Viewing Month: September 1972

Tabell’s Market Letter – September 01, 1972

Tabell’s Market Letter – September 01, 1972

Tabell's Market Letter - September 01, 1972
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TABELL'S MARKET LETTER L- . – – . – 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORk. STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE September 1, 1972 Having turned down from the 970 level two weeks ago, the Dow-Jones Industrial Average moved up last in a new assault on thatlevel.The index.has now spent ….. wek ' ., '–' — -' . ———– mosLoLJ 92 'M—;' . in, rouglily,-the 900-970' range. 'Comparable ranges, with a slight upward bias, exist for the broader-based indices. Having gone on as long as they have, these ranges assume some significance. The bearish argument would have it that they are part of broadening top forma- tions,while the bullish contention would hold that they are bases preparatory to a new upward leg. As we have pOinted out, most indicies of market vitality support the former contention, but a decisive upside breakout at this stage pould, at least temporarily, lend support to the optimistic view. Last February in this space, we took the opportunity to examine in some detail the behavior of the margin speculator, focusing on the extraordinary rise in margin account debit balances that had taken place in December 1971 and January 1972. We suggested at that time that this rise, were it to continue, could have important implications for the character of the stock market. In the intervening six months, some of these implications have become manifest,and others have been notable by their absence. In any case, it is worthwhile at this stage to revisit our friend, the margin buyer, and examine some of the implications of his activity so far this year, To begin with, the heavy buying, initiated last December, has continued unabated. Debit balances have moved to a newall-time high, and at their July level of 7,66 billion, had increa s ed 2.75 billion from the November figure. This is an annual rate well in excess of 4 billion which, for comparative purposes, is approximately one-third greater than the ers.1'I1unS.''lrc inyes tedbythElLmutua1.fund.indus try ..i.Il,;.anyZ,..,monthperiod. Put another way, the months December through April 1972 saw monthly percentage increases in debit balances ranging from 5.55 to 10. Since 1954 there had been only four months in which the percentage increa se in margin debt exceeded the lowest of these figures. Yet in the present instance we were able to put five such months back to back. We think it no coincidence that the market bottomed on November 23, 1971, and the rise in debit balances began in the month of December. During the period, mutual funds were net sellers of stock,and buying from other identifiable sources was not significantly above normal levels. It is highly probable that margin buying constitued the single most important factor in the market rise durinq the first half of 1972. Yet there remain a number of curiosities. We said in February, If the margin speculator does return . it will have important implications for the character of market leadership. His- torically, he has tended to prefer low-priced stocks to high-priced stocks, secondary issues to blue chips, and has shown a greater-than-average interest in the American Stock Exchange, .. ,The margin speculator has,in fact, returned with a vengeance, but these historic preferences have, so far, totally failed to maniiEst themselves. American Stock Exchange volume has continued to lag, and secondary stocks generally have shown inferior action in comparison to the blue-chip dominated averages, which have been making new highs. Our present margin buyer is apparently a totally new breed. In a market coming more and more to be dominated -abcytiionns'tiitsutainodnhsa, sh-sehhapaesd'anpipsarpetneftleyrerreialciezse-dactchoartdfinngsltyitu-tional -qua . -. lity – stocks are where the -.– . '';—- Another interesting sidelight to recent margin statistics is the number of open margin accounts. As of July, there were 725,000 such accounts, up only 75,000 from the November figure. This compares with 940,000 accounts open in February 1969, a figure which dropped off steadily through last fall. Quite obviously the margin buyers of 1972 are the survivors of the 1969-70 debacle who have simply regained the confidence to increase their borrowing under the stimulis of lowered minimum requirements, rather than new entrants to the market place. Whether these new entrants will arrive in the future, is, in itself, questionable Debit balances in July were approaching 1 of total New York Stock Exchange market value, a level in the past associated with peaks. It is thus quite possible that we may have to wait some time before seeing the classical signs of speculative activity which we might otherwise expect at this stage of the market cycle. Dow-Jones Industrials .(1200 p.m.) 969.07 SSP (1200 p.m.) 111.47 ANTHONY W. TAB ELL DELAFIELD. HARVEY , TABELL AW1!Q1pKenl or expre5510n of opinion or any olher matter helem ton'tomed IS, 01 IS 'to be deemed to be, duedly 01 mdlretlly, an oifeT Of 1ne s.olltl1allo\ of O\ oller to buy or sell any setlmfy referred 10 or menlloned The matler IS presenled merely for the conve'lenc of the subscTlber While Ie believe the sources of our information to be relloble, we In no way represent or guarontee the accuracy thereof nor of the tatements mude herem Any action to be taken by the subscllber should be based on hu own Investigation and Informotlon Janney Montgomery 5011, Inc, as a corporation, ond Its offICers or employees, may now hove, Of may loter toke, posItions or trades m respect to any secUTllieS mentioned In thrs or any future Issue, and such positron may be different from any Views now or hereafter eJpressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered wllh the SEC os on Investment adVisor, may give adVice to Its Investment adVisory and othel C'iJslomers Independently of any statements made In thiS or In any other Issue Further information on any secullty mentiOned herein IS available on request

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Tabell’s Market Letter – September 08, 1972

Tabell’s Market Letter – September 08, 1972

Tabell's Market Letter - September 08, 1972
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r– I j T li\JBIED..D..'S 1a1iIli\1RKIEV t D..1E11IER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEM8ER NEW VORK STOCK eXCHANGe, INC MEMSER AMERICAN STOCK eXCHANGe September 8, 1972 The last few issues of this letter have focused on an apparent shift in leadership which has been taking place in the market since November. In general this shift has featured det-eriorating – relative-action'byvisible-growtli issues-sJun;;t lllgh–multlplerand Improving action on tl1e-pa of some low-multiple cyclical issues which can be expected to thrive in an expanding economy. However, the improving relative strength shown by the latter group must be viewed in the light of individual chart patterns. In some cases, the patterns suggest the possibility of a major uptrend's having commenced. In others, the lact of large bases or the presence of overhead supply suggest that the current strength may be short term in nature. We are, therefore, starting this week, and will continue in future letters, a review of the technical positions of major industry groups. The comments which follow are based on technical factors only, and further information on all issues is available on request. AEROSPACE – Most stocks in this group have spent the last two years forming what will undoubtedly tum out to be potential bases. Market performance since November has been above average, but recent relative action has weakened, lending some doubt as to whether upside penetrations will take place immediately. They would thus appear interesting for purchase only on weakness to around last year's lows. AIR TRANSPORT – This group had been one of the star performers in the market upswing through May, but deterioration since that time has been vicious. Nonetheless, most long-term uptrends remain intact, and a number of issues appear close to support levels. Delta Airlines (53), NatIOnal Air- lines (38), and Northwest Airlines (37) have reached downside objectives of short-term tops and appear to be attempting base formations around current prices. ALUMINUM – This group is typical of those cyclical industries which had been inferior market – erformers-a Imos t-throughout 'th-eentirebulYmarKet-but wh-i-CWl1av-e'Snown dra rna ticallYlmptoved short-term relative action over the past couple of months. Although further short-term upside potential exists, the size of the bases, plus relatively heavy overhead supply, do not suggest the likelihood of a major move's having begun. AUTOMOBILES – This is one of the few cyclical groups that has failed to outperform the market recently, and this failure must raise some doubts in view of the above-average strength shown by other such issues. Potential bases are large, but we would await improving relative action before suggesting purchase. AUTO EQUIPMENT – This group has, generally, been outperforming the market over the past two years, but many of the leaders such as Champion Spark Plug (53), Dana Corp. (39), and Echlin Manufacturing (41), are approaching upside objectives. Borg-Warner (33), has an interesting long- term pattern with an upside potential well above current levels. BUILDING SUPPLIES – This group has been deteriorating relative to the market since approximately November, and a certain amount of further downside risk appears to be present in many issues. Generally, the attraction at this time is below average. CHEMICALS – This is another cyclical group which has just recently begun to show improving action. Monsanto (56) remains in a well-defined uptrend with higher objectives readable. Union Carbide (49) has completed a substantial base formation and also appears interesting as a purchase candidate. CONTAINERS – METAL & GLASS – Major issues in this group have shown dramatica lly improved relative.action overthepast.few .months,bu-theavy.overhead supply appears.to limit-upside 'poten- – tial for the time being. Such supply exists in the high 30's for Continental Can (33) and at 35-38 for American Can (32). CONTAINERS – PAPER – Most issues in the group appear to be in neutral to moderate downtrends and would appear to be uninteresting as purchase candidates except for very long-term bargain hunters. An exception might be Bemis Co (26) which ha s just broken out of a two year ba s e and which has strong support at 22-21. COPPER – Another highly cyclical group in which distinct relative improvement has taken place since November, after two years of below-average performance. Bases are generally not large, however, and it is hard to envision the present strength turning into a mOve of major proportions. Phelps Dodge (40) might be an exception, and ability of this stock to mOve above the 45 level would indicate considerably higher levels. Dow-Jones Industrials (1200 p.m.)962.67 S&P (1200 p.m.)1l0.29 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL f)NT.Fh No statement Qf eXpreSSion of opInion or any other matler herein contained IS, or IS to be det!med to be, directly or ,ndlrectly. on offer or the sollcltat,on of on offer to buy or sell any seC\Jr,iy referred to 01 menhoned The mOllel I pft'.senied ITIHely fof the CCI'I'Iel'ltnce of the subSCriber Whde we believe the sources of our mformotlon 10 be relloble, we In no way represent or guo ron tee the accuracy thereof nor of Ihe statements mudc herc,n Any action 10 be token by the subscnber should be bosed on hiS own Investigation and mformotlon Janney Montgomery Scott, Inc, as a corporation, and lIs officers or employee may now have, or may loter lake, POSitiOnS or trodes In respect to any SeCUrities mentIOned In thiS or any future Issue, and such posdian may be different from any views now or hereafter el'pressed on thiS or any other Issue Janney MontgOrTlery Scott, Inc, whICh IS registered with the SEC as an Investment adVisor, may give adVice to ItS Investment adVisory and cthe. customers Irldependently of any statements made on Ih,s or on any olher Issue Further ,nformation on any security mentioned herein IS available on request

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Tabell’s Market Letter – September 15, 1972

Tabell’s Market Letter – September 15, 1972

Tabell's Market Letter - September 15, 1972
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——————— TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIYISION OF MEMBER NEW YORK STOCK eXCHANE, INC MEMBER AMERICAN STOCK eXCHANGE September 15, 1972 -We-are -conUnuingtMsweekcwith -our'reviewof the 'current'technical'patfem-s'f6(m-a-jor iii'ausmal— groups. The comments on individual stocks are based solely on technical factors, and further in- formation on all issues are available on request. COSMETICS – Action of this group, only neutral throughout most of the bull market, has recently improved sharply. Avon Products (118) continues to hold within its major uptrend and has a moder- ately higher objective. Gillette (51), which recently moved to a two-year high, has broken out of a major base and appears attractive as a possible purchase. DRUGS – As a group, these issues are showing above-average relative strength but there is a wide diversity of patterns. Interesting purchase candidates include Bristol Myers (66) , and Carter Wallace (28). Others such as Merck (81) and American Home Products (112) have already moved up sharply and are, at least, approaching upside objectives. ELECTRICAL EQUIPMENT – General Electric (65) has continued to show above-average relative action, and there is strong support just under current levels with higher objectives readable. Westinghouse J!Q2, by contrast, has exhibited some recent price deterioration and might be technically vulnerable over the short term. ELECTRONICS – This continues to be, as always, a widely diverse group where individual patterns are more important than the group trend. There are currently interesting patterns in some of the more speculative issues in the industry including Oak Industries (18) and Varian Associates (20). The semi-conductor companies such as Motorola (115) and Texas Instruments (64) had been upside leaders until just recently, but their relative strength has deteriorated sharply, and some near-term –price,-ulneabilityappearsAstill..to..bepmsent-. FARM EQUIPMENT – Deere & Co. (75) has, over the past two years, been one of the better-perform- ing investment-grade issues, and an objective of 96 is still readable. However, the sharp advance makes it perhaps less attractive than International Harvester (37) which has just posted a major breakout and appears to have a wider current potential. FOODS – Although regarded as a defensive group, these issues have proved to be anything but de- fensive in recent markets with many leading stocks in the industry off sharply from their highs. Despite recent price markdowns most of the stocks do not appear particularly attractive for new purchase at this time. An exception might be Pet Inc. (42) which has reacted to a strong support level. Swift & Co. (35) and Iowa Beef Processors (30) , in the meat-packing area, both have sub- stantial long-term bases. INSTALLMENT FINANCING – Although this is supposed to be a low-volatility, conservative industry, most of its components have been leading the market on the upside over the short-term, and many issues in the group appear attractive for purchase, notably Beneficial Loan (48), CIT Financial (51), and the more speculative Heller International (34). LIQUOR – This little-followed group has been dramatically outperforming the market on a technical basis since the first quarter of 1972. In most cases upside objectives are being approached but Hiram Walker (49) still has a higher readable objective. MACHINERY – Group action, as usual, is mixed. The oil well equipment companies have turned in stnking performances, but upside objectives are being attained. Such issues as Caterpillar Tractor Man!. Ingersoll Rand (66) ,despite .their,shar.p,rises, still.ha-ve-attraGt-ive.long-term -patterns — Machine tool companies continue to build substantial bases but show no indication as yet of an immediate move. Joy Manufacturing (42), whlch has been in a vicious short-term downtrend, is close to support at current levels. MOTION PICTURES – The growth favorite in the industry, Walt Disney Productions (179), appears vulnerable at least for the short term. Other issues in the group have relatively uninteresting patterns. OFFICE EQUIPMENT – Many issues in this group have been standout price performers but upside objectives are being approached, and a few stocks are starting to form what look like distributional tops. Both IBM (400) and Burroughs (205) would have to be included in this category. Sperry, Rand (43) and National Cash Register (36), while of lower quality, still appear to have further upside potential. Dow-Jones Industrials (1200 P.m.) 947.55 S&P (1200 p.m.) 108.84 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL AWTmn No 51atement or expreulon of op'flIon or any other malter herein contolned IS, or 15 10 be deemed 10 be, directly or indirectly, on offer or Ihe ollcltotlon of on offer 10 buy or sell cnr, security referred to or mentioned The moiler IS presenled merely for the converlence of the subSCriber While we believe the sources of our Informa ,.on fo be rei lOb e, we In no way represent or guorantee Ihe accuracy thereof nor of Ihe statements mode herein Any action to be token by the subSCriber should be based on hiS own investigation and Information Janney Montgomery Scali, Inc, as a corporation, and lIS offICers or employees, may now have, or may later toke, poslhons or trades In respect to any rltle mentioned In thiS or any future Issue, and such pas. lion may be different from any views now or hereafter e;opreued In thiS or any other Issue Janney Montgomery Scali, Inc, which IS registered With the SEC as on Inveslment adVisor, may give adVice to lIs Investment adVisory and other customers ,ndependently of any statements made In thiS or In any other asue Further Information on any security mentioned herein IS available on request

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Tabell’s Market Letter – September 29, 1972

Tabell’s Market Letter – September 29, 1972

Tabell's Market Letter - September 29, 1972
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TABELLS MARKET LETTER – ——– 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE September 29, 1972 Read ers of this letter over the past few months can hardly fa il to notice that it has been —-,-… —- – – – –'—– ' – r i' ' – – . ; . …….—-a.—-;.-';'-c;—, -.. to say th1deast; sb-mewnat less than optimistiC a'bout the present level of stock prices. This opinion arose out of as honest as possible an evaluation of the available technical statistics and has been repeatedly expressed in the belief that awareness of these statistics would be of value to the investor. We are, nonetheless, cognizant of the fact that we may have come to sound like a broken record with our repetitive arguments for caution. So we propose this week to examine the bullish case, or at least to try to evaluate what upside possibilities appear to exist at the present time–playing the role, perhaps, of our own devil's advocate. To begin with, the popular averages have remained, essentially, locked in trading ranges since the early part of 1972. In the case of the Dow, the top of this trading range is at around the 980 level on an intra-day basis, this figure having been approached in April, May, and again in August. The lower part of the range is at around 917, intra-day, which level was touched in early M3Y, June, and again in July, with a couple of days of July trading actually moving somewhat below that figure. The broader-based indicies exhibit essentially the same pattern, although with a slight upward bias, in that they were, on their August rally, able to move to newall-time high territory by a modest amount. Now it has been the supposition of this letter that this entire trading rarge would ultimatel, come to constitute an area of distribution, the reasons for this conclusion having been documented at some length.What we.want to examine here is the ar,guJnenttbjlLsuch.isnot,the.,.-,- on'case and that the trailing range will ultimately be penetrated the upside. ' n If we are to deSignate the March-September formation as intermediate-term in nature, the relevant short-term formation is a subsidiary trading range, delineated by 945 and 980, which contained the Dow in late August and early September. This area was penetrated on the down- side shortly after Labor Day, and it must be noted that the downside objective of that top, roughly 936, was attained at last week's low. The area around the low 930' s on the Dow is of more than passing interest from a technical point of view. It is, first of all, the general area where the index has bottomed three times before and thus constitutes a plausible sup- port level. Moveover it constitutes the bottom of a computer-calculated trend channelrunnirg from the November 1971 low to the August high. If a rally then were to occur, 930-935 was certainly a logical area to expect such a rally to begin. Indeed, just such a short term rally did, in fact, occur, sparked by peace rumors on Wednesday afternoon. It had sorre mearure of conviction,with a ten-point advance in the Dow, more than 1, 000 advanCing stocks, and, after some hesitation, a convincing follow-through in late Thursday's and early Friday's trading. The course of the present rally will be highly interesting, for it will determine whether our recent peSSimism has been well-timed or prematur If the advance, either immediately or after some period of basing, could carry through, on good breadth and volume, above the 974 level, it would suggest tha the March-September range did not have immediate downs ide implications an9 indicatethe.p'o,s sibilityof.a further – – -, -e-xt-ension- of—'-th-e -a-d-v-a-n-ce–fr-om–th-e- N-o–v-e-m-ber lows. -…… … – The question of how far such an advance might carry is an interesting one. The most plausible upside objective would be in the area of 1020, fairly close to the 1065 objective which this letter first suggested as long ago as October 1970. While relatively small on a percentage basis, such an advance could produce a worthwhile rise in individual stocks. While it must be considered a possibility, such an advance could hardly alter, in our, view, the evidence of long-term deterioration that has been manifesting itself throughout the past summer. The uncertainties which confront the current stock market will not be removed by another relatively modest leg up on the advance. What a rally would do, of course, is to buy time, giving the investor a more favorable climate to take the steps nec- essary to insure protection of his capital. Dow-Jones Industrials (1200 p.m.)958.31 S&P (1200 p.m.) 110.70 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL AVlT.rlt No stotemenl or expression of OPInU;ln or any other motler herein conlcllned n, or 15 to be deemed to be, directly or indIrectly, on offer or the OII;llollon of on offer to buy Of sell ony security referred 10 or mentioned The matter IS presented merely for the conver-lenCE of the subSCriber Whllel'le believe Ihe sources of our Informahan to be rellahle, we In no way reprenl or guarantee the accuracy thereof nor of the statements mude herein Any action 10 be talen by the subscriber should be based on h' own Investigation and information Janney Montgomery Scott, Inc, as a corporation, and Its offICers or employees, may now have, or may later toke, positions or trades In respect to any secvrilies mentioned In this or any future ,ssue, and such POSIllOn may be different from any views now or hereafter expressed In thIS or ony other lSue Janney Montgomery Scott, inc, which IS regIStered With the SEC os on Investment adVisor, may give adVIce to Its Investment adVISOry and other customers Independently of any statements mode ,n thIS or In any other ISsue Further ,nformat,on on any security mentioned herem IS ovodabte on request

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