Viewing Month: January 1973

Tabell’s Market Letter – January 05, 1973

Tabell’s Market Letter – January 05, 1973

Tabell's Market Letter - January 05, 1973
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—. — -.. – — . –. —- TABELL'S MARKET LETTER L – —-.– ! I I ! I 1 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMaER NEW YORI( STOCI( EXCHANGE, INC MEMaER AMERICAN STOCK EXCHANGE – – – – . – – – – – '- ——– -. -. … – –'W'–' — ..–'—–'-. …g ……..-., January-5T197-3 It is pleasant to return to one's desk after two refreshing weeks on a Vermont mountainside and find that the action of the market in the interim ha s been perfectly normal, with a minimum of unusual developments. just prior to Christmas, the Dow-jones Industnal Average, as lt had to do eventually, underwent the first recognizable correction in its sharp advance from an mtra-day low of 917.07 last October. When it reached a closing low of, interestmgly enough, exactly 1000, all downside objectives of the small top formed in early December had been reached, and the market, for the first time in over two months, had reached a measur- ably oversold condition on a short-term basis. Thus the rally of the past two weeks was the logical expecta- tion, and the process carrled the Dow on to a new hlgh for the move at midday Friday. The rally, unfortunately, was pretty much confined to the Dow-type blue chips. Week's end found both the transportation and utility indices signIflcantly below their peaks of November-December, and breadth on the advance was not as impressive as might have been expected considering that the Dow- jones Industrial Average rose thirty-six points in the three days around the New Year holiday. A perhaps relevant item is the fact that on Wednesday, when the Dow first posted a new high, eighty-five stocks on the New York Stock Exchange posted 1972-73 h1ghs. Now it is not this factor that 1S important. It is the fact that 1827 issues traded that day, and thus 1742 stocks dld not post 1972-73 highs. Moreover, even while the market was moving ahead sharply, a great many of the air pockets which began manifesting themselves last Summer again developed in Issues reporting disappointing developments of one sort or another. Moreover, as the market sails ahead to new peaks, breadth action stubbornly refuses to confirm the admittedly powerful strength shown by the Dow. Now none of the aloove constitutes an attempt to questlOn the validity of the current rally or to suggest that we do not believe in Its near-term continuance. We continue to feel that the Dow has an upside objective somewhere in the 0 1OSOIlOO-range-and that-that figurewill-be-attainedin-thereasonablynear-future ;the- advance bemg interrupted by only occasional minor corrections such as that of mid-December. We feel it is incumbent upon us, however, to be aware of what is actually happening in the market place and to try to draw conclusions from market action as the pieces in the puzzle slowly fall into place. It is quite obvious, for example, that the advance from the 1970 lows through the Summer of 1972 featured, by and large, the institutional quality growth stocks, and the great bulk of market gains achieved in that period were due to the normal bull-market process of marking up the pnce which investors were wllling to pay for a dollar of earnings in these issues. By mid-1972 that process had pretty well run its course, most of these stocks having achieved, by that time, record peak multiples. After the indecisive action of Summer and Fall a new phase developed COincidentally with the October- December rally. At thlS pOint, the market begain to pay attention the the hltherto-neglected slow-growth and cyclical blue-chip issues, and it is no accident that it was during this phase that the Dow, heavily weighted with these is sues, finally penetrated the 1000 level, attaining a new h1gh for the first hme in over six years. While all this was going on the growth leaders of the earller phase essentially moved sideways. As we said in our year-end forecast, the unanswered question for 1973 is whether leadership w111 broaden still further and eventually shift into secondary and tertiary issues. The growth stocks were, in general, fully exploited ruring the initlal phase of the advance. While there is probably a good deal more upslde potential remaining m some of the Dow blue chips and thus in the Dow average, it is probable that a good portion of this mark-up phase, perhaps the bulk of it, has already been seen. It is the speculatlve areas of the market place which as yet remain unexploited. Paradoxically, a source of strength may lle in the very fact that we have had, m the course of this 2 1/2 year bull market, two reasonably sharp correctlOns–during the Summer and Fall of 1971 and the ldentical period of 1972. In the course of these downswmgs many stocks underwent private bear markets of their own. Many mobile home issues, for example, are selling from one-third to one-half thelf 1972 peaks. It IS quite possible that a number of these stocks,after a necessary penod of rebasing,could be in a positlOn to resume upside leadership. As we have stated before, the answers are not yet ln, and we do not think it lS necessary at this pOlnt to guess the future in so far as investment strategy is concerned. The best technlcal action at the moment con- tinues to be shown by the h,gh-grade, moderate-growth and cycllcal stocks, and 1t is in these stocks that portfollo managers should concentrate their efforts. Future moves, mto secondary issues, lf they begm to show strength, or into a defensive posture, if such strength is lacking, can be taken when technical conditwns warrant. Dow-jones Industrials (1200 p.m.) 1047.26 S&P(1200p.m.) 119.94 ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL AWTrk No stolement or expression of opinion or ony other moller herein contOlned IS, or IS to be deemed to be, dlreClly or Indirectly, on offer or tne soliCitation of an offer to buy or sell any security referred to or mentioned The molter IS presented merely for the converlence of the subscriber While we believe the sources of our Informa lion to be reliable, we In no way represent or guoranlee the accuracy thereof nor of the slatements mude herein Any action to be token by the subscriber should be based on hiS own InvestlgO/Jon and Informa/Jon Janney Montgomery Scolt, Jne, as a corporation, ond lIs offJcers or empJoyees, moy now have, Or may Jafer lo,,e, positions or trades In respect to cny securities mentioned, thiS or any future Issue, ond such position may be different From ony views now or hereafter expressed In Ihl or any o'her Issue Jonney Montgomery Scott, Inc, which IS registered with the SEC os on IOvestment adVisor, may give adVice to Its Investment adVisory ond othel customers Independently of cny statements mode, thIS or In ony other Issue Further InformotlOn on any security mentIOned herein IS avolloble On request

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Tabell’s Market Letter – January 12, 1973

Tabell’s Market Letter – January 12, 1973

Tabell's Market Letter - January 12, 1973
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TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORk STOCK eXCHANGE, INC MEMBER AMEFUCAN STOCK EXCHANGE January 12, 1973 1200 on the Dow. That's a Mdest Expectation for 1973. e ' -'.7.'- . – HeadlYne-Barron's, January 8;-'1973 – Onward and Upward. Experts Now Say It's Just a Matter of Time until the Dow Index hits 1000. Headline-Wall Street Journal, April 21, 1971 There is a tradition which recommends casting a jaundiced eye on consensus forecasts, and in retrospect this was a wise attitude insofar as the second forecast quoted was concerned. The Dow did indeed, as we all know, ultimately reach the 1000 level, but the matter of time was 18 months, and a detour from 950 via 800 was involved. Now a consensus forecast has again emerged, typified in an excellent series of articles in Barron's, the headline of one of which is cited above. In the articles, a panel of ten experts discuss the generally excellent outlook for business in 1973 and the probability that this excellent business outlook could well produce higher equity prices. So far in 1973, at least, the market has done its best to bear the forecast out. President Nixon's announcement of Phase 3 at noon Thursday turned a dull trading session into a 15-pointadvance before profit-taking set in. One of the first things that the novice technician learns is not to fight markets which are as obviously strong as this one, even as the novice sailor learns not to spit into the wind. As AlanAbelson, one of the few stock market writers with a gift for turning a phrase,puts it in the same issue of Barron's, The Dow(has)a real bead on the Battle of Hastings (and ultimately, who knows, maybe on the Magna Carta). For our own part, we would be reluctant to base invest- ment policY-9!J.hlsl!tgqn-A.nythilg other.than,Cl,5'Qntjnul'!,Ua.Yorltble El-'!uity,climate,.. …,.-'. – Indeed, we countoursel;,es firmly i'the-cam'p of the optimists insofar as the 1973 economy is concerned. GNP posted an advance of just under 10 in 1972,and we are inclined to think it will do the same in 1973, probably with an accelerated rate of expansion in the first quarter. Real GNP should come close to duplicating the better-than-6 advance of last year. The essen- tial question is, of course, to what extent is the stock market already discounting these prospects There is a school of thought which says that the normal discounting process has been less vigorous in the present instance than in past bull markets and there is, therefore, a good deal more room on the upside. We confess to a degree of skepticism regarding this view. We have always believed that news on the front pages of national publications is generally pretty well reflected in equity prices. The rosy outlook for the upcoming year could be news only to a hermit. And yet if the market is going to run into trouble in 1973,there will have to be a reason. Some sort of monkey wrench will have to be thrown into the now-smoothly-purring machinery. Trying to guess what it might be is like searching a cloudless sky for the direction from which a storm may come. And yet we are willing, tentatively, at this stage, to offer a guess. If the market reacted violently to the Thursday's announcement, it paid no attention whatsoever to the previous day's statement by the Labor Department noting that December's wholesale prices expanded at an annual rate of 62.4, the greatest month-to-month rise in 22 years. Wholesale prices, moreover, tend to be a leading indicator. Inflation in other words is not dead, nor does it, apparently, sleep. Throughout 1972 the money stock has been growing at a rate well above the .,. average for the-past few years and, if Phase 2 did indeed have any success in holding priCes down, it is difficult to believe that Phase 3 will be more effective. The question is, if more economic intelligence like the December wholesale price raise is forthcoming, how will the admmistration and the Federal Reserve act The past record give little confidence. All too often, the reaction in the past has been to jam on the monetary brakes. Whatever effect this sort of thing had on the economy, the effect on the stock market was prompt and apparent, as 1966, 1969, and, to a lesser degree, 1971 attest. We have no intention of being worry warts, but if trouble, now invisible, is going to manifest itself, we would like to know, at least, in what direction to be looking for it. We think the inflation front is as good an area to keep an eye on as any. Dow-Jones Industrials (1200p.m.) 1051.63 S&P (1200 p.m.) 120.'46 AWTrk ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or c;presslon vf opmlon or ony other matter herein tontomed IS, or IS to be deemed to be, directly or mdlrectly, on offer or the soliCitation of on offN to buy or ell ony security referred to or mentioned The moiler u presented merely for Ihe converlence; of The subscriber While we believe The sources of our Informa Tlon To be reliable, we In no way represent or guaranTee The accuracy Thereof nor of The staTements mude herein Any action to be token by the subSCriber should be based on his own investigation and Information Janney Montgomery Scott, Inc, as a corporallcn, and lIs officers or employees, may now have, or may fater tae, posllions or trades In respect to any securities menTIOned In Ihls or any future Issue, and such pOSition may be different from any v,ws now or hereafter expressed on thlS or any ather Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may gll.. e adVice To Its Invcstment adVISOry and othcl CI,Istomers independenTly of any statements mode In thiS or In any other Issue Further informaTion on ony security mentioned herem IS available on requesT

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Tabell’s Market Letter – January 19, 1973

Tabell’s Market Letter – January 19, 1973

Tabell's Market Letter - January 19, 1973
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TABELL'S \ MARKET L LETTER – 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORk STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGe January 19, 1973 ,Th. mar,ket analyst is, by., training. accustome,d to relY.,on ,statistlc;s,. -YLtjl,er,e ar.e ti,mes when. numbers, especially the more obvious ones, do not seem to be telling the full story, and it is at these times that experience, intuition, and, to a degree, guesswork must be brought into play. Recent market action provides a case in point. It is, after all, just over a week since January 11 when the Dow-Jones Industrials posted a newall-time high of 1067.20, and the market at the moment is off only modestly from that high. One would expect last week's miniscule correction to have excited hardly a npple in the financial community and to be shrugged off with blithe comment about the need for consolidation after such a sharp advance. Yet the mood appeared to be profoundly different,and,only days after the high, the sort of concerns typical of the advanced stages of a downswing emerged. The feeling was inescapable that the message being telegraphed by the averages was 'somehow false–that the pattern of a strong bull market rally followed by a minor correction was not typical of the pattern of the average stock, or indeed the experience of the average investor. We decided, therefore, to repeat an exercise which we have performed in the past and to examine each stock on the New York and American Stock Exchangos at 1tS close on Wednesday of this week in relation to its high and low for 1972-73. This more intensive look at statistics tends to reaffirm the fact that now, more than ever, the averages are not telling the true story of the market. From the three numbers discussed above, Le. 1972-73 high, 1972-73 low and recent price, a number of interesting statistics may be derived. Among the most relevant are the percentage decline from the high, the percentage advance from the low, and the relative position within the c.tr;'!,';ling.r,mge between.highalow. Let. us examine .indiv.idually-each-of,these, number-s-f-orAhe. Dow and for those 2487 individual issues which we studied. 1. Percent Decline from High. The Dow closed Wednesday at 1029.12 some 3.5 down from its high for 1972-73,yet only 124 issues of 2487, fewer than 5 of the total, were, at Wednesday's close, that close to their high for the 13 months. The average issue had, as of mid-week, declined 26 from its 1972-73 peak. Almost 1000 issues were down 30 or more from their high, 326 were down 50 or more, and almost 100 managed to post declines 10 excess of 65. 2. Percentage Advance from Low. By this measure, the Dow at Wednesday's close, was up 16.5 from its low of 1972, made in early January of last year. The average stock had done somewhat better than this, and was up just under 25 from its 1972-73 low. However, th1s is at least in part due to the influence of a small number of outstanding individual performers (54 stocks were more than 100 above their lows) and the fact that individual issues tend to be more volatile than the average. Nonetheless, 1097 stocks, some 44 of the entire list, were up from their lows by a lesser percentage than the Dow and, despite the fact that we are within an ace of the high in a 2 1/2 year old bull market, only 444 issues were up 40 or more from their lows of the past 13 months. This must be conRidered a somewhat less than impressive figure. 3. Relative Position within Trading Range. The range of the Dow for 1973 has, as noted above, been between 1067.20 and 883.43, a span of some 183 paints. As of Wednesday's close, 1t was 145 points above its low, thus placing it in the upper 20 of the 183-point trading range. An examination of individual stocks in relation to their own trading ranges is revealing. Only 954 '-issues 'have'equalled the performance of the Dow'and remain in the upper 20 oftheir 1'972-73' ranges, and the average issue is in the lower two thirds of its range. 895 issues are in the lower half of their 1972-73 ranges, and almost 400 are in the lower quarter of these ranges. Now all of the above does nothing more than document the intuitive feeling that the performance of the averages is painting a rosier picture than the performance of the average stock. It is, however, worth noting that market advances tend to lose rather than to gain momentum as they mature. The rationale for investment in the stock market has always been the possib1hty of earning a greater-than-average return. Quite clearly, the expectable return in recent markets has, despite the performance of the Dow, not been all that exciting. Dow-Jones Industrials (1200 p.m.)1019.49 S & P (1200 p.m.) 118.03 AWTrk ANTHONY W. TABELL DELAfIELD, HARVEY, TABELL No statement or expreSMon of Opinion or ony other motter herein contOlned IS, or IS 10 be deemed to be, dlrertly or Indirectly, on offer or the S011Clloilon of on offer to buy or sell ony security referred 10 or mentioned The molter IS presented merely for the convePlena of the subscnber While -Ne believe the sources of our Informa- tion to be reliable, we ,n no way represent or guo ron lee the accuracy thereof nor of the stotements mude herein Any action to be token by the subscllber should be based on hiS own investigation and information Janney Montgomery 5;011, Inc, as a corporation, and Its officers or employees, may now have, or may later toke, positions or trades In respect to any seCUrities mentioned In thl or any future Issue, and such position mcy be different from any views now or hereafter e.(pressed In thl or any olher ISsue Janney Montgomery Scott, Inc, which IS registered With the SEC as an Investment adVisor, moy give adVICe to IS Inve!olment adVISOry and olhel customers Independently of any statements made In thiS or In any other Issue Further information on any security mentioned herein IS available on request

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Tabell’s Market Letter – January 26, 1973

Tabell’s Market Letter – January 26, 1973

Tabell's Market Letter - January 26, 1973
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– – – – – – ,——— \ TABELL'S MARKET LETTER J 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK. STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE January 26, 1973 Havmg just excited all sorts of fanfare by breaking through the magic 1000 level on the upside a few months -ago-; the Dow-Jones -Industrials-seerrre-d -bent'this-weekOn -reversing'that- magic-by-pene– trading 1000 in the opposite direction. As the reactionary trend of recent sessions continued, the market, after posting a tepid rally in response to the announcement of the peace settlement,plummeted some 14 points in Wednesday's trading. By noon on Friday, the decline had carried on below 1000, the Dow having given up another six points at 998.80. One piece of news that might have helped fuel the decline was the announcement last week of Decem- ber figures on mutual fund sales and redemptions. The fact that redemptions again exceeded sales by a modest amount provided no immediate downside spark since it was notably lacking in news value. There was very little dramatic shock element comparable to the summer of 1971 when it developed, in May of that year, that redemptions had exceeded sales for the first time in the history of recorded figures. Since that time, the pheromenon has become somewhat old hat. There has been a net out- flow from mutual funds in every month since February 1972, and the net excess of redemptions over sales for the full year has been in excess of 1.7 billion. Both the optimist and the pessimist can buttress their arguments with the most recent mutual fund statistics. It should be pOinted out first of all that the 1.7 blllion cash outflow is relatively mini- scule considering the almost 60 billion of assets that funds as a whole had on hand at the end of 1972. Moreover net redemptions during 1972 have apparently stabilized at a relatively low level rather than showing any tendency to increase. A look at the figures, however, tends to lend support to our long-held thesis that the basic market climate has changed drastically since the middle 1960's. The following table shows, in the first column, the net sales (sales minus redemptions) of all mutual Juncis ea ch,y,a,. si'lce.1.95 5and,.-inthe secondcolumn-,–t-he-aetua-l-net- purcnas es-of securities;-(iargely – common stocks) by those funds. MILLIONS OF DOLLARS YEAR SALES – REDEMPTIONS NET PURCHASES YEAR SALES – REDEMPTIONS NET PURCHASES 1955 764.9 635.7 1964 1528.8 1541. I 1956 913.9 860.0 1965 2395.7 1921.3 1957 984.8 953.6 1966 2666.7 1498.7 1958 1108.5 997.1 1967 1925.3 2330.6 1959 1494.3 1269.0 1968 2981. 0 2360.5 1960 1255.4 1142.2 1969 3056.6 2397.7 1961 1790.5 1783.0 1970 1638.2 1834.7 1962 1576.3 1241. 6 1971 413.3 1023.8 1963 953.7 927.5 1972 -1731. 3 -1727.9 The first thing we think it important to note about the table is the tremendous shift in basic market impact that has taken place between the late 1960's and 1972. Purchases by the fund industry grad- ually built up from a level of 635 mlllion in 1955 to around 2.3 billion for the years 1967-69. In 1972, net sales of securities were 1.7 billion, a total swing of 4 billion. It seems obvious that such a swing must have an impact on the overall market climate. Again, however, on the optimistic side,it must be noted that 1972,was byarrllarge,not that bad a market year. The market has obviously developed the capacity to survive a good deal of mutual fund selling. A second factor worthy of mention is the fact that thre have often been important discrepancies between the cash inflow to funds and the amount actually invested. Thus, in the most recent period, the funds invested considerably less than all of the cash they received during 1968-69, w,ereas they draw down on this cash reserve, investing considerably more than their cash inflow in 1970-71. For 1972 actual sales of securities were about equal to net redemptions. What about 1973 It would, unfortunately, be unrealistic to expect sales or purchases of secur- ities by the fund industry to be much different than the sales-minus-redemption figure. Although cash position was built up somewhat in the year,heavy purchases of securities by the industry late in the year brought cash down to 5 of assets, generally considered a relatively low figure. It is thus likely that mutual funds as a whole will have limited reserves to draw on for market support during the year ahead. Dow-Jones Industrials (1200 p.m.)998.80 S&P (1200 p.m.) 116.08 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTrk – No statement or expression of opmlon or any other matter herein contolned IS, or I to be deemed to be, directly or Indirectly, on offer or the sollcltotlon of an offer to buy or sell any security referred to or menhoned The molter IS presented merely for the converlcnc!O of the subscriber While we believe the sources of our information to be reliable, we In no way represent or guarontee the accurocy thereof nor of the statements mude herein Any action to be token by the subSCriber should be bosed on hiS own Investigation and Information Janney Montgomery Scoll, Inc, as a corporallon, and It officers or employees, may now hove, or may later toke, POSitiOns or trades In respect to any seCUrities menlloned In thiS or any fulure Issue, ond such position moy be different from any views now or hereafter e'(pressed In thl3 or ony other Issue Janney Montgomery Scoll, Inc, which IS registered With the SEC as on Investment adVisor, may g.ve adve to .ts Invutment adVisory and othlI customers Independently of any statements mode In thiS or In any oher Issue Further Informotlon on any security mentioned herein IS avollable on request

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