Viewing Month: January 1974

Tabell’s Market Letter – January 04, 1974

Tabell’s Market Letter – January 04, 1974

Tabell's Market Letter - January 04, 1974
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORI( STOCI( eXCHANGe, INC MEMBER AMERICAN STOCK EXCHANGe ror January 4, 1974 somE'-years no;;we'lfilve'tU1I!ea lhe'Iamillarse-a'sonal lenden-ey -of 'th-estock market tostage-ayear-end rally, and it has been the custom of this letter around the New Year to point out some of the conclusions that can be derived from a study of this phenomenon, We have suggested that an exhaustive study of chart patterns since the Dow-Jones Industrial Average first was computed in 1897 indicated that such a rally, however miniscule, invariably had taken place. A number of interesting facts about the market action of the year-end may be noted. (1) – As stated above, an identifiable year-end rally has taken place in every year since 1897. This rally often has been of great magnitude with advances as great as 28 having been recorded. It also, on occasion, has continued with only minor interruptions for as long as six months into the new year. How- ever, on other occasions, it has been of only a few days' duration, reaching a top extremely early. Thus, in 1960, 1962, 1970, and, most recently, in 1973, the rally reached a peak in the first week in January. In 1961, 1964, 1967, and 1971, it continued into February or March. (2) – There has been a perSistent tendency for the rally to begin early in years when the market has been up, and late in years when the market has been down. ' In recent upward years, 1959, 1963, and 1967 are examples, the rally commenced from early December. In 1962, 1966, and in 1969, it began late in the year. If the rally this year started on December 5, 1973 will be an exception. (3) – The important thing to watch in cam ection with market action in the early months of the new year is the low for the previous December. This low has been broken in forty-four years out of the past – .,.seventy-three. H-owever,,–ln twenty.,six. oftheseforty-fourca ses.,,, itwa sbroken.-in Ja nuaroY,,a nd-February. Since 1937, it has never been broken later than mid-March, with the single exception of 1965. Thus, if the market is able to hold above its December low for the first 2 1/2 months of the year, chances become good that this low will not be broken. For example, in 1969, 1970, and 1973, the December low was broken early in January. In1963, 1964, 1967, and 1971, and, most recently, 1972, it never was broken, 1965, as noted above, was unusual with the December, 1964 low of 850.19 being broken in June when the Dow reached an intra-day low of 832.74. (4) – In years when the December low has been broken, the subsequent trend has been downward two- thirds of the time. 1962, 1966, 1969, and 1973, of course, are typical cases. Again, 1965 was an ex- ception. 1970, of course, was a down year in the first half. d- (5) – The magnitude of the rally is an important clue as to the year's market trend. For example, an advance of 10 or more from the December low has been followed by an upward or neutral market in thirty-one of the thirty-six years that such an advance has occurred. An advance of less than 10 from the December low before an identifiable correction takes place has been followed by a downward market in twenty-five of thirty-seven years. 1963, 1964 and 1971, the year-end rally approximated 10, and in 1972 it was 17. In 1962, 1970, and 1973, for example, it was less than this figure. (6) – The length of time in which the rally continues into the new year also is important. For example, in nineteen years the rally continued into March or later. In seventeen of these nineteen years the eventual trend was upward. In 1964 and 1972 the year-end rally continued into March and in 1961, 1963, 1967 and 1971 into February, TJ1fs- year;- therefore;tlie-previousDeceiiiberciosing low of 788.3 i becomes an import-;nt -ref'e-re-n-c-e—-. point to watch. On Thursday of this week the Dow-Jones Industrial Average closed at 880.69. The fact that this average has already advanced 10 must be viewed constructively. If the rally continues into February or March, historically a good market year would be indicated. Dow-Jones Industrials (1200 p. m.) S & P Compo (1200 p. m.) 98.85 Cumulative Index (1/3/74) 604.191 RJS/jb 873.92 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL No statement or expreulon of opinion or any otner motter herein tonlo,ned IS, or 1110 be deem!!d 10 be, directly or mdlrl!c'!ly, an offer or the 501lcllollon of on offer to buy or sell any security referred 10 or mentioned The mCl1ler 15 presented merely for The corWCr,cnce of the subscrober While -He be!leve the sources of our Inforr'n,,- tlon to be reliable, we In na way represent or guarantee the accuracy thereof nor of the statements ml,lde herem Any action to be token by the subSCriber should be bosed on hiS own investlgotlOn and Information Janney Monlgomery Scott, Inc , as a corporation, and Its officers or employees, may now have, or may later toke, POSitions or trades In respect to ony secUrities mentioned In thiS or any future Issue, and such posilion moy be different from any views now or hereafter expressed In thiS or ony other Issue Janney Montgomery Scat!, Inc, whlch IS registered With the SEC as on Investment adVisor, may give adVice to Its Investment odvisory ond other customers Independently of any statemenu mode In thiS or In ony olher Issue FUr1her ,formollon on ony security mentIOned herem 1 avolloble on request

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Tabell’s Market Letter – January 11, 1974

Tabell’s Market Letter – January 11, 1974

Tabell's Market Letter - January 11, 1974
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0—————————————————— TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY OB540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – — – – —- .- -; 7- ..- ..- – – … Januaryl.l/;;1974…, — .- If the wild gyrations which ushered in 1974 constitute any indication of the sort of stock market we are going to have, 1974 is, perforce, gOing to be quite an exciting year. We started out by enjoying the year-end rally — and with a vengeance. From a Christmas Eve low of 814.81, the Dow forged ahead to reach a closing high of 880.69 on 1974's second trading day. This constituted an advance of over 10 from the early December low of 788.31, a phenomenon which, as we suggested in last 'week's letter, has historically been a bullish one. In the current instance we would prefer to await additional evidence before stating that such was definitely the case. Having thus displayed extraordinary vigor on the upside, the market then did a 180-degree pirouette. A few days of consolidation were followed by a sharp drop beginning on Tuesday of this week, and the average wound up the week having retraced about two-thirds of the December-January rise. Despite the wide swings in both directions, we see no reason at this stage to change our forecast as to the shape of the 1974 stock market year. That forecast it will be recalled, called for strength in the early part of the year followed by a move to around and quite possibly through the previous lows with a true bottom to occur sometime in the spring. Such a pattern still appears to have a high degree of plausibility. We do not, however, think the recent decline is necessarily the start of the future weakness we anticipate. To begin with, it is possible to read higher objectives near term for at least some of the major indices. The Dow, for example, has readable upside objectives in the 920-930 range, and it has re-, -,turned to reasonabl-y good support atcurrentlevelrhepat-ternsGf-theeaiita-I-weighted -indiees-;sueh ,-, as the S & P 500, are considerably less impressive. That indicator has very little in the way of a readable upside potential and runs into heavy overhead supply just above current prices. The same is true of the similarly-constructed New York Stock Exchange Index. That this should be the case is hardly surprising. The latter two indices are heavily biased in favor of the former first-tier growth stocks, and it is this bias, no doubt, that accounts for their relatively inferior patterns. It is with these issues, actual-Iy, that the real tale of the stock market's action over the past two to three weeks lies. The dismantling of the two-tier market has now reached a point where the momentum generated by this process is becoming inexorable. In one sense, actually, the two-tier market has not been dismantled. The tiers have simply been reversed. The high p/e, growth favorites of a year ago have now, almost without exception, broken down from top areas of massive proportions, and the downside momentum that many of them have built up is indeed fearsome. To those of us familiar with the dynamics of stock market processes, it appears unlikely that the corrections in these issues will end either very soon or at prices very close to current ones. Not only is the vulnerability in these issues maSSive, the time span before any appreciable recovery takes place could also be great. It is a time, however, when the diversity of individual stock patterns is astounding. At the same time that the deterioration in former glamor' issues continues, large numbers of stocks, notably in the commodity and natural resource areas ,possess highly constructive patterns suggesting considerably higher.pricesoyer.the.long,term .It!ls.ampng.these.lssues.that.recentkupstde ,leadership ha s developed, and-,.. we would expect this to continue to be the case in any near-term advance whlch might eventuate. We would also expect such issues to be relatively resistant to any weakness which might later develop on the downside. The first half of 1974, in sum, shapes up to be a period when stock selection will be of cntical im- portance. This is, of course, always the case, but we suspect It will be true, doubled and In spades, in the months ahead. Dow Jones Industrials (1200 p. m.) 828.80 S & P Compo (1200 p.m.) 92.80 ANTHONY W. TAB ELL DELAFIE LD, HARVEY, TAB ELL Cumulative Index (1/10/74) 585.907 AWT/jb No statement or e)'preSS10n of opinion or any other molter herein tontoH\ed IS, or IS 10 be deemed to be, directly or IndHectly, on offer or the soliCitatIon of on offer to buy or selJ any security referred 10 or mentioned The moiler 1 presented merely for the conver'lenct of the subscrIber WhIle -Ne believe the sources of our Informa tlon 10 be reliable, we m no way represe.,1 or guarantee the accuracy thereof nor of the statements mllde herein Any action to be token by Ihe subscriber should be based on hiS own Investlgallon and mformotlon Jonney Montgomery SCali, Inc, as a carperolton, ond Its officers or employees, may now have, or may later toke, posilions or trades In respect to any securities mentioned In thiS or any future Issue, and such paslilon may be different from any views now or hereafter expressed In th,s or any other Issue Janney Montgomery Scott, Inc, which ,s registered With Ihe SEC as on Ifwestment adVisor, may give odvlce to Its Investment ad'o'l5ory cnd clhel customers Independently of any statements mode In thl or In any other Issue Further Informotlon on ony security mentioned herein IS ovolloble on request

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Tabell’s Market Letter – January 18, 1974

Tabell’s Market Letter – January 18, 1974

Tabell's Market Letter - January 18, 1974
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK EXCHANGE January 18, 1974 As twenty years of experience has made us painfully aware, forecasting the stock market is a hardgus hu.stness. Qcsionally );he..taskJs madedo.ubly difficult. Thereare often.timesLwhen ,in …., addition to figuring out where the market is going, it is necessary to devote fairly intensive scrutiny to find out where it has been. The last six months or so constitute a perfect example of a period for which Just such is the case. Date DnA Chg. S & P 500 Chg. Cum. Index Chg. 8-22-13 10-26-73 12- 5-73 1- 3-7' 1-10-74 1-\7-74 851. 90 987.06 15.9 788.31 -20.1 880.69 11. 7 823.11 – 6.5 872.16 6.0 100.53 116.38 92.16 99.80 92.39 97.30 15.8 – 20.8 8.3 – 7.' 5.3 652.19 749.77 561. 90 614.62 585.90 610.11 15.0 -25.1 – 9.' 4.7 4.1 HIgh made January 7. 1974 The table above shows the levels of three averages, the Dow-Jones Industrials, S -& P 500 and our own Cumulative Index, which it will be recalled, is an unweighted index of all stocks on the New York Stock Exchange, at six significant benchmark dates during the past half-ear. The first of these dates is August 22, 1973, which was the starting date of the market advance that preceded the recognition of the energy crisis. As can be seen, for the period beginning on August 22 and ending October 26, all three indices posted identical 15 advances. The sharp decline which then ensued to the lows of early December chopped some 20 off both of the widely-followed averages and constituted the sharpest drop for such a short period in recent stock market history. The fall taken by the average stock, as shown by the pumulative Index, was even worse, that index losing, over the six-week period, more than one–juaner of its-value.oc W-e then had theunusually strong year-end rally whIGh-peakedout.on,January.3 , 1974, and at this pOint an interesting fact began to manifest itself. The Dow advanced on that rally considerably more than did the S & P 500, moving up 11. 7 vs. an 8.3 advance in the more comprehensive index. Interestingly, for that period the Cumulative Index also outperformed the S & P, posting a9.4 advance and extending its rally to January 7, two days beyond the peak in the other averages. On the decline to January 10, the Cumulative Index was the star performer, declining far less than the Dow or the S & P which again turned in the worst performance. For the rally through yesterday the S & P again posted a relatively Inferior advance. To / From 8-22-73 10-26-73 12-5-73 1-3-74 1-10-74 Change Dr sp Cum DJ SP Cun DJ SP Cum Dr SP Cum Dr SP Cum 10-26-73 12- 5-73 1- 3-74 1-10-74 1-17-74 15.9 15.8 15.0 – 7.5 – 8.3 -13.8 -20.1 -20.8 -25.1 3.4 – 0.7 – 5.7 -10.7 -14.2 -18.0 11.7 8.3 3.4 – 8.0 -10.1-16.6 -20.6 -21.8 4.4 0.2 2.3 – 3.2 – 6.5 -U.6 -16.4 -18.6 10.6 5.6 9.4 4.3 .8.6 – 6.5 – 7.4 – 4.7 – – 1.0 – 2.5 – 0.7 6.0 5.3 II I 4.1 The table above shows the percentage change in each of the three indices for all of the benchmark dates mentioned above to each subsequent benchmark date, the starting date being shown acros s the column headings and the end date down the rows. As the first set of columns shows quite clearly, the investor in stocks In the Dow has tended to outperform other Investors since last October. At the December low he had posted only a 7 1/2 loss of his capital since August, and, as of early January and today, he is actually ahead of where he was at the August lows, while the other Indices still show losses. Since December as the right-hand 'figures show, the Cumulative Indexhas turned in an improving'relative-e– performance. It Is now 8.6 above its December lows and Is the closest of the three indices to posting a new high for 1974. All of the above number crunching is, we will be first to admit, nothing more than past history, but we do think it offers a number of clues to the market's current state. As we have suggested in the past, we think the relatively poor performance of the S & P 500 is no accident and is attributable to the relatively heavy weight in this index of the high p/e,growth issues with their continuing vulnerable technical patterns. To us, perhaps the most significant fact is the recent improvement in the action of the Cumulative Index. This suggests a somewhat firmer undertone in the market than the other averages have perhaps so far indicated. Such action, it seems to us, if continued, could only be interpreted con- structively. Dow-Jones Industrials (1200 p.m.) 860.85 ANTHONYW. TABELL S & P Compo (1200 p. m.) 96.17 DELAFIELD, HARVEY, TABELL Cumulative Index (1/17/74) 610.113 AWT/Jb No Slalement or expression of opinion or any olher matter herein contOlned IS, or IS 10 be deemed to be, dlrec1ly or Indirectly, on offer or the Sollcllotlon of on offer to buy or self any security referred to or men1ioned The motter IS presented merely for the conver!enc of the subSCriber Whde oNe 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 taen by the subSCriber should be based on hiS own Investigation and Information Jannev Montgomery Scott, inc, as a corporation, and Its officers or employees, may now have, or may later toe, poSitions or trades In respect to any securities mentioned In thiS or any hlture ISsue, a'1d suc pmltlO'1 moy be ddferent from any views now or hereafter eyp'essed In thiS or ony ather Issue Janney Montgomery Scott, Inc, whJCh IS registered With the SEC as on Investment adVisor, may give adVice 10 Its Investment adVISOry and Olhel customers Independently of any statements made In thiS or In any other Issue Further information on any security mentioned herein IS ovallable on request

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Tabell’s Market Letter – January 25, 1974

Tabell’s Market Letter – January 25, 1974

Tabell's Market Letter - January 25, 1974
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TABELL'S MARKET LETTER '.- 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF' MEMBER NEW YORK STOCK EXCHANGE, INC MEMBEA AMERICAN STOCK EXCHANGE Jal-lUary 25, 1974 – – The -mar,ket as measured by ,the Dow Jones- Industr-ial Average;c continues' to fluctuate-ina tange . , bounded by the support offered by the December base at 840-820 and the year-end rally high of 880. The lateral nature of trading is underscored by the fact that on Thursday, of 1766 issues traded, only 21 made either new highs or new lows for 1973-4. As we have stated in the past, we feel the resolution of this im- passe may be on the upside but continue to have some doubts about the validity of any ensuing advance. As the averages move sideways, individual stocks are beginning to present interesting investment di- lemmas. For over a year now, this letter has made no secret of its general bias against relatively high- priced growth favorites and in favor of supposedly cyclical, commodity-related companies. This bias has been based on both technical and fundamental grounds, the technical ones being that most of the first- tier issues, at some time in 1973, initiated major downtrends by breaking down from distributional areas of some significance. The fundamental grounds centered around the fact that the price being paid for basic earning power of cyclical companies, in our view, was ridiculously low, both on an historical basis and in comparison with the much higher prices being paid for growth issues. As technical patterns develop, it is interesting, however, to note that a great many growth stocks have in the past couple of months ceased to decline and begun to move in lateral trading ranges, If these ranges are penetrated on the upside, fairly substantial short-term moves ight ensue although it must be empha- sized that in no case would the major downtrend be destroyed, and any rally follOWing upside breakouts from these potential bases would, in most cases, provide a selling opportunity, Since the patterns are fairly uniform, we have tabulated below the statistics on eleven growth favorites showing, in the first three columns, the 1973 high, a recent price and the percentage decline from the high of 1973, The next two columns show the level at which the stock would break out of its recent trading range on the upside and what the upside objective would be were such a breakout to be achieved. It will be noted that in no case do-theseobj ectives-exceed-the -19-73 -highs-and-insome-cases,are-cons iderablyebelow-those 'highs.-The— – — final column shows the downside breakout level for the recent trading ranges. Were these new lows to be attained, all of the above, of course, would become nothing more than mere theorizing. 1973 High Recent Decline Uaside Bkout Upside Obi. Downside Bkout Avon Products 140 61 -56 68 80-92 50 Burroughs 252 196 -29 214 235 168 Coca Cola 150 121 -19 130 135-150 112 Disney 122 45 -63 50 72 35 Eastman Kodak 150 III -26 118 140 100 IBM 360 247 -31 260 300 220 Int'l. Flavors 50 41 -18 42 46 32 McDonalds 76 56 -26 60 76 44 Polaroid 142 80 -43 82 108 66 Sears Roebuck 122 89 -27 90 98-104 78 Xerox 170 ll8 -31 130 142 106 The patterns for the commodity-related companies, the bulk of which have been in uptrends extending as far back as two years, are considerably less uniform. Some industries, steel for example, show no sign whatever of technical deterioration. Stocks in others, such as aluminum, have potential short-term dis- tributional patterns with the downside breakout in the case of Alcan (36) being 35, with an objective of 30- 27 and Alcoa (73) 68 with a possible downside target of 58. Even were these downside breakouts to take place, long-term uptrends would not be destroyed. Paper issues in most cases have already reached short- term downside targets and appear to be attempting to rebase around current levels. In some cases such as chemicals, thecpicture within the industry is mixed,-Monsanto'55) which'recently declined from a'1973 high of 75 has reached its downside objective and has already formed a fairly substantial base. Allied Chemical (45) by contrast, has violated a short-term top with a possible downside target in the middle 30' s,but this, again, would constitute nothing more than a return to proven support levels. It should be emphasized again that the possible short-term market change in leadership cited above is at the moment only potential, and there exists no indication that the major downtrends in the growth issues or the major uptrends in the cyclicals are about to be reversed. We do, however, feel that the possibility of short-term strength in growth stocks and some minor weakness in basic industry companies is one that is raised by present technical patterns. Note The above comments are based largely on technical factors. Further information on companies mentioned is available on request. Dow-Jones Industrials (1200 p.m.) 858.78 S&PComp. (l200p.m.) 96.55 ANTHONY W. TABELL Cumulative Index (1/24/74) 609.36 DELAFIELD, HARVEY, TABELL AWT/jb No statement or epreulon of Opinion or ony other motter herein contolned IS, or IS 10 be deemed to be, directly or Indirectly, on oHer or the solicllotlOn of on offer to buy or sell any security referred 10 or mentioned The molter IS presented merely for the corwerlence of the subSCriber Whde ….e believe the sources of our Informa tlon to be reliable, we In no way represent or guarantee the accuracy thereof nor of th(! statements mude herein Any action to be tak(!n by the subSCriber should be based on hiS own Investigation and Information Jonney Montgomery Scott, Inc, as a corporation, and Its offlCl'rs or employees, may now hove, or may later lake, posilions or trades In respect to any scuntles mentioned In tlus or any future Issue, and such pOSition may be different from any views now or hereafter eypressed In thiS or any other Issue Janney Montgomery Scali, tnc , whlen IS registered With the SEC as on Investment adVisor, may give adVice to lIS Investment advls.ory and otnel customers Independently of any uatements made In thts or In any other Issue Further information on any secvroty mentioned herein IS available on request

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