Viewing Month: June 1974

Tabell’s Market Letter – June 07, 1974

Tabell’s Market Letter – June 07, 1974

Tabell's Market Letter - June 07, 1974
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEM8ER NEW VORK STOCK EXCHANGE. INC MEM8ER AMERICAN STOCK EXCHANGE — -I – – – – .- –June7,19…4. — ——…….—o-. ,..- To a greater degree, perhaps, than at any time in at least the recent past, Wall Street finds itself divided between proponents of the bullish and bearish case for the equity market outlook. Both sides, of course, have ammunition. The optimist will suggest that the December low in the Dow-Jones Industrial Average has now been twice decisively tested. After an intraday bottom of 783.56 was reached last December, the Dow declined in February to an intraday low of 795.68 and then promptly rallied in March to a new 1974 high. The subsequent decline reached an intraday bottom last week at 788.90, whereupon a four-day, 42-point advance bounced the mdex off that low yet a third time. What more evidence, the optimist can ask, is needed to prove that a strong level of effective demand exists around the 800 level Dow-Schmow, replies the bear. Any true index of security prices, he will suggest, has moved on to decisive new lows, well below its levels of last December. Consider the S & P 500 Stock Index. It broke its December low in February, penetrated that low again in April and moved to another new low last week. And lest it be argued that this is true because of the importance in that index of utilities which, as we all know, are faced with problems of their own, it can be pointed out that the S & P 425 Industrial Index, which includes no utilities, has done almost precisely the same thing. The pessimist can also suggest that the Dow-Jones Transportation Index and the S & P Rail Index have also moved below their December lows, although here the argument is not quite as strong, since both these indices, to date, made their bear market lows back in August, 1973, not in December, and those lows have not as yet been penetrated. Bulls and bears, likewise, can find arguments to buttress their position in a whole host of more – -esoteric teclinical indicators. A few of tlie more wU!eJ.YIOJ.lowealnaicators turnea-qUitebUlllsh-lasC-' –, December, but only a very few. Others have turned bullish quite recently, and still others remain in an ambiguous state, generally favoring the optimistiC view, but not yet having reached levels which have characterized past major bottoms. The question is whether, at this precise point in time, it is necessary to take a position at all. We can clarify this assertion, perhaps, by examining the nature of technical indicators in general. When one sets oneself to the task of creating a technical indicator which is gOing to suggest a source of action, that indicator will be subject to two risks — akin to what statisticians call alpha and beta risk. The first risk is that the indicator will suggest a course of action which later proves to be erroneous. The second risk is that it will fail to suggest a course of action which later proves to have been the correct one. Generally, there tends to be a trade-off between the two sorts of risks. It is not difficult to construct a whole series of indicators, for example, which have, in the past, successfully identified every major stock market bottom within a very short time after the fact. The trouble is that such indicators generally have a low degree of reliability and will often tum positive at points other than market bottoms. It is equally easy to construct indicators with a very low percent'' age of false signals. The trouble is that such indicators generally do not tum positive until a large percentage of the advance, both in terms of time and amplitude, has already taken place. Our approach has always been to follow both types of indicators and adjust investment posture slowly, first as the more sensitive indicators begin to tum positive, and then more aggressively as the high-reliability indicators turn. In this light, it is well to review where we are at the moment. — Even the highly sensitive'sort of technical indicator hasnot,- as of this moment, turned positive- — although it would take just a bit more market strength for this sort of device to suggest that stocks were a buy, at least on a trading basis. Were this to start to happen and, as noted above, it could do so at any time, we would be willing to advocate at least a partial commitment of reserves, and we would follow it up with more aggressive commitment if, as, and when the more reliable sort of indi- cator began to turn positive. To date, as we suggested above, no real change in the pessimistic technical picture has yet taken place. Yet the sorts of changes that could tip the scales decisively in favor of the bullish or bearish arguments is probably fairly imminent, and we Will continue to comment on these changes a s they occur. Dow-Jones Industrials (1200 p.m.) 853.10 S & P Compo (1200 p.m.) 92.62 Cumulative Index (6/6/74) 535.08 AWT/jb ANTHONY W. TABELL DELAFIELD HARVEY. TABELL No statement or epreSlon 01 opinion or any other matler herein contained IS, or IS to be deemed to be, directly or Indirectly, an offer or the solICitation of an oHer to bll' or sell any security referred 10 o mentioned The matter IS presented merely for the convefllenCE of the subSCriber While oNe believe Ihe sources of our Informa- tion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the stolements mude herein Any action to be token by the subSCriber should be based on hiS own Investigation and information Janney Montgomery Scott, Inc, 0 a corporollon, and Its offICers or employees, may now hove, or moy later toe, pOSitIOns or trodes 11'1 respect to ony secuhes mentioned In thiS or any future lSue, ond such position may be dlfferenl from ony views now or hereofter epressed In thiS or ony other Issue Jonney Montgomery SCali, Inc, whICh IS registered wllh the SEC o on Investment odvlsor, moy gIVe adVice to Its Investment adVISOry and other customers ,dependently of any stOlemenlS made In thiS or In ony other Issue Further informatIon on any security mentIOned herein IS oVOllable on request

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Tabell’s Market Letter – June 14, 1974

Tabell’s Market Letter – June 14, 1974

Tabell's Market Letter - June 14, 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 A.MERICAN STOCK eXCHANGE June 14, 1974 -.- A-whlle-ago7'wh'en 's-mrre'-wag'1lubbed- growth' stocks ;which-w-ere stlllat'their'peakof-institution 'popu —- larity, I1Vestal Virgins. II we formulated a group of stocks of our own, which we named Sexless Spinsters. These were, by and large, basic-industry, commodity-oriented companies, which had historically been viewed by the market as cyclical in nature and which generally were selling at PIE ratios of one-third to one-half those of the growth favorites. The following table shows the approximate prices of each group, 13 virgins and 11 spinsters at five pOints in recent market history, the January 1973 high, October 1973 high, December 1973 low, April-May low, and a recent price. The percentage change between pOints is also shown together with the average for each group and the Dow-Jones Industrial Average. Jan Oct Dec Apr-Mar High High Change Low Change Low Change Recent Change DnA Hli7.2l 99759 – 6.5 783.56 -21.4 788.80 0.6 853.25 8.2 Avon Products 132 98 -25.7 58 -40.8 40 -31.0 52 30.0 Burroughs 115 121 5.2 92 -23.9 96 4.3 110 16.6 Coca-Cola 145 145 115 -20.6 98 -14.7 118 20.4 Disney 115 82 -28.6 41 -50.0 41 49 19.5 Eastman Kodak 145 135 – 6.9 108 -22.9 100 – 3.8 116 16.0 IBM 360 280 -22.2 235 -16.0 210 -10.6 226 7.6 Int'l Flavors/Fragrances 48 47 – 2.0 34 -27.6 32 – 5.8 37 15.6 Johnson & Johnson 132 125 – 5.3 100 -20.0 105 5.0 118 12.4 McDonald's Corp 78 74 – 5.1 44 -40.5 50 13.6 62 24.0 Polaroid 130 125 – 3.8 65 -52.0 53 -18.4 42 -20.7 .P-fecter&Gamble 1.20-..1-.06dL69…….,..l6 ..0.-…85 .5105'''''''',.t23.5 Sears, Roebuck & Co. 124 100 -19.3 78 -22.0 80 2.5 89 11.2 Xerox 156 150 – 3.8 115 -23.3 106 – 7.8 124 16.9 Average 9.9 -28.8 – 5.5 14.8 Alcan Aluminium Ltd 26 40 53.8 36 -10,0 27 -25.0 29 7.4 Allied Chemica1 28 48 71.4 43 -10.4 39 – 9. 3 41 5, 1 Alcoa Bethlehem Steel Int'l Paper Kennecott Copper Monsanto Phelps Dodge U. S. Steel 40 54 30 36 42 57 26 38 55 74 44 50 34 37 35.0 20.0 35.7 46.1 34.5 13.6 8.8 44 27 43 31 43 39 30 -18.5 -25.0 -24,5 -18. 4 -41.8 -22.0 -18.9 43 29 42 31 60 35 40 – 2.2 43 7.4 31 6.8 – 2.4 48 14.2 36 16.1 39.5 68 13.3 -10.2 37 5.7 33.3 45 12.5 Westvaco 28 40 42.8 27 -32.5 27 27 Weyerhaeuser 28 41 46.4 34 -17.0 40 17.6 40 Average 37.1 -21.7 4.4 7.4 The figures, we think, are interesting. While the Dow was posting a 6.5 decline In the first nine months of 1973, the cyclical issues advanced an average of 37, versus a 9.9 decline for the growth issues. Although not invulnerable to the October-December decline, the cyclicals performed about the same as the Dow on the downside and considerably bettered the average 28.8 decline shown by the growth issues. This performance continued for the first four months of 1974 with the cyclicals showing a slight advance to the April-Mayolow., whereas the growth issues as a group continued to move lower. It is only on the recent rally that a chi.nge has become apparent 0 thts advance. the growthlssueshave posted an average 14.8 advance, exactly twice the advance shown by the cyclicals, which, for the first time, have failed to outperform the Dow. We think there are a number of conclusions to be drawn from the table, the most important of which is that the better performance of the growth stocks is a relatively new phenomenon, only six weeks old now, whereas, to date, at least, the spinsters have proved their staying power. Nine of the eleven cyclical issues, for example, are above where they were at their January, 1973 high despIte the fact that the Dow is some 200 pOints lower. Every one of the growth issues remains today below that high and in some cases the difference approaches being staggering. In short, we think it is premature to conclude that the super- ior growth stock performance which characterized 1971 and 1972 and then disappeared abruptly in 1973, is about to burst out again in its old refulgence. Dow-Jones Industrials (1200 p. m.) 844.81 S & P Compo (1200 p. m.) 91. 56 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (6/13/74) 535.06 AWT/jb No statement or el(preSSlon of Opinion or ony other metter herein tontomed IS, or IS to be deemed to be, directly or Indirectly, on offer or the solicotlon of on offer to buy or stili any seC1.Hlty referred to or mentioned The molter IS presented merely for the conve(l,en of the subSCriber While e believe Ihe sources of our Informo tlon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herelO Any action to be taen by Ihe subSCriber should be based on hl5 own investIgation and IOformohon Janney Montgomery Scali, Inc, os 0 corpOlOhon, and Its officers or employees, moy now hove, or may later toke, poslllOns or trades In respect to any securities me'llioned 10 Ihls or ony future Issue, and such position may be different from any views now or herelfter expressed In thiS or any other Issue. Janney Montgomery Scott, Inc, whICh IS registered With the SEC as on Investment adVisor, may give adVICe to Its Investment adVisory and othel customers Independently of any statements mode In thiS or In any olher Issue Further ,nformat,on on any security mentioned herein IS available on request

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Tabell’s Market Letter – June 21, 1974

Tabell’s Market Letter – June 21, 1974

Tabell's Market Letter - June 21, 1974
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1..—— ——- I TABELL'S I ,\ MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCI( EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – June 21, 1974 n Last,weekscmarket,p,erf()rmance,can. best.be cbi3J9cteriEda siJ1sipi.d . .—– ……. In five successive days of decline, through Thursday, the Dow managed to retrace the bulk of the ground it had gained on the advance in late May and early June, in response to signs at that time of easing of interest rates, Volume was just as unimpressive as the performance of the mar- ket itself, remaining for the most part in the 9-10 million share range, with late Thursday after- noon trading being the only period in which any sort of flurry of activity developed. Nor was the performance of any of the other indices a great deal better than that of the Dow. The Dow-Jones Utilities, for example, spent the week moving to a new bear market low,and it is interesting to note that that index is now at the lowest level it has seen since a few months around the time of the 1957 bottom. It is, in sum, difficult to find anything to get excited about in the market performance, al- though a number of reasonably favorable background factors remain. Mutual Fund cash posi- tion, for example, was up again in May, to almost 10.6, and mutual funds actually enjoyed an excess of sales over redemptions for only the third time since early 1972. This, of course, was due to the cash inflow into the new money-market funds but, even adjusted for this inflow, the net redemption fig'.lre was moderately impressive. It is possible to find some solace, also, in the developing patterns of individual stocks, and it is the area in which improving patterns are being seen which is to us, as technicians, of in- terest. Every once in a while the market will begin to show action which flies in the face of generally-accepted conventional wisdom. In early 1968, for example, the Vletnam war was at I-I.,,i.,t-s.h-,,,eight, .,cNith .absolute!yf!Q .p'ros pect .9!.wlJ1!9rawal in2.i.ght ..-.Let throu.ghout,1)1y first quartEl — of that year-, the technical act'ioTl of peac'e stocks thOSe companieswhlCh would bebene- -..-' ficiaries of the end of the war and increased consumer spending, was consistently superior to that of companies presumably benefiting from the level of war activity. At the end of March, it will be recalled, President Johnson made his momentous decision not to run for reelection that fall and to seek a cessation of the Vietnam hostilities. The result was the famous April Fool's Day rally, which touched off what was ultimately to be a 170-point advance in the Dow, with the so-called peace stocks leading the way. It is perhaps worth noting that only the prospect of Vietnam peace was enough to set the rally off. Peace itself did not occur until four years later. Again in 1974, the stock market patterns that seem to be developing fly in the face of current , conventional wisdom. We are assured on all sides that the outlook for consumer spending is bleak,and that it is likely to turn down sharply in the second half of the year. Yet a careful in- spection of stock patterns suggests that among the better ones are those belonging to a whole group of companies that would benefit from increased consumer spending. One obvious such area is the retailing industry, and the bulk of retail stocks, and there are a great many of them, appears to show, at the moment, distinctly improving price action. But the improvement is by no means confined to retail issues alone. Hotel and motel stocks, for example, most of which have been clobbered over the past year by the prospect of reduced travel due to the energy crisis,have begun to move sideways and to develop impressive base patterns. The same is true of airline issues whose mcremental profits, at)east, tend,to Qome,frgm,an.in… crea se 'in vacation travel. Autom'C;bUestOcks';- despite -saggi;g' sa-les, sho;' signs of baSing and – the same is true of selected building issues — at a time when we are reliably assured that high interest rates will strangle home building in the second half of 1974 and early 1975. Thus — while economic analysts are assuring us of the imminence of the apocalypse, a recession led by reduced consumer demand and lowered real income — the market seems to be trying to indicate precisely the opposite, that the second half of 1974 and the first half of 1975 will be characterized by business as usual , with a concomitant increase in at least some corporate profits. It will be interesting to see in the present instance who is correct. Dow-Jones Industrials (1200 p.m,) 816.57 ANTHONYW. TABELL S & P Compo (1200 p.m.) 87.60 DELAFIELD, HARVEY, TAB ELL Cumulative Index (6/20/74) 510,23 AWT/jb No statement or expression of opinion or cny other moiler herein contolned IS, or IS to be deemed to be, directly or indirectly, on offer or the sol,cltot,on 01 on offer to buy or sell any seCt.Jrlly referred to or mentioned The mallnr IS presented merely for the convef'lencs of the subscriber While e believe the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mode herein Any action to be loken by the subscriber should be bosed on hiS own Invetlgotlon and Information Janney Montgomery Scott, Inc, as a corporation, and liS offIcers or employees, may now have, or may loter toke, positrons or trades In respect to any securities mentioned In thiS or any future Issue, and such pOSitIon may be different frOM any views now or hercoher e1pressed In thiS or any other Issue Janney Montgomery Scali, Inc, which IS regiSTered With the SEC as an mvestment adVisor, may gIve adVice to Its mvestment adVisory and othel customers Independently of any statements mode ,n thiS or In any other Issue Further ,formation on any security mentIOned herein IS available on request

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Tabell’s Market Letter – June 28, 1974

Tabell’s Market Letter – June 28, 1974

Tabell's Market Letter - June 28, 1974
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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 June 28, 1974 .. 'But he has got nothing on,' said a little child. o – '-r — .;– ..!- ;.-H9.n2JrlJi!!n l\ers, Thmgeror s. e Clot!' The classic cop-out of the techmcian, when he has nothing more to say about falling markets, is to talK . about fundamentals and to proclaim that stocks are cheap. We plead guilty to this in the present instance, although it is, In fact, true that stocks cheap, and we think due note ought to be taken of the fact. The following table is an update of a study we last published a year ago. As we all know, the absolute historical nadir for price-earnings ratios was 1949, during which year the Dow-Jones Industrial Average it- self sold at 7.2 times earnings (a ratio which, if duplicated for the entire average today, would place the Dow around 643). The table shows a recent price for each of the 30 components of the Dow, a consensus estimate of 1974 earnings and the price-earnings ratio based on those earnings. Next is shown the 1949 price-earnings ratio, the pnce at which the stock would sell were 1974 earmngs to be capitalized at this ratio,and the percentage dlfference of that price from the current one. Stock Recent Price Earmngs 1974-E 1974 1949 PiE 1974 Earnings x 1949 PIE Pet. Difference Allied Chemical Alcoa American5rands American Can Amencan Tel. & Tel. 37 4/10 9.0 11.2 46 41 5.50 7.5 10.7 59 35 S.25 6.7 8.7 46 27 3.80 7.1 9.6 36 46 5.35 8.6 14.8 79 24 44 31 33 71 Anaconda' Bethlehem Steel Chrysler duPont —- Eastmanoda-k 21 4.50 4.2 30 4.75 6.3 16 2.25 7.1 162 12.00 13.5 1-03 4,.-2-0 -24-.5 9.6 2.9 3.7 11. 7 12-.-0 43 104 14 -53 8 -50 140 -14 50-..,..,,,,,,,!F''-.,,-5L- — Esmark Exxon General Electric 26 5.00 5.2 70 12.00 5.8 49 3.35 14.6 7.3 36 7.4 89 8.8 29 38 27 -40 General Foods General MotorsGoodyear Tlre International Harvester InternatlOnal Nlckel International Paper Johns Manvllle Owens Ilhnois Procter & Gamble Sears Standard Oll of California Texaco Union Carbide Umted Alrcraft U,S. Steel Westinghouse Woolworth 24 2.60 SO 4.00 16 2.60 23 4.25 27 3.50 48 4.40 17 2.80 39 5.75 HTO 3.80 83 4.50 27 5.50 25 5.75 41 5.50 26 5.00 45 6.25 12 1.90 .-l!i..b.Bl 9.2 12.5 6.2 5.4 7.7 10.9 6.0 6.8 26.3 18.4 4.9 4.3 7.5 5.2 7.2 6.3 5.5 9.2 4.1 4.8 6.0 13.5 4.1 8.2 11.1 16.2 8.5 6.0 5.8 12.2 7.2 4.4 5,7 12.3 24 16 12 26 47 18 23 64 62 38 33 33 67 36 28 11 33 -68 -23 13 74 -62 35 64 -38 -54 22 32 63 38 -37 -8 120 AVERAGE 803 89.39 780 Amazingly enou-gh. 18 of the 30 Dow components -more-thanhalf, are now selhn(;iat price-earnings – – ratios lower than those of 1949. Were all of the 30 components to be capltalized at 1949 PIE ratios at the end of this year, assuming the earnings esllmates hold up, the Dow would sell for 780, only 20 some odd pOInts below current levels, and an equal dollar amount Invested In each component at leday's prices would produce an 8 gain by the end of 1974, were 1949 p/r ratios to be uniformly applied at that time. Now, Wall Street lS full of perfectly rational explanations as to Just why thls should be the case. The bond-stock YIeld relationship. It can be argued. is today precisely the reverse of what It was In 1949. and the host of economic problems now facing us have all been studiously documented. Nonetheless, there comes a time when It IS necessary to emulate the httle boy In Andersen's faIry tale who IS the only one unsophisticated enough to pOInt out a simple and obvious fact. That simple and obvious fact, insofar as most stock pnces are concerned, is that they are today, by any historical standard, amazing bargains. Dow-Jones Industrials (1200 p.m.) 802.80 S & P Compo ( 200 p. m.) 85.99 J\NTHONYW. TABELL DELAfIELD, HARVEY TABELL Cumulative Index (6/27/74) 491. 99 J\wT/lb No statement or expreSlon of opinion or any other mattIJr herein contained I, or IS to be deemed to be, directly or ondoreelly, on offer or the sollcltotlon of an offer to buy or sell any secvrlty referred to or mentioned The mailer IS presented merely for the convellence of the subSCriber Whole we believe the sources of our Informahan to be reliable, we In no way represent or guorontee the accuracy thereof nor of the statements mude herein Any aellon 10 be token by the subscrober should be based on hiS own Investigation and Information Janney Montgomery Scoll, Inc, as a corporation, and Its officers or employees, may now have, or may later toke, poSitions or trades In respect to any eCVrlheS menfloned In thiS or any future Issue, and such pOSition may be different from any views now or hereafler elpressed In Th,s or any other Issue Janney Montgomery ScOTT, Inc, which IS registered With the SEC as an ,vestment adVisor, may give adVice to lIS ,vestment adVisory and othel customers ,ndependently of any statements mode ,n Ihls or In any other Issue Further information on ony serurlly mentioned herein 15 available on request

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