterioration. An inspection of the table shows that precisely the opposite is taking place today. ANTHONY W. TAB ELL Dow-Ioes Indu)triaI 1200 p.m.) 922.03 DELAFIELD HARVEY TABEII. S&P (2.99 .m. 196. 1 '. – h- I I If A.WTIl\ll,uyNo statement or expression of opInion Of any olher maHer herein contolned IS, or IS to be deemed 10 be;-(llrectly or mdncc11y, on offer or 1 e 0 1(;ltotlon a on 0 er or sell Clny Ilcunty referred to Or menhoned The molter IS presented merely for Ihe converlenee of the subscriber Wl'ule -He believe the sources of allr informa- tion to be reliable. we ,n no way represent or guarantee Ihe accuracy Ihereof nor of Ine statements mude herein Any oellOn 10 be token by the subscriber should be bosed on hiS own mveu,gohon and Informatton Janney Montgomery Scoh, Inc. as a c;orporallon, and lIS offIcers or employees, may now have, or may laler toke, pOSItions or trades In respect 10 any secutll1es mentioned 11'1 thl! or any future Inue, and such pOSitIon may be dIfferent from any vle now Of hereafter expressed In thl5 or any other Inue Janney Montgomery Scott, Inc, wtch IS regIstered WIth the SEC as on Investment adVIsor, may gIve adVIce to Its Investment adVISOry and othel customers independently of any sfatements mode In thIS or In any other Issue Further InformatIon on any security mentioned herein IS avcllioble on requt

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