Tabell’s Market Letter – November 03, 1972

Tabell’s Market Letter – November 03, 1972

Tabell's Market Letter - November 03, 1972
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, — …. …. — TABELL'S MARKET LETTER I l 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMSER NEW VOAK STOCK eXCHANGE, INC MEMBER AMERICA.N STOCK EXCHANGE November 3, 1972 A number of years ago, this letter, already finding itselLperforce, in the forecasting busi- nes s developed.a .traditIOn-of- foreca sting,the-res uHs,of.pre sident-ia L electionso. That .particular …. task 1S about the easiest one facing us this week. We forecast the reelection of President Nixon. Recent reactions to Mr. Nixon's overwhelming lead in public opinion polls are interesting. We have recently seen a spate of articles proving that polls can be wrong, with abundant reference to 1948 and to the Literary Digest Poll of 1936. We must confess, in this regard, we feel a certain sympathy with the pollsters, partially, we suppose, as a result of being allied with them m the forecasting trade. 1948 polls, for example, did support the probability of a Dewey V1CtOry over Mr. Truman. There was a necessary margin for error in this forecast, and that margm proved decisive enough to tip the scales in President Truman's favor. In the present case,the margm for error is a good deal wider. Unless the American people have, overnight, developed the habit of lying to polltakers, the wrongness of the present -day fore- cast could be a great deal larger than it was in 1948, and Mr. Nixon would still emerge v1ctor- ious, the only difference being that the election would be a great deal closer than the landslide now apparently in the offing. As we suggested above, forecasting the election, at the moment, is a great deal easier than forecasting the stock market. We noted last week the fatuity of trying to link stock market fluctuations to news events, and th,S was once again demonstrated m the past week's trading. From Tuesday to F rid a y the market staged what was, by all odds, its best two-day rally of the year, advancing a total of 25 points on the Dow-Jones Industrial Average which reached a c high,onF.LLd a yju st3.a.b.ocv eLt.sp.e.a.kLe.v.e.LsoLlas.tAugust .Wew.eredulyass.med.that. this strength was due to a combination of peace expectations and better corporate earnings, despite the fact that there was absolutely no progress in the V1etnam peace talks and the corporate results released were really not surprising. Once more, with a shortage of hard events to stimulate price change, Wall Street took to inventing imaginary ones. The problem is to assess what it all means. From a technical point of view, JoVe are still, unfortunately, in not a very different place from the one we have been in,lo these many months. For the fourth time the Dow finds itself posting an intra-day high around the 980 level. The ques- tion is whether this barrier, Wh1Ch turned back the market on the three previous occasions, can this time be decisively breached. There are certain arguments in favor of the thesis that, this time, the bastion may fall Breadth has been a shade better on the recent rally than on rrevious advancing attempts. Broader price indicies, furthermore, have broken out on the upside of small base formations suggesting higher levels, although, in most cases, not a great deal higher. And there are certainly enough positive patterns in' the Dow-Jones Industrial Average itself to suggest an intermediate-term advance in that mdex, carrying it above 1000 with all the inev1table accompanying hoo-hah. Yet the question remains how excited we should get about th,S prospect. The art of investmg is a process of weighing risk against reward ,and 1t 1S the potential for large returns that should make one enthus1astic about assuming the necessary risks inherent in eqUlty investment. Thrrujr- out the summer of 1970, as the market pattern unfolded, there was the strong probability that a major bear market bottom had been.made. Based on th,S thesis, .the.prospects.for.substantial up– slde reward were exc1ting in the extreme. Even last November, as the fact of a reversal became clear, the Dow, from the low 800's, still had interesting enough upside possibilities to warrant a reasonably aggres1ve attitude. In the present case, where ups1de object1ves on most averages seem to be about 10 above current levels, evenwhenv1ewed in themostopt1m1stic light, there is not all that much to get worked up about in so far as upside prospects are concerned. None of th,S should be taken as an attempt to fight the tape too hard. If the market does ultimately demonstrate a high degree of likelihood of advance from these levels, we w1ll take due note of thefactand recommend action accordingly. The reader will forg1ve us, however, if we are unable to get as excited about upside prospects 2 1/2 years into a major bull market as we did in that bull market's infancy. Dow-Jones Industnals (1200 p.m.) 981.04 S & P (1200 p.m.) 113.79 AWTrk ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No. statement or expression of opinion or any other matter herein contained IS, or IS 10 be deemed 10 be, directly or indirectly, on offer or the sol,ellallon of on offer Ie buy or sell any security referred to or menhoned The motter IS presented merely for Ihe converllmCt of the subSCriber While oNe believe the source of our Informa lion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the stotements mude herein Any oclion to be laken by the subSCriber should be based on hiS own Investigation and Informallon Janney Montgomery Scott, Inc, os 0 corporation, and 115 officers or employees, may now have, or may later toke, pOSitiOns or trades In respect to any securities menlloncd In thiS or any future Issue, and such position may be different from any VICWS now or hereafter e)(presscd In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may glvc adVice to Its Invetment adVisory and other customers Independently of any statements mode In thiS or In any other Iue Further onformallon on any security mentioned herem IS available on request

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