Tabell’s Market Letter – January 19, 1973

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