Viewing Month: February 1973

Tabell’s Market Letter – February 02, 1973

Tabell’s Market Letter – February 02, 1973

Tabell's Market Letter - February 02, 1973
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,———————— – . ..——– —-. TABELL'S MARKET LETTER ,— — 909 STATE ROAD, PRINCETON. NEW JERSEY 08640 DIYISION OF MEMBER NEW YORI( STOCK EXCHANoe, INC MEMBER AMERICAN STOCK EXCHA.NGE February 2, 1973 The market, it seems to us, has been suffering from a sort of schizophrenia over the past few -weeks. We commented on one-aspect-of this -two weeks ago, -when-we- pointed out that-, although the averages had made a new high only a week before, the mood of the finanCial community seemed to be one typical of the more advanced stages of a decline. As the downswing continued through this week, reaching a low of 981 on the Dow-Jones Industrial Average on Friday morn- ing the despair deepened, heightening the contrast with the euphoria of less than a month ago which accompanied the averages' attainment of newall-time highs. In one sense, this schizophrenia may be attributed to the vlOlent contrast existing at the moment between technical and fundamental factors bearing on security prices. The move to new highs in November, December and January was accompanied by growing fanfare about the rosy outlook for the economy in general and for corporate earnings in particular. During the ensuing decline, we and our brothers in the technical-analysis fraternity have been pointing out the abundant' symptoms of a market in less-than-perfect technical health. Now our own career in the securities industry has paralleled the growth in respectability of technical analysis, and we are naturally gratified that we and our confreres are being listened to. We may now, however, have to guard against the difficulty that has plagued ourfundamentalist brethren for years—the possibility that, at any given time, our projections may be at least partially discounted. The signs of technical malaise which have been so widely pointed out are, most certainly, real and they include, but are by no means limited to, the following factors. 1. Market Breadth – For almost a year and a half now, breadth has been, in a word, abysmal. –Ourbreadth index reached-itspeak -lnMarch; 1972 at if Tower level -Uran its April,197rhTgn-'It remained in a steady downtrend as the averages inched ahead to new highs in mid-1972, and, although it staged a modest recovery on the October-November rally, it failed even to approach levels it had attained as long ago as May. The recent high in the averages was not confirmed by breadth on a short-term baSis, and the index is now flirting with its October lows, attained when the Dow was at 930. 2. Maturity – The upswing from May 1970 was, at its mid-January peak, 665 trading days old. This plaes us In a time frame where, a bok at market history ells us, we should be seeking signs ci a Ililrla peek. 3.Illiquidity – The sudden collapses in market values of many issues caused by only modest changes in fundamental outlook have been as well documented as they have been painful to inves- tors in the stocks affected. 4. Penetration of December Low – This took place last week and, as we have suggested in the past, such a penetration, historically, has often foreshadowed a down market. Now as we stated above, all of these symptoms are real and, in light of them, we have abso- lutely no quarrel with an investment policy which would involve non-participation in any rally that might occur over the next few months. Investment policy, however, must be distinguished from a market forecast and we are somewhat suspicious of forecasts which suggest that a market already down 70 points in three weeks is going to continue to sink like a stone with no interrup- tion whatever. Among the mitigating factors are the fact that the averages have reacted to what should, for the time being at least, be a fairly strong support level andthat most short-term indicators have reached the sort of overso-Id condition from which- an advance historically has ensued. We do not discount, in other words, the short-term possibility of a rally from somewhere around current levels. As a general rule, at this stage of the market, it is not the magnitude of decline s which gives us a clue as to longer-term market directionbut the strength and character, or lack of it, on market rallies. We think, therefore, that close scrutiny of any future short-term advance will be important. If better breadth and new leadership develop, the market outlook for 1973 could vastly improve. If the advance consists, as recent ones have, of nothing more than a markup in the pie ratios of a narrow list of growth favorites, it will be more incumbent on us than ever to pay att- ention to the distressing technical symptoms noted above. Dow-Jones Industrials (1200 p.m.)983.97 ANTHONYW. TABELL S&P(l200 p.m.) 114.54 DELAFIELD, HARVEY, TABELL AWTrk No statement or expreslon of opinion or CJny other matter herein contolned IS, or 1 to be deemed to be, directly or mdlrectly, on offer or the soll(IIOllon of on offer to buy or sell any security referred 10 or mentioned The motter IS presented merely for the conVel11cnC5 of the subSCriber While we believe the sources of our In/orma lion to be reliable, we In no way represent or guarantee Ihe accuracy Iheref nor of the stotements mude herein. Any action to be token by the subSCriber should be hosed on hlS own Investigation and Informollon Janney Mcntgomery SCali, Inc, 05 a corporation, and Its officers or employees, moy now have, or may later toke, posilions or trades In respect to ony securities mentioned In thiS or ony future luue, and such position mey be different from any Views now or hereafter expressed In thiS or any other Issue Jonney Montgomery Scolt, Inc, whICh IS registered With the SEC as on Inveslment adVisor, may give adVICe to Its Investment odvlsory and other customers Independently of any stotemems mode In tflls ar In ony other Issue Further Informal Ion on any security mentioned herein IS ovolfoble on request

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Tabell’s Market Letter – February 09, 1973

Tabell’s Market Letter – February 09, 1973

Tabell's Market Letter - February 09, 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 AMERICAN STOCK eXCHANGE February 9th, 1973 Despite sporadic intra-day attempts to rally, stock pnces still found themselves little in the way of significantspport in last week's trading. A five-point advance In the Dow on Wednesday morning was aborted anci-turn-d ;;to 'a-n Tl-p';-int dcii-ne,whi-ch continued with further sinking spells in Thursday morning's trading. Although a mild rally attempt Thursday afternoon failed to demonstrate a great deal of follow-through, some strength was evident in early Friday trading. The bear cub spawned last January 11th is now beginning to grow claws. In short, the decline, which has now extended to almost 9 in 19 trading days for the DJIA, is be- ginning to hurt. As drops of this na ture become increasingly pa inful, various reactions are possible. Some, unfortunately, border on the irrational. Two such responses can be characterized as the horrorific visIOn and the indignant bleat. The horrorific-vision sort of response could well. in the present instance, center around the well-advertised dOings in European money centers. A casual reading of the headlines of the past week would seem to suggest that the United States will soon be owned,lock, stock, and barrel, by the Deutsche Bundesbank. Indeed, one possible reason for the market's response to the heavy selling of dollars abroad IS the fact that very few people seem to have any precise idea of iust exactly what it means or does not mean as far as the U. S. stock market is concerned. There is an apocryphal story to the effect that only two people in the world really understand the tnternational money market, a clerk in the Bank of England and a partner in the House of Rothschild. They, it is said, disagree. Our own reaction to these developments is perhaps an overly simplistiC one. – Wewould suggest–that-the-ul-timateeffectwi-l-l be-I)-an upward-revaluation of- ma-jor- — . European currencies, which will, in turn, produce 2) another rise in the price of Volks- wagens. If this is catastrophic for the market. so be it. The second category of response, the indignant bleat, tends to come from those who consider market declines a personal affront. XY2 Corporation, they tell us, IS going to earn 10 per share. How, it is asked, can the ignorant stock market value It at 50 Translating this sort of plea into current terms, might produce the statement that the Dow- Jones Industrial Average Will probably, in 1973, earn 73 a share. How can it, as was the case at this week's intraday low, sell for only thirteen times these all-time record earnings The obvious answer to this one IS, simply, that it, in fact, did. As we have pointed out innumerable times in the past, earnings and dividends are not the only in- puts to market prices. Investor confidence is equally important and can be expressed numerically by the price paid for a dollar of earnings. That price, in the case of the Dow, was 13 last week, has been both higher and lower in the past, and wilL in all probability, be both higher and lower again. If we are to draw any optimism for the future from last week's events, we, for ourselves, would prefer to do it with hard statistical fact. Such fact is, in actuality, available. At iast week's low, the market had reached, in terms of a number of indicators, the sort of measurably oversold condition which has in the past characterized important bottoms. In terms of one such indicator -the excess of decllntng issues over advancing issues on a 10-day basis reached 25 of the tota I number of issues traded. This is, admittedly, a somewhat esoteric number. However, on the record, it has occurred comparatively few times 10 the recent past and, 10 the major- ity of those cases at least, some rally from then-existing levels has ensued. We are, thus, as we indicated last week, impelled to a degree of moderate optimism on a short-term basis. Further, as we suggested last week, it is generally not sharp declines that worry the techniCian, but weak ralites. A narrow and modest advance from whatever bottom is made over the near term would cause us to increase our skeptiCism regard- ing the futureco.nreof equity prices. Before we can make any such diagnosIs, how- ever, we mus t wait for such an advance to occur. Dow-Jones Industrials (1200 p.m.) 972.61 ANTHONY W. TABELL S&P (1200 p. m.) 113.98 DELAFIELD, HARVEY, TABELL N e ; el;presslon of opInion or any other moIler herein contolned I, or IS to be deemed to be, dorectly or Indirectly, on offer or the sollcllallon of on offer 10 buy or sell any securrty referred 10 or mentioned The molter IS presented merely for the convellenCE of the subSCriber While NI! believe the sOU'ces of our Informo- tlon to be relloble, we In no woy represent or gUorantee the accuracy Thereof nor of the statements mude herem Any achon to be tal..en by the subSCriber should be based on hiS own investigaTion and mformatlon 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 seCurotles mentioned In thiS or any future ISSUe, and such position may be different from any Views now or hereafter e) pressed m thiS or any other ISsue Janney Montgomery Scott, Inc, wh,ch .s registered With the SEC as on Investment adVisor, may give adVICe to 115 Investment odvIory and other customers Independently of ony statements mode 'n thiS or In any other Issue Further InformatIon on any secunty mentioned herein IS available on request

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Tabell’s Market Letter – February 16, 1973

Tabell’s Market Letter – February 16, 1973

Tabell's Market Letter - February 16, 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 AMERICAN STOCK EXCHANGE February 16, 1973 The stock market spent the past two weeks putting on a performance reminiscent of an old-fashioned – -, roller-coaster-ride .-.-T-heprice- sk-id -which-hadbeen-going on'since-early January-halted-Thursday -a'week ago, as an eight-point decline, WhICh had reached an intra-day low of 954.17, was virtually erased in two successive afternoon rallies. There were followed by back-to-back 12-point advances on Friday and Monday and an astonishing twenty-point plus rise in the first half hour of Tuesday's trading. The rest of Tuesday was spent giving up the bulk of that gain and Wednesday saw the sharpest drop in sne twenty months, a 16-point decline in the Dow. Thursday and Friday showed continued weakness suggesting a test of the recent 1973 intra-day low of 954.17. No less an authority than the N'ew York Times informed us on Thursday morning that It wa s a performance that left Wall Street confus ed and bewildered. A good deal of the confusion and bewilderment obviously stemmed from attempts to connect the market's performance with what has come to be the fashionable financial buzz word, intemationalmonetary-crisis. If one assumes that market fluctuations are the result of that crisis and the subsequent devaluation, one's reasoning must run as fOllows A–As the crisis developed, the Dow-Jones Industrial Average (1) skidded 113 pOints from its January high and then, (2), with no apparent change in the situation, advanced 42 points on an intra-day basis on Tuesday and Wednesday. B–With the devaluation, the market (1) advanced 23 points on Tuesday's opening and (2) declined 41 points on the rest of Tuesday, Wednesday, and Thursday. It is hardly surprising that confusionard bewilderment should result from this sort of thinking. Actually, in order to put the market gyrations into perspective, all that is necessary IS a simple intellectual exercise, albeit that that exercise will constitute heresy in the eyes of many. It is simply 0-necessaryassume- that the market eveittsof the past two weeks had nothing-hatsoever- to- d—;;;ith -' the happenings in international currency markets. If we are only willing to make this assumption, a perfectly plausible scenario emerges. In order to outline this scenario it is first of all necessary to recall that the Dow-Jones Industrial Average spent eight months of 1972 trading, for the most part, between 925 and 980. It continued within this range as the outlook for 1973 became more and more visible. After eight long months it was, or should have been, obvious that this level constituted an equilibriu m demand level based on the existing supply/demand equation and on rather clearly defined 1973 prospects. Secondly, the market penetrated this range on the upside in a decisive rally in November and Dec- ember 1972. The widely-heralded reason for this was a sudden realization on the part of the stock market of the excellence of the 1973 economic outlook. The more skeptical among us might tend to suggest that more fundamental to the rise was the emergence of new short-term sources of demand, specifically a 100 million rise in debit balances in November and December and heavy mutual fund purchases in December despite continuing net redemptions. This advance took the Dow up some 14 over 91 trading days, rising at an average rate of 1.82 points per day. On an historical basis this constituted a fairly normal bull-market leg, but the rate was clearly unsustainable for any protracted length of time. The emergence of the consequent down- swing should hardly, therefore, been all that surprising. In any case, by middle of last week, the Dow had returned to the upper part of the equilibrium level which had contained it for eight months last year. The clash between the demand at that level and-the selling forces which had gathered momentum since January might w-ell be expected to produce fireworks just as it, in fact, did. While all of the above may help in clarifying recent market action, it does little, we admit, to answer basic questions about the future, largely because these questions remain unresolved by market action. It is still not known if new sources of demand for equities will emerge to replace those sources which were spent on the recent rally. One potential source of such demand might, of course, be foreIgn buyers who would find devalued U. S. stocks more attractive. This source has clearly not emerged as yet, however. Residual support at present levels plus the oversold condition to which we have drawn over the past two weeks should be sufficient to hold the market at least temporarily. Its future course will be determined by the emergence or lack of emergence of new demand sources. Dow-Jones Industria's (1200 p.m.)971.10 S&P (1200 p.m.) 114.38 AWTrk ANTHONY W. TA8ELL DELAFIELD, HARVEY, TABELL No tatement or expreIQn c.F opinion or any other motter herem contolned I, or IS 10 be deemed 10 be, directly or I1ld,rectly, on offer or the sollcltotlon of on offer to buy or sell ony securlly referred to or mentioned The motler IS presenlcd merely for the convcrlencc of the subSCriber Whde we believe the sources of our mforma tlon to be reliable, we In no way represent or guarantee Ihe accuracy thereof nor of the S;Olemenls mude herein Any action to be token by the subscriber should be based on hiS own mvestlgotlon and Information Janney Montgomery Scott, Inc, as a corporation, and lIs officers or employees, may now have, or may later tOKe, poSitions or trades In respect to any securities me'1lloned In thiS or any future Issue, and such position may be different fro'TI any Views now or hereafter expreSSed In thiS or any other Inue Janney Montgomery Scott, Inc, which IS registered With Ihe SEC as on Investment adVisor, may give adVice to lIs ,nvestment adVisory and othel customers Independently of any statements mode ,n thiS or In any other Issue Further mformatlon on any security mentioned herein IS Qvollable on request

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Tabell’s Market Letter – February 23, 1973

Tabell’s Market Letter – February 23, 1973

Tabell's Market Letter - February 23, 1973
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORI( STOCK eXCHANGE, INC MEMBER .6.MEAICAN STOCK EXCHANGE February 23, 1973 It has often been claimed in recent months that the popular market averages have been g'iving'a dist.rted picture of the stock market's true performance. We have recently completed a study which unders-cores jusfhowclistorte;'Cl';infact' thalpiaurehas be.;;;– – c- – . -.– c – ,…– -.- According to the averages, the stock market scored a newall-time high just over a month ago. Measured another way, however, the average stock made its high—not this January, but over four years ago in December 1968, and it is currently trading some 40 below that high. Likewise, according to this measure, the high for the recent bull market was scored, not six weeks ago, but in April 1971, and we are now some 18 below that lEak. We computed the index on which we base the above statements as follows. Since May I, 1964 QUOTRON has made available a stock price change index which, essentially, shows the average dayto-day percentage price change for all issues traded on the New York Stock Exchange. It is computed, in essence, by adding the daily percentage change of all stocks and dividing by the number of issues traded. We have comput ed a market index by cumulating these percentage changes daily, starting with a base of 810.77 which is the level at which the Dow-Jones Industrials stood on April 30, 1964. The index in our opinion, gives a reasonably accurate statistical picture of the performance of the average New York Stock Exchange issue, as contrasted to indices such as the Dow and the S&P 500 which tabulate the performance of a limited number of issues. The table below gives the value of our cumulative index at major market turning points since 1964 and the level of the Dow for the same date. Percentage changes between each pOint are also given. Date April 30, 1964 Feb. 1966 High .–Dct.196Low Dec. 1968 High May 1970 Low April 1971 High Nov. 1971 Low Aprill972 High Oct. 1972 Low Cumulative Index Change 810.77 1094.85 35.0 8.0.3-.25—- ,26..6 3 1455.00 81.1 704.32 -51.6 1059.51 50.4 826.54 -22.0 1044.01 26.3 888.56 -14.0 DOW-Jones Industrials 810.77 995.15 44. .3. 985.21 631.16 950.82 797.97 968.92 921.66 Change 22.7 —2.'2' 1 32.4 -35.9 50.6 -16.1 21.4 – 4.9 Jan. 1973 High 979.26 10.2 1051.70 14.1 Feb. 21,1973 870.64 -11.1 974.34 – 7.4 A number of mteresting points can be raised. First of all, the Dow understated the performance of the market between April, 1964 and February, 1966 by a relatively small amount, and produced a fairly accurate representation of the 1966 bear market. It is following this point that discrepancies begin to appear. First of all, as we all know intuitively, the period from October, 1966 to December, 1968 was a period of speculative turmoil, probably unmatched in recent decades. Our cumulative index suggests this, showing a whopping 81 advance while the Dow dramatically understates it, posting onl)' a 33 advance. Likewise, the action of the Dow failed to show the true viciousness of the 1968 – 1970 bear market. Its 36 decline was substantiallyeceeded by the drop of over 51 in our cumulative index. From May 1970 to April 1971, the 50 rise shown by the Dow was a reasonably accurate representa- tion of the performance of the market has a whole. However, since that time, the Dow has been perform- ing a great deal better than the average st'ock, as measured by the cumulative index. That index posted a 22 decline in April-November 1971, versus only a 16 drop in the Dow, and its rise from November, -1971 to April of 1972 failed to reach.a new high in contrast to new,peaks posted.by. the Industrials. During the summer of 1972,the Dow dropped only 4.9 while the cumulative index declined 15, and the advance of last fall in the cumulative index was only 10 versus 14 on the Dow, marking a second failure by the cumulative index to post a new high. Since the January high, the cumulative index has dropped another 11 versus only a 7 decline in the Dow, and it stands, interestingly enough, at a level approximately equal to that of the fall of 1964. The action of this index simply underscores the fact that the period since May, 1970 has been a difficult one for equity investment despite the fact that the averages have turned in a rather conventional bull-market performance. It also emphasizes, in our opinion, however, the fact that the average stock is at the moment fairly reasonably priced on a historical basis. The index shows that we have come a long way in recent years toward correcting the excesses of the late. 1960's. That correction may not yet be complete, but at least it is, according to this measure, well on the way. DOW-Jones Industrials (1200 p.m.) ANTHONY W. TABELL S&P (1200 p.m.) 113.95 AWTrk DELAFIELD HARVEY TABELL ', No ,tolement or expresSion of opinion or ony olher motter herein contolned IS, or 15 to be deemed to be, dlreC1ly or Indirectly, on offer or the SO\lcltollon of on oHer to buy or sell ony 5el;unty referred to or mentioned The molter IS presented merely for the converlenCI! of the subscriber While we believe the sources of our information 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 ) corporation, and Its officers or employees, may now have, or may later toke, positiOns or trades In respect to any secUrities mentioned In Hlis or any fulure Issue, and such position may be different from any views now ar hereafter expressed In th or any other Issue Janney Montgomery Scoll, Inc, which IS regisTered with the SEC os on Inveslment adVisor, may gIVe adVice 10 lIs investment adVisory and othel customers Independently of any statements made In thiS lr In any other Issue Fvrther Informallon on any security mentioned herein IS available on request

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