Tabell’s Market Letter – August 25, 1972

– —– – — — —— I TABELL'S I MARKET LETTER I I J 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE August 25, 1972 More than perhaps any market in recent memory, the present one is beset by numerous cross currents. As we indicated last week, an inspection of advance-decline statistics suggests quite clearly that, since – – – -March ;'-fndre'stodks -havebeengoing downtha'ii'nai'-ebeen-golfiup;'OespiteCth'EP'facftnat th-epoptilaf' –'. averages are close to record highs. Yet despite all of the statistics which suggest the increasing com- plexity of the investment environment, there are substantial numbers of individual stocks for which the technical patterns are, by themselves, highly encouraging. To some degree, at least, as we suggested last week, a shift in leadership does appear to be taking place, and a number of hitherto-laggard issues are beginning to look like interesting investment opportunities. – The following table is an attempt to indicate the existence of such a shift. It is based on the fact that three important lows for the Dow Jones Industrial Average are recognizable in the 2 1/2 years since bull market began in May,1970. The first is, of course, the 1970 low itself. The second is the low of last November when the Dow bottomed out below 800, and the third is the low of July 20, one month ago,when the market began its current uptrend. The table takes the performance of the 25 issues most popular in Mutual Fund portfolios as tabulated by Vickers Guide, and measures their percentage change from each of the three lows. Also shown is the change in the Dow Jones Industrial Average. Percent Chge-May 26,1970-Date Percent Chge-Nov.23,1971-Date Percent Chge-July 20,1972-Date 1 MGIC Investment 2 McDonalds Corp 3 Brunswick Corp 595 539 295 1 MGIC Investment 2 McDonalds Corp 3 Philip Morris Inc 113 92 91 1 MGIC Investment 2 Burroughs Corp 3 Travelers Corp 20 13 13 4 Philip Morris Inc 271 4 Burroughs Corp 70 4 Ford Motor Co 12 5 Kresge S S Co 245 5 Eastman Kodak Co 57 5 Du Pont De Nemours 11 6 Northwest Airlines 7 EastmanKodakCo 8 Xerox Corp 138 130, 128 6 Xerox Corp 7 KresgS,Co 8IBM 54 6 Texaco Inc 47 7 General Motors.Corp' 428KresgeSSCo 11 1! 8 9 General Electric Co 10 Minnesota Min. Mfg. 11 Burroughs Corp 12 Reynolds R J Inds 13 Sears Roebuck Co i4 Avon Products Inc 15 Polaroid Corporation 16 Du Pont De Nemours 17 Ford Motor Co 18 IBM 19 Westinghouse Elect 20 Standard Oil Of N J 21 American Airlines 22 Traverlers Corp 23 Dow-Jones Ind. Aver. 24Texaco Inc 25 General Motors Corp 26American Tel & Tel 118 110 110 109 102 84 82 80 76 71 62 56 55 55 54 46 33 3 9 Polaroid Corporation 10 Minnesota Min. Mfg. 11 Du Pont De Nemours 12 Reynolds R J Inds 13 Avon Products Inc 14 Brunswick Corp 15 Dow-Jones Ind. Aver. 16 Standard Oil Of N J 17 General Electric Co 18 Texaco Inc 19 Sears Roebuck Co 20 Northwest Airlines 21 Ford Motor Co 22 Travelers Corp 23 American Tel & Tel 24 General Motors Corp 25 Westinghouse Elect 26 American Airlines 42 9 Xerox Corp 37 10 Dow-Jones Ind. Aver. 35 11 Standard Oil Of N J 33 12 McDonalds Corp 24 13 IBM 23 14 General Electric Co 22 15 American Tel & Tel 18 16 Minnesota Min. Mfg. 18 17 Reynolds R rInds 16 18 Philip Morris Inc 14 19 Eastman Kodak Co 14 20 Avon Products Inc 10 21 Polaroid Corporation 8 22 Sears Roebuck Co 8 23 Westinghouse Elect 5 24 Northwest Airlines 3 25 American Airlines – 16 26 Brunswick Corp 8 7 6 6 6 5 4 4 2 2 2 1 0 -2 -3 -7 -8 -10 The following facts may be noted. 1) A small minority of stocks have managedto turn in conSistently above-average performan-ce. Such issues as MGIC, Kresge, and Burroughs are uniformly near the top of all three lists. 2) Beating the Dow is becoming a great deal more difficult. For the entire bull market, 22 of the 25 issues have outperformed the Dow. ,Since November, only 14 have done so, and, in the past month, the Dow has outperformed 16 of the 25 issues on the list. 3) There was little apparent leadership shift in the rise from the November lows. Of the ten top-perfor ing issues for the period November-to-date, seven were among the top ten for the bull market as a whole. 4) However, on the more recent rise, a distinct shift in relative action is apparent. For the bull mark as a whole, 12 stocks had performed better than twice as well as the Dow. Of these 12, no fewer than eight have underperformed the Dow on the recent rally. On the other hand, five of the nine issues that bettered the Dow on the recent rIse were among the laggards for the bull market as a whole. It is the emergence of this new leadership which has kept the average near its high so far, despite the deterioratkn in a large number of issues. Dow-Jones Industrials (1200 p.m.) 958.31 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL S&P ( 2'00 p.m.) 110.75 AWT' statement or expreSlon Qf opinion or ony other mattcr herein contolfled IS, or is 10 be deemed 10 be, directly 01 indirectly, on offer or Ine 501l;llollon of on offer ''\6'buy or sell any secunly referred 10 or mentioned Tne moiler 's presented merely for tne conver'lenCE of Ine subSCriber Willie He believe Ihe sources of our Informohon 10 be rel,oble, we In no way represenl or guoronlee Ihe occuracy thereof nor of tne slotements mude herein Any ocllon 10 be loken by the subscriber should be based on h,s—owii Invesllgotlon and Information Janney Montgomery Seoll. Inc, as a corporotlon, and Its officers or employees, may now have, or may loler toke, poslhons or trades In respect loony secUrilles mentioned In Ihls or ony future Issue, ond such pOSition may be different from any views now or herellter expressed In thiS or any olner Issue Janney Montgomery Scott, Inc, which 's registered With the SEC os on Inveslment odvlsor, moy give adVice to Its Investment adVISOry and olher customers ,ndependently of any statements mode m thrs or In any other Issue Further Information on any secunty mentioned herein IS aVailable on requesl