Viewing Month: May 1972

Tabell’s Market Letter – May 05, 1972

Tabell’s Market Letter – May 05, 1972

Tabell's Market Letter - May 05, 1972
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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 r– My 5, 1972 It all began, hindsight tells us, around March 6, some two months ago. Through that date equity markets had been in an uptrend as pleasant as any investor would have a right to desire. For some five months, the Dow-Jones Industrial Average had remained within the confines of an uptrend chan-tlen'lS il\(rat-lne 'fafEnrf'Cpproximately r'17-poir'itspetdlfy, 6nitswaytochalking'up'1l-21 'advance- – from the November low. This trend had as steep an upward slope as almost any intermediate-term advance on record. Throughout the period November 23-March 6, breadth action was well above aver- age with advancing stocks regularly exceeding declining issues by a wide margin. And, as the ad- vance moved ahead, a gratifying number of issues were pushing forward to new 1971-1972 highs. Then, in early March, an abrupt reversal of momentum occurred. This reversal has been perhaps less apparent on the surface than when one examines underlying market statistics. In terms of the averages, action has hardly been all that bad. Indeed, the Dow, currently, is at approximately the same level as It was when the whole process started. The first phase was a consolidation during which the Dow held roughly between 950-930 for the better part of the month of March. This was followed by what seemed to be a strong advance to a closing high of 968.92 on April 18. Following that high, in late April and early May, the Dow declined back to the 950-930 support area afforded by the March consolidation. As we suggested above, however, this innocuous performance by the averages masked consider- able underlying deterioration. Throughout the 17 trading days of the March consolidation, declining stocks on average exceeded those advancing by 175 issues per day. On 12 of the 17 days of the con- solidation, more stocks declined than advanced. Despite the apparent strength of the April rally, ad- vancing stocks tended to exceed declining ones for this period by only 120 issues per day, and In the most recent market period the average daily number of advancing issues has been 543 vs. averaq declines of 896, a pluraility of 353 declining issues. . . . N0rdG4hec-StatistiG-S-on.new-J1ighs-andIGws-hold.any .great-..GOmfort.ur..ingtheearlyApriL…a.d, . vance as the market was sailing to new peaks, an average of 61 issues a day were posting new 1972 lows. And, in the period since April 19 an average of almost 100 issues a day have been moving to new lows. A host of other statistics could be cited but the conclusion is obvious. The supply/demand equation, quite obviously favorable through early March, has altered dramatically since then, for reasons as yet unclear. Two questions suggest themselves. The first is Why and the second is What does it all mean As to the first question, we do not subscribe to the currently-fashionable theory which blames everything on the Vietnam situation. The existence of the Vietnam conflict is undoubtedly one of the most tragic and divisive forces affecting American life today. This does not make it a scapegoat for what is going on in the stock market. More fundamental, we think, is the fact previously suggested in this letter that, since November, a high level of individual stock demand, especially from margin buyers and foreigners, has been sufficient to offset reduced institutional purchases of equities and a relatively high supply of new common-stock issues. This was evidently true through March, during which month purchases from the above-mentioned sources continued at record levels. April figures will not be available for another few weeks and it will be interesting to see whether they show any change in this buying and selling pattern. If they do, it will be a source of some disquiet. As to the meaning behind the past two months' action, a number of considerations suggest them- selves. The unfavorable implications of the recent deterioration could be cancelled in one of two ways. The first would be a show of above-average market strength. This appears an unlikely even- tuality in the light of recent market behavior,.but it could, of course, .occur. Pardoxically, the.othe!. factor which would clear the air would be an immediate and fairly steep market decline. One of the plus factors inherent in the current situation is the fact that, through March, the market was acting so well that present dlstributional tops have had only two months to form. An immediate sharp de- cline would cause most issues to reach the downside objectives of those tops. In terms of the aver- ages, if such a decline were to occur, it might reach the 890-880 level,and it is difficult at the moment, at least, to envision a drop exceeding these proportions. Perhaps the worst sort of action would be continued consolidation around current prices while the underlying deterioration, evident since March, continues. This sort of action would serve only to broaden the distribution that now exists. Thus, while the current market outlook cannot be termed unfavorable, it is, for the first tlme In seven months, in a posltion where it could deteriorate appreci- ably. Dow-Jones Industnal (1200 p.m.) 943.26 ANTHONY W. TABELL . DELAFIELD, HARVEY, TABELL S&P (1200 p.m.) 106.74 A/TR1fi No tatement or expression of opinIon or ony olher maHer herein contolned IS, or is to be deemed to be. directly or indirectly, an offer or the solicltotlon of on offer to buy or 5e1l any secvrily referrecl 10 or mentioned The mailer IS Fesented merely for the converlena of the subSCriber WhIle we believe the Ources of our Informa han 10 be rehoble, we In no way represent or guarantee The accuracy thereof nor of the statements mude herein Any actIon to be token by the wbscrlber should be based on hiS own investIgatIon and Information Janney Montgomery Scalf, Inc, as a corporation, and ,Is offIcers or employees, may now hove, or may later toke, posItions or trodes In respect to any sea/rltles mentIoned In thIS or any future Inue, and such POSlt,on may be different from any vIews now or hereofter expressed .n thiS or any other Issue Janney Montgomery Scan, Inc, whIch IS registered WIth the SEC 0 on Investment adVIsor, may gIve adVIce to .IS onvestment adVISOry and otne, customers independently of any statements mode on Ih.s or In ony other issue FUr1her onformat,on on any securIty mentioned herein IS available on request.

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Tabell’s Market Letter – May 12, 1972

Tabell’s Market Letter – May 12, 1972

Tabell's Market Letter - May 12, 1972
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TABELL'S MARKET LETTER -I g)eIajUd, 1'13y, !YakII 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK eXCHANGE May 12, 1972 During periods of sharply rising stock, markets, Fall 1970 – Spring 1971 and November, 1971 until recently being examples, we constantly heard about the market being in need of a correction. The '— 1mpH c111Ton-in-tli'i's s 6reofcommentary wa s' that'ari sing' market-wa S'S emehow-unh eaIthya nd,tha t,a, -, downswing would provide a sort of cathartic effect which would restore the market to a healthful condition. Regular readers of this letter will recall that we expressed our impatience at the time with this sort of thinking. Yet, we confess that, at present, we think a correction would be a healthy thing for the equity market. The reason for this apparent shift of philosophy is really quite simple. A sharply-rising stock market suggests, not an unhealthy, but a healthy technical state, and as long as upside momentum persists, there is no reason whatsoever to expect that a correction is needed to improve the market's internal condition. But what we have been seeing for the past two months is precisely the opposite — an obvious loss of upside momentum. Distribution, quite obviously, has been taking place and under these conditions a market correction, fulfilling the downside implica- tions of that distribution before it becomes too extensive, would, in our view, constitute a tonic. Viewed in this light, last week's market action must be construed as mildly disappointing. Presi- dent Nixon's decision to mine North Vietnamese ports provided the market, which has, for the past month, been using Vietnam developments as an excuse to reveal its intentions, with a perfect ration- ale for a sharp decline. Such a move began conventionally enough on Tuesday with a 13-point dip in the Dow in a session which set an all-time record for the number of declining stocks. The decline, however, did not follow through. A low-volume rally on the last three days of the week cancelled the entire drop and returned most market indices to their week-ago levels. Despite the end-of-the-week market strength, however, a developing short- ,,- , – ,t Qf,m-Gownsw,ing-at-this,s,t a,g e m u s,ta LleasLb,erjOlgar,(le!, asp ,Jp iIi t y. y ere this t a occur, it would be, bas ed on the limited distribution which has taken place to date, difficult — to envision that downtrend's developing into anything more serious than,a decline to, roughly, 890 on the Dow-Jones Industrials or approximately 103-102 in the S&P 500. There continue to be two develop- ments which could cancel out this implication. The first would be evidence of reaccumulation suffi- cient to suggest that the market was ready to test its mid-April peak. The other would be further dis- tributional action at current levels which might eventually suggest a downside target worse than we are now able to envision. When we back away from the confused short-term picture and examine the broad outline of what the market has done since the beginning of 1972, it is amazing how action to date has conformed to a pattern apparent months ago. The central tenet of our year-end forecast, issued in December, was that the market was, this year, likely to duplicate its 1971 performance, s pending most of its time in a range between 800 and 950. It has, o far, exceeded that range for a 13-day period in mid-April after which it promptly returned to it. A decline to 890 at the moment would, of cours e, prolong further the time spent in that range. 'We also suggested in our forecast letter that, were the 800-950 range to be decisively violated, that such violation would be likely in the latter half of the year rather than in the beginning. We still regard this as a possibility, and the pattern of a short-term decline followed by further market strength would fit precisely into the sort of market one would expect in an election year. We analy- zed the election year pattern at some length in mid-January and suggested that one of the more in- teresting general tendencies was one toward a relatively flat first half. After moving ahead sharply through April, the S &P 500 is now only some 3above its' Dec-ember' close and a drop-to th-e-l03-102 – – downside objective would bring it just about back to its year-end level. However, the most consis- tent fact about an election-year market is the tendency toward a strong second half. As we noted in January, in 15 of the 18 election years since 1900 the average price for December has been higher than the average price for Ju n e. And, in only two cases were prices significantly lower in Decem- ber than they were at mid-year. Thus, if the market were to restore its technical health by a short-term drop and later to show second-half strength, 1972 would conform almost precisely to the standard election-year scenario. That there has been recent market deterioration is obvious, and the fact has been repeatedly noted in this space. To date, at least. that deterioration has not been sufficient to require an alteration of the basic market premises expressed by this letter at the end of 1971. Dow- Jones Industrial (12 00 p. m.) 941. 23 ANTHONY W. TAB ELL S&P (1200 p.m.) 106.42 DELAFIELD, HARVEY, TABELL AWTmn No statement or eJOpression of opmion or cny other matter herem contolned IS, or I 10 be deemed to be, directly or ,dlrl'Clly. on offer or the 50lu;lloilon of on offer to buy or sell cny sl!cvnty referred 10 or mentioned The moiler IS presented merely for the converlenre of the subscrrber While we believe the wurccs of our mformahon to be reliable, we m no way represent or guorontee the accurocy thereof nor of the statements mode herein Any aCTIon to be token by the subCrtber should be based on hiS own tnvesttgotlon and tnformatton Janney Montgomery Scott, Inc, as a corporOTlon, and Its officers or employees, may now have, or may later toke. positions or trades In respect to ony securities mentioned m thiS or any future Issue, and such posItion may be different from any views now or hereafter expre-ssed m thts or any other Issue Janney Montgomery Scot!, Inc, which 15 registered wllh the SEC as on Investment adVisor, may gtve adVice to lIS Investment adVISOry and other (\,Istomers Independently of any statements mode In thiS or m any other Issue Further Information on any security mentioned herem IS available on request

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Tabell’s Market Letter – May 19, 1972

Tabell’s Market Letter – May 19, 1972

Tabell's Market Letter - May 19, 1972
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TABELL'S MARKET LETTER ————-.– 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIYISION OF MEMBER NEW VORK STOCK EXCHANoe, INC MEMBER AMERICAN STOCK eXCHANGE May 19, 1972 We have noted In the past the stock market's unfortunate tendency to do that which will make the analyst's job most difficult. Last week's market action was an example of that proclIvity. We suggested In this space a week ago that a mild market correctIOn would probably be fairly 'desitable1ft this'5tage onlW'gaITfe-; Contrarily ;-th'emaik'-f;aftertwo moi'ith's-of -deterioration, eXhrD — – .. ited ItS first mild show of strength, when the Dow Jones Industrials, having consolIdated since early May in the 926-944 area, broke out of this area on the upside in Thursday's tradIng. Unfortunately, at the moment, it IS dIfficult, based on pOint and fIgure analYSiS, to forecast that the advance IS likely to carry too far–an objective of 966 on the Dow being the most plaUSible. Most readers are by now familiar enough with technical Jargon so that the thought double top should immediately come to mind, and this spectre does indeed exist. The strength and character of the rally, therefore, will bear a great deal of close scrutiny. Inspection of individual group action will also be interesting. It IS possible, at the moment, to break Individual group patterns down to three rough categories. The first category, conSisting of 35 of 96 groups,Includes those which have, essentially, remaIned in uptrends since the bull market began in May, 1970, showing only minor, if any, deterioration dunng the April-November, 1971 decline. These groups are listed below, with the 17 (approximately half) which have begun showing preliminary Signs of deterioration within the past two months marked with an asterisk. Air Trans Elec./Major Co's Mach./Oil Well RetaIl Strs/Department Auto Parts Elec./Househld Appl Mach. Specialty Retail Strs/Mail Order Auto Trucks Electrorucs Mobile Homes Retail Strs/Variety Bev/Brewers Finance-Small Loan Offshore Drilling Soap Bev/Soft Drink Food-Biscuit Bkrs Pollution Control Truckers Bldg Mat'ls-Air Con Food-Dairy Radio/TV Brdcasting Vending Machines Chemicals .-..–Orugs .. -Ele-c. 'Equip Home Furnishings Hotel.LMotel … …. Leisure Time . Radio/TV Mfrs ReaLEstate.. Restaurants Ins urance/Ufe Insurance;l'rop.&-Uab–I—; The second category includes those groups which underwent fairly substantial corrections at some time dunng 1971, but have since moved back into uptrends. The oft-noted renaissance of cyclical issues is apparent In the inclusion of most major cyclical groups in this list. As in the first list, those issues showing preliminary deterioration are marked WIth an asterisk, and it is interesting that the total here is 19 or,again,just about half the 40 groups in the list. Aerospace Copper Mach. Ind Steel Air Freight Cosmetics Metal Fabrict'g Sulphur AlumInum Finance Co's Metals/Misc Textile Products Atomic Energy Food/Corn Refiners Motion Pictures Tobacco/Cigarettes Automobiles Food/Packaged Office Equip Toys Bev/Distillers Gold Mining Oil/Crude Producers Util/Nat'l Gas Pipeline Bldg Mat'ls/Cement Lead & Zinc Paper Banks/NYC Coal Bituminous Machine Tools Publishing Banks/Outside NYC Conglomerates Mach/Agric Retail Strs/Disc SavIngs and Loan Containers/Paper Mach Constr Shoes Insurance/Multi-lIne Finally, the following 21 groups, about one-quarter of the market, have, as yet, been unable to demonstrate any convincing recovery from their 1971 decline and still must be classified as being in neutral or downtrends. Bldg Mat'lq/Htg-Plmb'g Food/Meat Packing RR Equip Textiles/Syn —Bldg Mat'ls/RoofIng Forest Products Confectionery — . -'Mach/Steam Gen- Retail StrS/Food Tire & Rubber . 'Sugar Beet Ref –UuI/Elec- – -.- Cont/Metal & Glass Oil/Domestic Sugar/cane Util/Natrl Gas Food/Bread & Cake Oil/Int'l Textiles/Apprl Util/Tel Food/Canned Foods The overall picture–some three-quarters of the list in uptrends but with half that group shOWIng pOSSIble deterioratioI-lS typical of a fairly advanced bull market. Action from here will help determine whether the market stages a complete recovery from its April-May weakness or whether its technical health continues to deteriorate. We would be impressed by reversal of the recent weakness shown by the industries in the second group and by seeing the techrucal action of the third group improve enough so that 'some of them could be classified as moving Into uptrends. It IS from this class of relatIvely unexploited issues that the kind of leadership which could sustain the advance for a worthwhile period of tIme might very well come. Dow-Jones Industrial (1200 p.m.) 957.63 ANTHONY W. TABELL DEIAFIELD, HARVEY, TABELL S&P (1200 p.m.) 108.76 AVf'f .ele No stotement or exprenlon of opinion or any 01nel motter hHen contoll'led I, Of l!i 10 be deemed to be, dHlldly or mdlrectly, 01'1 offer or the lOhCltatlOI'l of an offer to buy or lell any seCUrity referred to or mentioned The motler IS preel'lted merely for the cOl'lVe('lenc5 of the subSCriber While e believe thE' sources of our mformo tlon to be reliable, we In no way represent or guoronlee the accuracy thereof nor of the statements mude herem. Any oellon 10 be token by the s….bscrlber should be based on hiS own Investlgahon and mformatlon Janney Montgomery Seat!, Inc, os 0 corporation, and Its officers or employees, may now have, or may later take, polllJOm or trades In respect to any Securilies mentioned m thiS or any ' …. ture Issue, and such posItion may be different from any views now or hereafter exprened In thiS or any other ISSue Janney Montgomery Scott, Inc, which IS registered With the SEC os on Investment adVisor, may give adVice to Its II'IVetment adVISOry and olhel customers Independently of any statements mode In thiS or In any other Issue Further Informallon on any security mentioned herem IS available on request

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Tabell’s Market Letter – May 26, 1972

Tabell’s Market Letter – May 26, 1972

Tabell's Market Letter - May 26, 1972
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TABELL'S MARKET LETTER ., 909 STATE ROAD. PRINCETON. NEW JERSEY 08540 DIYISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – May 26, 1972 Any attempt to relate political trends to the stock market is an occupation fraught with peril – – Ior tli-efiiatKet'-analysC Perhaps-the hara-esFtasknrtoma-intaln'-one-s'bbjecti vity;Bu'Wami bea-r – markets have, in the past, occurred under both Republican and Democratic administrations, and with a fine impartiality. It is a difficult task for both the analyst and investor to keep his own political views out of a rational assessment of the market situation, to avoid excessive opti- mism when his own party is in power and a tendency to look on the gloomy side of things when it is not. Despite these difficulties, it should remain, nonetheless, part of the investor's task to assess political trends and to try to relate them to possible developments affecting his securities. What has taken place so far in 1972 represents an interesting field for such an exercise. The major news, to begin with, has been the Democratic primaries, and it is obvious from the results of these primaries to date that the two major winners are Senator McGovern and Governor Wallace. Considered in what we have come to accept as conventional political termi- nology, two more dissimilar individuals could hardly be imagined. Political commentators, therefore, have spent a great deal of time trying to find a common bond between them and many of them have located such a bond in calling both populists — Le., the political heirs of William Jennings Bryan and Robert LaFollette. Like most such comparisons, it is probably a bit facile. The sort of .populism that consti- tuted a major political force prior to World War I was agrarian in its roots. And it was directed against an establishment represented by a Wall Street which then possessed power which it dOES I not ;-tha nkful1yretaifjtodoy -rhereaTe7n-oneth-etes s;- tiesthatbindth'e-currenttrend'with ' that of the early years of the century. In an article in Thursday's New York Times, Senator Fred R. Harris of Oklahoma, author of a book about and advocate of the new populism, quotes LaFollete as saying, The issue … is not the tariff or conservation of the currency. It is not the trusts. The supreme issue, involving all the others, is the encroachment of the powerful few upon the rights of the many. Harris goes on to argue that the central issue today is not tax reform, monopoly or the environment but a similar latter-day encroachment. It is not necessary to agree with this sort of thing to realize that it has attracted a following. It will be important to note this fact even if Senator McGovern is nominated and later defeated by President Nixon — an event the stock market (see our letter of January 14) is now apparently forecasting. It is the nature of political processes to respond to positions held by individuals who receive large blocks of votes even if those individuals themselves are defeated. This is why an assessment of the implications of a new populist trend is important to the investor. Two keystones of current populist thinking are impatience with the present tax structure, especially the so-called tax loopholes , and the belief that current income is somehow mal- distributed. It is irrelevant that both these propositions might be refutable. They are still widely held. The investor, therefore, should consider carefully investments which depend for their continued profitability on favorable tax treatment. The current depres sed levels of many oil stocks, as an example, attest to doubts which have already been raised on this score. The investor should also, in his'planning;be prepared to confront-the demise-of-fa-vorable tax-' treatment that he has been receiving. The exemption of estates from capital-gains penalties is one example that readily comes to mind. There are also implications for the investor on the positive side. Any steps toward a redis- tributive incomes policy could obviously aid industries with an interest in higher consumer spending, such as the leisure time industry, and the historic identification of populism with easy money may well have implications for bond prices. These and a host of other implications must be considered if Senator McGovern and Governor Wallace indeed represent the political force that a number of observers tell us they do. Dow-Jones Industrial (1200 P.M.) 970.57 S&P (1200 P.M.) 110.57 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or expression of OpinIon or any other matter herein contOlned IS, or 15 to be deemed to be, directly or mdlrectly, on offer or the solicltotlon of on offer to buy or sell any security referred 10 or mentioned The moiler IS presented merely for the convef'len of the subscriber While we believe the sources of our Informa han 10 be rehable, we In no woy represenl or guarantee the accuracy thereof nor of the statements mude herein Any oOlon 10 be token by Ihe subSCriber should be based on hiS own inVeSTigation and Information Janney Montgomery Scott, Inc, as 0 corporation, and Its officers or employees, may now have, or may later toke, poslhons Of trades m respeo to any securlhes mentioned In thiS or any future Issue, and such poSition mey be dlfferenl from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered Wllh the SEC as on Investment adVisor, may give adVice 10 lIs Investment adVISory and olhel customers Independently of any statements made In thiS or m any other Issue Further information on any security mentioned herem IS available on request

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