Viewing Month: April 1974

Tabell’s Market Letter – April 05, 1974

Tabell’s Market Letter – April 05, 1974

Tabell's Market Letter - April 05, 1974
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————–, TABELL'S MARKET LETTER , ….l 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCI( EXCHANGE – -c……;;;-.,-.- …4o;- — – '–!!'- '-…,…o-AprH . . 5r.–1-974 -…………- -..'i.–.-.;; I Maybe it is only the euphoria induced by a three-week vacation featuring large doses of sun, powder snow and the beauty of Idaho's Sawtooth Mountains. In any case, we think we see some slight improvement in the stock market picture. It is not so much that we are at the moment wildly bullish, but that we are more ready to become bullish — not so much that we think technical work totally p,ecludes a move through the December lows on some averages ,but that we can see some convincing reason for buying into such a decline. Let us try to document this in a bit more detail. The latter part of March featured a rather sharp short-term decline in which the Dow declined from a high of 899.16, on a cloSing basis, to a low on March 29 of 846.68. The downside objective of the top formed in early March had been approx- imately 840, and apparent demand was met in this area as our short-tem oscillator reached an over- sold condition and mild price improvement was seen in the latter stages of last week. It is generally an encouraging sign when minor declines halt at objectives or support levels, and this apparently has been the case with the present one. We now apparently have the opportunity to broaden further the base in the rough 800-900 area which was begun in the latter part of 1973. — As we said above, the question of whether Spring (and this would be a normal seasonal pattern) will see a new low remains moot. The answer, as has been the case with a number of stock market dilemmas over the past couple of years, will be provided by the action of the now-Iargelydiscredfte'drrj'stner g-rowtn'sl6cKs-TI1-ese Issues nave generollysofa-A3rl!a-sr,–been-able-to'– –,- – hold above their recent lows. Were these lows to be penetrated — and it should be noted that short-term patterns tend to suggest the likelihood of such a penetration — another downside move of considerable proportions in these issues could ensue. To what degree the rest of the market would be resistant to such a move is, of course, problematical but in any case, we would expect the bulk of the list to outperform the fading glamours In such an eventuality. The real reason for our feeling that some improvement in the technical picture has taken place lies in the way individual stock patterns seem to be developing. With a few notable exceptions few issues appear to have moved into major uptrends. What has happened, rather, is that in many stocks — perhaps in the bulk of them — downside movement has been replaced by lateral movement. In a significant number of cases downtrend channels going back two or more years have been penetrated,and it appears apparent that a great many issues sometime between last fall and today became thoroughly sold out and reached what are apparently demand levels. Such action does not in any way suggest immediate upmove, but it is nonetheless a precursor to it. It has been suggested in some quarters that the poor breadth action of recent weeks (through Tuesday, five of the last six days when the Dow advanced had more declining stocks than advan- cing ones) is a sign of underlying weakness. This view, in our opinion, uses a valid indicator for an invalid purpose. Poor breadth after a long market advance is interpreted quite correctly as a sign market odfecwlainneing upsIde,momentum andwe-are, at the and,a,clue to moment, not tahnati'mfapreonfdfintghm-arlketofpeaakY.earF-oilolnogwbienagrmaa-mrkaejot,r ,–,.-I- inferior breadth action is a relatively routine phenomenon. Shattered confidence after a market drop tends to be rebuilt slowly and normally flows first into the blue-chIp Issues in the Dow- Jones Industrial Average thus causing the Dow to outperform the general market, often well on into an advance. As we suggested, whether the market lows have yet been seen is problematical, but we would find ourselves uncomfortable in the camp of the ever-more-vocal superbears. Dow-Jones IndustrIals (1200 p. m.) 848.48 ANTHONY W. TABELL S & P Compo (1200 p.m.) 93.26 DELAFIELD, HARVEY, TABELL Cumulative Index '4/4/74) 598.01 AWT/jb No statement or epresslon of opinion or any OTher matter herein contolned IS, or IS to be deemed to be. directly or indirectly, on offer or the solicitatIOn of an offer to buy or sell onr, security referred to or mentioned The moiler IS presented merely for the converlenCE of the subKTlber While we believe the sources of our information to be rellob e, we In no way represent or guarantee the accurocy thereof nor of the statements mude herein Any ocllon to be token by the subs.crlber should be based on hiS own Investlgollon ond Informatron Jonney Montgomery Scoll, Inc, as 0 corporatron, and Its officers or employees, may now have, or may later lake, poslflofl5 or trades In respect to ony securities menlloned In thiS or ony future Issue, and such POSITion may be different from any views now or hereafter expressed In thu or ony other ISsue Janney Montgomery Scott, Inc, which IS registered With the SEC os on Investment adVisor, may give adVice 10 Its mvestment adVISOry and other customers Independently of any stoTements mode III thiS or In any other Issue Further information on any security mentioned herem IS available on request

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Tabell’s Market Letter – April 11, 1974

Tabell’s Market Letter – April 11, 1974

Tabell's Market Letter - April 11, 1974
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TABELL'S MARKET LETTER , -..J 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE , ..,,-. .. Aprll11, 1974 It has been, in a worn, a market-of-iilmcisl-tntrealbl-e tlllllness.TJ1eWeek-began-as'the'prevlous-one had – left off with a sharp decline in the Dow-Jones Industrial Average, accompanied by more than a thousand declining issues One would have thought, perhaps, that the stage was being set for yet another precipitous downward move such as the declines of mid-January and early February.'-Yet, despite continuing news of higher short-term money-market rates, the market moved higher in Tuesday's trading and co'ntinued dull for the remainder of the week. The most notable feature of the week probably was the volume or, more properly, the lack thereof. For the past fortnight, daily New York Stock Exchange volume has been running in the 10-11 million share range, a level not seen since a short period in June of 1972 and, prior to that, during the normal period of dullness following the May, 1970, lows. Yet if the NYSE figures appear miniscule, consider American Stock Exchange figures. Volume West of Trinity Churchyard has been running consistently under the two-million share level, a rate about half of the still-depressed trading level of the end of 1973. Quite obviously, the torpor of last week has done little to resolve any of the questions which beset the current stock market. We would like, therefore, to devote our space this week to expanding a bit on some of the thoughts we expressed seven days ago. The general tenor of last week's letter was that (1) we thought there was some degree of likelihood that the market might move lower, and (2) that we thought any such weakness should be used as a buying opportunity. We were, with this pronouncement, doing two separate things, two acts that are often confused in in- vestment thinking. We were — in ltem I above — making a forecast and — in item 2 — suggesting an investment strategy. As we suggested above, it is, we think, lmportant to keep the two processes separate. Quite obVIously, in an uncertain world, forecasts are necessary, and some expectation as to the probability of future price action Is quite certainly a necessary component of any investment plan. Fore- –……o..ca-sting.,howevJI',a;;thoseoLus–'-.Voho have been in the business of sticking our necks out for some period of time are well aware, continues tobe a hazardous -a-;;-d-uncertain art, and; with'an enlbarra-ssirrgdegree 6FI- regularity, forecasts made with all due diligence based on the best avallable data often tum out to be just plain wrong. Strategy, therefore, involves a great deal more than forecasting. It involves the formulation of an investment plan which must allow for what will happen if the forecast on which the plan is based turns out to be totally incorrect. The forecast in last week's letter suggested a market which might move through the previous lows but not to a great degree. This, therefore implied a strategy which involves the maintenance of reserves for the time being but the commitment of those reserves on any relahvely minor down move in the market — to, let us say, the 750 level in terms of the Dow. If the strategy is followed and the forecast turns out to be correct, there is obviously very little problem; the investor who became fully Invested at the 750-800 range will wlnd up with some very attractive purchases. Strategy, however, must focus on the way in which the forecast could go wrong and there are, obViously, two ways in which this could take place. The first, of course, is a market decline greater than the one we now envision, the sort of thing being suggested by the vocal super-hears we mentioned in last week's letter. Were this eventuality to ensue, the investor would find himself 100 committed at the 750 level while the market continued to plummet. Yet, even in this case, it seems to us, the risk would be temporary in nature. The levels at which we are suggesting commitment of reserves would be ones offering incredibly sound fundamental value. It would appear to be totally unwarranted pessimism to suggest that stocks might sell for any great length of time below these levels a 5 anything other than a temporary market aberration. It is the other direction in which the forecast could turn out to be incorrect that. quite frankly. worries us a blt more, for a great many more lnvestment problems would be posed, we would think, were the mar- ket to refuse to move toward or through the December lows and then begin to exhibit some strength. The strategy wehave suggested would then leave the investor maintaining fairly large res'Les Vfhip!t he hC!d refused to commit at lower prices, with the possibility of a major advance staring him In the face. Nor would he be alone in th.s particular dilemma. The current high levels of institutional cash position suggests that the number of poor Grenvilles could be embarrassingly large. In strategic terms, we are willing to put up with the first risk mentioned above and we know of no real answer for the second, except the continuing scrutiny of individual technical patterns and the pattern of the general market. We must reiterate that we see no reason at this point to alter our forecast of some- what lower prices as a working hypothesis for putting together an investment plan. We would certainly, however, be willing to alter it were any evidence of improvement in upside momentum to develop. Dow-Jones Industrials 844.81 ANTHONY W. TABELL S & P Compo 92.12 DELAFIELD, HARVEY, TABELL Cumulative Index (4/10/74) 584.74 AWT/Jb No statement or expressllm of opinion or any olher matter herein contained IS, or IS to be deemed to be, dlredly or Indlredly, an offer or the ollcltotlon of on offer to buy or sell ony 5ecuflly referred to or menhoned The matter IS presented merely for the conVerlencc of the subSCriber While oNe believe the !.Curces of our Informalion 10 be relloble, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any ochon 10 be token by the subSCriber should be bosed on hiS own investigation ond informatIon Janney Montgomery Scott, Inc, os a corporat,on, and lIS officers or employees, may now hove, or may later toke, pOSitIOns or trades In resF)ect to any seCUrttles mentioned In Ihls or any future Issue, ond such position moy be different fro'T1 ony views now or hereafter expressed In thiS or any other Issue Jenney Montgomery Scott, Inc, which 's registered With the SEC 05 on Investment adVisor, mQy give advl(e to Its 'nvestment adVisory and othel customers Independently of any statements mode In th.s or In any other Issue Further onformotlon on ony security mentioned hereon 15 ovailoble on request

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Tabell’s Market Letter – April 19, 1974

Tabell’s Market Letter – April 19, 1974

Tabell's Market Letter - April 19, 1974
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TABELL-S MARKET LETTER L – – , 909 STATE ROAD, PRINCETON, NEW .JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCI( eXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE .. April 19, 1974 We have examined, in our past two letters, the merits of an attitude toward stock prices more , -posinvehall 'we-have-b'een 'able'to'assurrre-for sometime';-specificaHy;–suggesting,thepossibil-, – ity that the lows of last December may ultimately prove to be an important cyclical turning point. We are, as we have suggested for the past two weeks, still not totally convinced of the conclusiveness of this contention and are not yet willing to base investment policy thereon. Yet a number of arguments in its favor do begin to emerge. Interestingly, a number of these arguments center around the calendar, which, for the first time in many months, is beginning to work in the market's favor. It has never been our thought that seasonal patterns in the stock market should be relied on m toto. Indeed, ironically enough, if reliance on these patterns proves to be correct in the current instance, such reliance will be proved to have been wrong last December. At that time, It was possible to argue that the month's low was not a major bottom, simply because no major low m many years of market history had occurred between December and April. Now, however, seasonal patterns are suggesting that 1973 may be the first instance of just that phenomenon occurring. To begin with, let us consider the historical length of past bear markets. The longest downswing in the postwar experience, that of 1968-70, lasted 18 months. Most of the others have been considerably shorter. If we are still in the bear market which began m January, 1973, it is now 16 months old. The record tends to suggest that time is running out. , – Tn'e' pnenomenon oftfieyei,fterl(rrally,mdth'eDecemberlow-is 'one-;wh,ich'we haveoof-ten ,(lis-,cussed in this space. In 17 of the 48 market years since 1926, the low of the previous December has never been broken. In 22 of the 31 years that the low was, in fact, penetrated, penetration took place in January or February. With only four exceptions such a penetration, if it was going to occur, took place prior to April 26 and two of those exceptions turned out to be temporary aberrations in what was basically an upward market year. The fact that the December lows have, in fact, held as late as the date of the current writing in 1974, must be viewed in a positive sense. The final mteresting bit of calendar evidence is provided by the decennial pattern. We have, ourselves, always been a bit suspicious of this pattern since we can find no particular rationale for it. It IS, nonetheless, on the face of it, persuasive. The 70 market years from 190'0 through 1969, have included 43 advancing and 27 declining ones, with the average advance being 6.5. Yet for some reason, years ending in the digits 4 and 5 have tended to depart dramatically from this norm. Six of the seven years ending in 4, from 1904 through 1964, were advancing ones and five of them produced advances greater than the overall average. The average performance for such years is a 16.71 gain. The pattern for years ending in 5 IS even stronger. All seven of these years produced advances of an amount greater than the 70-year average and the mean performance for the seven years is a 34.42 advance. Based on this theory, at least, we are entering mto what must be conSidered an auspicious portion of the decade. Now,' as we said above, we think total reliance on patterns of this sort IS probably super ficial, and we would want to see the bullish argument confirmed by more persuasive technical evidence as the market pattern develops. We think, however, the factors cited above will provide an interesting background to such evidence should It emerge. i Dow-Jones Industrials (1200 p.m.) 860.92 S&P Compo (l200p.m.) 93.82 Cumulative Index (4/18/74) 593.76 AWT/jb ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL No statement or eprCS510n of opInion or any other mOiler herein contolned IS, or 1510 be deemed 10 be, directly or tndlrectly, on offer or the sollc,totlon of on oHm to buy or sell ony security referred to or mentioned The moiler IS presented merely for the conllel'lence of the subscriber While we believe the sources of our mforma tlon to be reliable, we In no way represent or guarantee the accuracy ihereof nor of ihe siatements mude herein Any action to be taken by the subSCriber should be based on hiS own Investlgotlon and Information Jonney Montgomery Scoll, Inc, 0 a corporatIOn, and lIs officers or employees, may now have, or may loter toke, pOSlhons or trades In respect to any securities mentioned In Ih,s or any future ,ssue, and such pOSition may be different from any views now or hereafter e…pressed In thl or any other Issue Jonney Montgomery Scoll, Inc, whl;h IS registered with the SEC as on Investment adVisor, moy give adVice to liS Investment adVISOry and oth(!1 customers Independently of any statements mode In thiS 01 In any other ISsue Further Informollon on any seo;urlty mentioned herem IS aVailable on request

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Tabell’s Market Letter – April 26, 1974

Tabell’s Market Letter – April 26, 1974

Tabell's Market Letter - April 26, 1974
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1- TABELL-S MARKET LETTER — 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER New YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCI( EXCHANGE .-.' – ,,–,',- 'd '' . Apr,il'26,1974,.–w- – All right. We know that we have used the last three issues of this market letter examining the reasons for being bullish about stock price prospects, and we are likewise painfully aware that, starting on the day when we published the last of these effusions, the Dow-Jones Industrial Average proceeded to drop some 42 points before a rally this morning. After 20 years we have be- come thick-skinned enough to be inured to this sort of thing. Besides we can say, in all honesty, that we were not, in the series in question, suggesting the deployment of buying reserves. We were merely examining the conditions under which such reserves might be deployed. So much for excuses. Where do we stand at the moment In terms of the Dow, we have now moved out on the downside of a rather classic short-term head-and-shoulders top formation which suggests various objectives in the range of 800-780. The suggestion is, of course, a test of the December 5 low of 788.31. We have repeatedly stressed, as our readers are aware, the histor- ical significance of this low. We noted last week that on only four occasions since 1926 has it been violated to later than April 26 of the following year. Whether 1974 will prove to be the fifth exception is a rather interesting question. The problem is that, in restricting our discussions to the Dow, we are talking about only a rather small segment of the market. Most indices of first-tier growth stocks continued to plunge to new bottoms well after the DJIA low was made in December, and technical patterns clearly suggest that most of these issues have a fair amount of further room on the downside. Indeed, at least in part due to the weight given growth issues in its construction, the S & P SOO-Stock Gompositewa,a oi..Yg.tElrkY, already at a new 1973-74 low. For this index, ,the bearmart continues. Our own Cumulative Index was, as 'of yesterday 'a mere tWo'points ab6vetfi'e -low….it' – … chalked up on December 24. Part of the reason for the poor performance of the S & P 500 and also of the Cumulative Index can also be ascribed to the fact that a new villain has entered upon the stage, that villain being the utilities. Prior to last week's passed dividend by Consolidated Edison, we thought the market was responding somewhat better to unexpected bad news than it previously had been. The first omitted dividend since 1885 by a large and respected company was evidently, however, a bit more than it was prepared to take. The Dow-Jones Utility Average gapped on the downSide (something we don't ever remember happening, although it may have occurred sometime in the dim, dark past) and plunged from a level of 86.69 last Friday to a close of 78.80 yesterday, a decline of 9 in five days in an index of supposedly non-volatile investment grade issues. It is an interesting, albeit somewhat disturbing fact, that the Dow Utility Average is,at today's prices, at a lower level than at any time since early 1958. As we said above, this has had something to do with the per- formance of the S & P 500 and of the Cumulative Index. The 500 contains 60 utility issues, weighted by capitalization. There are well over 100 utility issues listed on the New York Stock Exchange which are included, on an unweighted basis, in the Cumulative Index. Thus, the fact that these indices are at or flirting with new lows should be hardly surprising. Thus, while admittmg that the short-term prospect for lower prices is a real one, we confess we are inclined to view such a decline with equanimity. While the question of whether the Dow will penetrate the December bottom is an interesting one from an academic point of view, we do not'tlililklt 15 o(overriding-importa-nce–The answer tothe question will,in our view,be determined by whether a severe enough decline takes place in the qrowth issues (and perhaps now in the utilities) to drag the rest of the market down along with it. The whole pOint of our discussions in the last three letters was that we were becoming worried about an investment strategy which con- tinued to stress the maintenance of buying reserves in a market which might not give us the opportunity to commit those reserves at lower prices. On any weakness around or to new lows by the Dow, we think that the commitment of those reserves would be indicated and would ultimately prove to be profitable. Dow-Jones Industrials (1200 p.m.) 825.95 ANTHONY W. TABELL S & P Compo (1200 p.m.) 89.55 DELAFIELD, HARVEY. TABELL Cumulative Index (4/25/74) 554.83 AWT/jb No stotement Qf expreSSion of OpinIon or ony other motter herein contaIned '5, or 1 to be deemed 10 be, dIrectly or 'ndlrectly. on offer or the OIICIIOl1on of on offer to buy or sell any security referred to or menhoned The mOiler IS presented merely for the converlence of the subscriber 'WhIle we believe the sources of our InfOrmolion TO be reliable, we ,n no way represent or guarantee The accuracy thereof nor of the lIatements mude herem Any ocllon To be token by The SubSCriber should be based on hiS own InveSTigaTion and information Janney Montgomery Seoll, 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 10 thiS or any future Issue, and such POSition may be different from ony Views now or hereafTer erpressed In thIS or any other Inue Janney Montgomery SCaN, Inc, which IS regisTered WITh the SEC as on investmenT adVisor, may give adVice to Its Investment adVISOry and olher customers Independently of any statements mode In thIS or In any other luue Further information on any security mentIOned herein IS available on request

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