Tabell’s Market Letter – December 22, 1972

Tabell’s Market Letter – December 22, 1972

Tabell's Market Letter - December 22, 1972
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\ \ TABELL'S MARKr LETTER I. 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORk STOCK eXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE December 22, 1972 But who knows where or when -. . c ,C-.-,.-.,. . '. . . -., Rodgers,and-Hat,– ,.,-.,,……,. As the time comes to issue a 1973 forecast, the question posed by the stock market is quite clear and is embodied in the popular song. The answer, as we shall see, is less definitive and depends on a number of factors as yet unknown. Reviewing our forecast of a year ago, we find it essentially in the ball park, albeit a bit con- servative. We said in this space on December 23, 1971, The market is … likely to .. spend most of its time in the 800-950 range (It) should be noted that 1972 is an election year, and the normal shape for such a year is a flat-to-down market in the first half, followed by higher prices during the second half. Thus, our projected 800-950 range, if it is to be Violated, is most likely to be exceeded on the downside in early 1972 and on the upside in the latter part of the year. The projected range was, in fact, never exceeded on the downside, and turned out to be at a slightly above the one we had anticipated, i.e., 900-980. AS,the election year pattern accurately forecast, the upside violation came at the end of the year, in November an! December, and we now find ourselves at approximately 1000 on the Dow, moderafely above the trading range we had envisioned. The task at hand is to relate this market action, as it did, in fact, develop, to a rational market expectation for 1973. We drew attention in last week's letter to three factors we considered relevant. They were as follows 1) A comparison of the present bull market with past bull markets indicates that we are in all probability, in terms of time and amplitude, at a reasonably mature stage. 2) We are currently near the upper part of the market trading range, which our analysis of supply/ dem-a'i\d'f6rces read'sus'-tc)be1ieve w-illdlYmiha te-marketacrionirt'lea-s1'for lheear'lyT9 70'''s'''.-..,.—I 3) The seasonal pattern for the initial year of a presidential administration is .such that a correc- tion of major proportions in 1973 or early 1974 is a real possibility. We know then what we are looking for–a market top. This should not be surprising. All bull markets have topped out in the past and this one will, also. The questions are Where and When –when, because if a top is well off into the future there is little point in allow- ing it to dominate our current investment thinking, and where, because, if the top is going to occur at much higher levels, the ultimate bottom will be at prices not too much different than current ones. History furnishes us with some less-than-precise guidelines. If the experience of 1953- 1956, for example, were to be duplicated, the top could occur as early as next March. If, on the other hand, the present bull market equaled the one of 1957-1961 in length, the ultimate peak could be deferred as long as March 1974. As to the question of where, current upside objectives on the Dow center on the 1050-1100 range, and we are willing, for the present, to use this as an approximate target price. The central factor which will probably determine the length of the present bull market is at present unknown. The last upward phase has featured a distinct and dramatic shift in leader- ship away from high pie glamour issues, in favor of lower priced, slow-growth, and cyclical stocks. We would expect a continuation of this phase to carry the market higher, at least in the early months .of )973. The ,question is whetheL there ,will then be a.further, shift.of ,interest in favor of secondary and tertiary issues. There is at the moment absolutely no sign of this occurring, but, if it does occur, it could well prolong the life of the current upswing. Our foreca st for the year, then, must call for higher prices, to be reached, in all probability, during the first half of 1973. Whether the favorable market climate can be sustained through- out 1973 will depend, in great part, on whether the market can broaden its leadership to seg- ments of the list hitherto ignored. WE WISH YOU ALL A VERY HAPPY NEW YEAR Dow-Jones Industrials 11200 p.m.)1003.39 S&P (1200 p.m.) 115.62 AWT rk ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement to buy or sell or expression 01 opinion or any other any security referred 10 or mentioned molter here'n The moiler IS contolned presented 15, or 1 to be merely for the cdoenevmeredIe1n0boef, directly or mdnec1ly, the subscrIber WhIle on -Ne offer or believe Ihe the 5o0u1rIcCeItootiof nouorf on offer Informa- tIon to be reliable, we In no way reprelent ar guarantee the accuracy thereof /lor of the statements mude herell'l Any achon to be tai-en by the subscriber should be based on hiS own Invesllgohon and Informallon Janney Montgomery Scolt, Inc, as a corporation. and ItS officers or employees, may now have, or may raler toke, poSitions or trades In respect to any SeCUrities menhoned In thiS or any future IUe, and such position may be d,ffere'lt from any views now or hereafter expressed III thiS or any other Issue Janney Montgomery Stott, Inc, which IS regIstered w,th the SEC as on Investment adVisor, may give adVICe to Its IIlvestment adVISOry, and othel C\,ISfOmerS ,ndependently of ony statements mode ,n thn or III any other Issue Further Information on any security menhoned herein IS available on reques,

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