Viewing Month: July 1974

Tabell’s Market Letter – July 05, 1974

Tabell’s Market Letter – July 05, 1974

Tabell's Market Letter - July 05, 1974
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——————————————————————————— TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK S1OCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE -;-;.; — ..,- -.–,;.- ….. –'–.-,.,– . . Jy,,,r114..,.. ——- This is the way the world ends Not wIth a bang but a whimper. T. S. Eliot, The Hollow Men Mr. Ellot's viSIon of the form of the apocalypse does not, in most times and most places, ex- tend to the stock market. Bear markets m the past have had a strong tendency to end WIth a very distinct and noticeable bang, the best example bemg the most recent one, WIth Its cllmax on May 26, 1970. It IS equally true that rather obvious selling climaxes were a feature of the endmgs of most other recent major bear markets, notably those of 1966, 1962 and 1957. It IS necessary to go all the way back to the early 1950's, and to certam occasions m the 1930's and 1940's, to find bear markets which have, m effect, qUIetly turned themselves around whlle no one was really paying attention. It is nonetheless worth explonng the possibilIty that the current downswing, whenever and wherever it comes to ItS ultimate end, wlll not be charactenzed by climactIC action visible in any other but the most esoteric technical terms. One argument m favor of such a contentlOn IS the general one that each market cycle has a tendency to be suffIciently different from the past one so as to fool the greatest pOSSIble number of people. Thus, the fact that the bear market of 1968-70 came to an end WIth one of the more classic, textbook instances of a selling climax to have occurred in recent years, suggests that its 1973-4 successor may well have a dIfferent sort of terminatlOn. An equally persuasIve argument IS the large number of observers who appear to .-be..;;.Locl0ng…LfQel1i!lgchmlL. If this.feeli!!9pecomes wIdespread, It becomes highly. likely that one of two thmgs ;;ill happen. either appa-rent-c1iffiactlcactlo'n';;;It take place 'i;here- upon the market will go lower (there IS, in technical history, plenty of precedent for this sort of thing), or, alternatively, the cllmax wlll never take place, and a turn WIll not be recogmzed un- tll the market has already moved substantIally off its low. It can also be persuasively argued that the market has already or shortly will have seen enough mdivldual bangs to have reached an effectlve sold-out bottom. ThlS week's collapse in Polaroid and Damon constituted really nothmg more than a long and dlstmgUlshed lme of in- dividual d,sasters runmng back through Combustion Engmeenng, Avon Products, the mortgage trusts, and Walt Disney all jffi W3y1oLevitz FurnIture. Eventually, the last of the Issues whIch supposedly-professlOnal portfolio managers have managed to mamtain at pnces mcredibly out of line with the rest of the market WIll have jomed the processlOn down the tube, and we can once again look for a market where It IS possible to practlce secunty analYSIS rather than readmg com- pound growth tables. It IS also just possible that that happy day may not be too far off. Now, none of the foregOing is meant to suggest, certamly, that a bottom has already occurred or that it may not occur at levels Significantly lower than the present. The December low on the Dow at the moment of thiS writmg has managed to hold, although the Dow gives the ImpresslOn of holdmg on by ItS fingernails in an attempt to keep from following the other major mdlces into the abyss. Our CumulatIVe Index, mCidentally, posted a milestone of sorts last week by break- ing through the 500 level a week ago to close on Wednesday at 475.16. ThIS figure represents a declme.of 51.from.the ..1973.hlgh and an astounding 68 from the high of 1465 posted m 1968. A market which has seen the average stock lose-twothld; of Its wlue over asix-yeaTjj'E;r,od'ls one that IS calculated to produce the sort of lethargiC bottom we have been discussing above. As we have pointed out m the past, the thmgs the stock market IS supposed to be worrying about have been awfully well publlClzed by th,s tIme and it is at least worthy of note that on Wed- nesday, after the stage had been set by the Fnday ,IS-point decline, the market shrugged off a 12 pnme rate WIth a ratherde;ultory ho-hum. The current bear market may, mdeed, wmd up With the usual climactic bang and make pinpomting a bottom easy for us, but ,at this stage ,we doubt if we would make climax-seehng an Important part of our mvestment game plan. Dow-Jones Industnals '1200 p.m.) 790.36 ANTHONYW. TABELL S & P Compo (200 p.m.) 83.72 DJLIIFIELD, HARVJY, TABELL Cumulative Index (7/3/74) 475.16 AWT/jb No stCltement or expression of opinion or Clny other moiler herein tonlalned IS, or IS to be deemed to be, directly or indirectly, on offer or Ihe SOIIC'loIIOn of on offer to buy or sell any 5ecunty referred to or mentioned The moiler ,s presented merely for Ihe conveflente of the ubscrlber While 'lie beheve the sources of our mformalion 10 be relioble, we In no way represenl or guorontee the accuracy thereof nor of the 5tolemenls mude herem Any act,on to be loken by the subSCriber should be based on hiS own Investlgotion Clnd informatIon Janney Montgomery Seoll, Inc, os 0 tarporat,on, ond ,/5 offIcers or employees, moy now have, or moy loler toke, positions or trades 1/1 respect 10 any secufltles mentioned ,n th,s or any future Issue, and such posillon mClY be dlfferen, from any views now or hereafler expressed In ,hiS or ony other ISSlJe JClnney Montgomery Stolt, Inc, whIch '5 registered WIth the SEC as on Investment odv,sor, may gIve adVice to ,Is Investment adVisory and othel customers mdependently of ony ,tatements mode ,n th,s or 111 any other ISsue Further mformO'lon on ony leamty menl,oned herem 1 ovo/lable on request

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Tabell’s Market Letter – July 12, 1974

Tabell’s Market Letter – July 12, 1974

Tabell's Market Letter - July 12, 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 July 12, 1974 Monday's 21-point drop m the Dow-Jones Industrial Average, which saw that venerable index follow most –other'ma j or market'oarorrfetets-to-'a-Iow BelOW'fljii('orlilSTDecernoer; Ra''-;-,thoutdouJ5Ccalteredthe techi – cal picture, although not in as fundamental a degree as many might suspect. The penetration of the December low on July 8 marked only the second time since 1926 that that low has been penetrated so late in the subse- quent market year. The only other case was penetration of the December, 1928 low in October, 1929, a iact, we hasten to add, that has, in our opinlOn, absolutely no statistical significance. The llkelihood now, of course, is that the market .s headed lower, at lea st over the short term. Th.s re- mains true despIte Friday momingls sharp rally In response to a slowed nse in business loans. It is necess- ary to have some working hypothesis as to Just how low that might be. Here there .s very little change. For the Dow and most other mdices, the applicable distributlOnal tops were formed m 1972 and 1973, and these tops were violated on the downside la st December. The trading range In which most indices held throughout the first six months of 1974, the limits of which, m the Dow's case, were the December low of 783.56, and the March high of 904.02, did not widen the previously formed tops, although that range apparently faIled to turn out, as we must confess we hoped it mIght, into a saucer-type base formation. It, therefore, appears that the original downside targets which were .dentifiable fairly early last year are now likely to be fulfilled. For the Dow ,most of these targets center on the 740-680 range which, quite obviously, is not all that far be- low current levels. Downside objectives of similar percentage magnitude exist for the other IndIces. For the Dow-Jones Transportation Average, for example, the downSIde objectlve IS an apparent 135-115 versus the current level of 153. In the case of the broad-based mdlces, the Standard & Poors 425-Stock Industrial Index has a down- side objective of 83 versus its current level of 92, and the Standard & Poors 500 suggests a possible 74. For the New York Stock Exchange mdex, now 43, a downside target of 40 .s readable. It .s, of course, qu.te possible that these forecasts might,have to be altered,should the recent advance demonstr.te9Jll-'ayJn9 power. More evfdence, -however, will certaInly-be requIred. – – .- All of the above numbers have a certain conSIstency 10 that they suggest, In all cases, a test of the lows of May, 1970. Such a test, incidentally, would be perfectly consistent w.th the longer-term hypothesis we have been proposing in th.s space for the past three years, the theory that the basic secular trend of the stock market has changed from the rising channel which charactenzed the 1940's, 1950's and early 1960's, to a flat channel, centered around the 850 level m terms of the Dow, with llm.ts roughly a couple of hundred points on either s.de of that level. We do not, In other words, place ourselves in the camp of the super-bears. We think analYSIS of the technical patterrsof mdiv.dual .ssues strongly suggests that the bulk of them are suff.ciently thoroughly sold out so as to prevent them from mOVIng a great deal below current prices, although quite obviously they could be vulnerahle to short-term weakness. We also think that the apparently-huge amounts of money now on the sidelines mitigate against the suggestion that we are headed for some sort of apocalypse. We do, how- ever, think that a good deal of vulnerabIlity remains for a faIrly extensive minority of mdividual stocks, most of them those glamour issues whIch have not yet had corrections comparable to those which have affllcted the bulk of the ilst. LIke the averages, most of these Issues spent 1972 and r973 forming substantial top formatIons and, lIke the averages, penetrated these top formations on the downside last December. Some of them, and 111e nantes are sufficiently obVIOUS so that they do not need to be recounted here, did, indeed, move lower In the first six months of 1974 and are at or approaching theIr downSIde obJectIves. A number, however, Including many in the drug and off.ce eqmpment helds, staged a m.ld rally In the first half of this year and moved up mto the overhead supply from the 1972-73 tops. There are very few cases that we can recall where the princ.ple of overhead supply has been better demonstrated than by the action of the past few weeks. Almostuniformly, on the recent decline, the growth Issues that had moved up Into the overhead supply backed off sharply from that supply on the recent drop, and now hnd themselves posseSSIng short-term patterns which suggest a move to new lows and dn ultimate extension of thdt move to the downside objectives of the angInal tops. These objectives, it must be noted, are in many cases substantially below current levels. I\s our readers are well aware, we have always been philosophically opposed to the pnnciple that a hand- ful of select Issues, rightly or wrongly tagged as growth stocks, should sell at an immense premium over the bulk of the list. The past year or so has done a great deal to destroy that nahan, and technIcal patterns now suggest that the next few months could see the final demise of the myth. We do not, In sum, see any reason, In practIcal terms, to worry unduly about further short-term weakness in the market prOVIded that portfolios are protected by rigid exclusion therefrom of as-yet-uncorrected growth lssues. Dow-Jones Industrials (1200 p.m.) 778.16 ANTHONY W. TABELL S & P Camp. (1200 p.m.) 82.04 DLLArILLD. HARVIY, TABrLL Cumulative Index (7/11/74) 449.79 AWT/jb No slotement or expreSSion of opinion or any other matter herein contomed IS, or IS to be deemed to be, dlfectly or indirectly, on offer or the wlicltatlon of on offer to buy or sell any secunty referred to or menlloned The matter IS presented merely for the COnVerienCE of the subscriber WhIle we believe the sources of our Information 10 be rellCble, we In no way represent or guarantee the accuracy thereof nor of the stotements ,ode herem Any achon to be loen by the subscllber should be bocd on hl5 own InvestlgollOM and IIlformoflon Jonny Montgomery Scott, nc, 0 a corporation, and Its officers or employees, may now have, or may laler toke, positions or Irodes In respecl to any secuntles mentioned In Ihls or any fulure ISwe, and such position may be dlfferenl from any views now or hereafter expressed HI Ihls or any other Issue Janney Montgomery Scott, Inc, whIch IS regIstered wllh Ihe SEC as an Inveslmenl adVisor, may give adVICe to Its Investment adVisory and othel CUSTomers Independently of any stalements mode In Ii-liS or tn any olher uSUe Further Information on any securtty mentioned herein 1 available on request

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Tabell’s Market Letter – July 19, 1974

Tabell’s Market Letter – July 19, 1974

Tabell's Market Letter - July 19, 1974
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TABELL'S MARKET LETTER , ( \ \- – – – ………–…- 909 STATE ROA.D, PRINCETON. NEW JERSEY 08S40 DIVISION OF MEMBER NEW YORK STOCK EXCHANoe, INC MEMBER AMERICAN STOCK eXCHANGE July 19, 1974 After breaking sharply to new lows a week ago, the stock market displayed some firmness last week, staging a normal,.,,o!lectiol! ,of the,Fridayadv.nc.e.Q.n MonpilY caJ1d1uesdgY;!J;lcU,hen.dvancjTlg,ag!1J.o new rally high on Wednesday and Thursday. Presently the Dow is just underneath the heavy overhead . supoly from the early 1973 trading range, and its reaction to this supply will be mteresting. The opinion has been expressed that the recent advance may be the start of a so-called summer rally. We have studied that phenomenon in this space for the past two years, pointing out that the theory of a summer rally had some basis in fact, but that It would be unwise to lean upon It too hard as a market fore- casting tooL The following table is an updated version of that study including the changes for 1973. ONE-MONTH PERIODS TWO-MONTH PERIODS Ending Month Advances Declines Avg. Chge. Advances Declines Avg. Chge. January 31 17 0.71 31 17 2.10 February 26 22 -0.06 26 22 0.64 March 26 22 -0.20 23 25 -0.37 April 27 21 0.87 29 19 0.75 May 25 23 -0.76 29 19 0.34 June 22 26 0.82 23 25 0.01 July 33 15 2.29 31 17 3.06 August 32 16 1.80 35 13 4.24 September 21 27 -I. 17 29 19 0.57 October 26 22 -0.49 24 24 -1.59 November 28 20 0.52 29 19 0.09 December 37 II 1.37 32 16 1.93 Total . 334. 242 9.47 341 n' . 23.5 . 0..98 .. The table shows the action of the Dow- Jones Industrial Average m everyone-month and two-month period from 1926 to 1973. For each period the number of instances when the market advanced and declined is shown, together with the average percentage change for the period. A prehmmary look at the table, in- deed, supports the notion of a probable summer ra lly. The average monthly advance for the Dow over the period has been .47 whereas the average performance m July is an advance of 2.29, more than four times as great. LIkewise, the average advance of 4.24 for the two months ended August is four times larger than the average two-month advance. It would, mdeed, appear that the expectatIOn of an advancing mar- ket during July and August has some solid grounding in fact. laving made th,S statement, however, a few doubts must be raIsed. The first factor which needs to be pomted out IS that a large part of 'he high average advance for the summer period rests on the aCCIdent of the 1932 bottom's having occurred at the end of June. Thus, July and August of that year produced the largest two-month advance in stock-market history, an astounding 70 rise. If this smgle year IS elim- mated from consideration, the results for July and August are much closer to normaL Secondly, while it IS true that July and August do show sigmficant pluralities of advancmg months over declining months, 1t must be remembered that advancing periods tend to outnumber declining ones over the 48 years by almost three to two. When standard tests of statist1cal sigmfIcance are applied, the penod with the clearest seasonal action is the month of December, which 1S why th,S letter has always empha- sized the importance of the year-end rally. Likewise, the tendency toward a declming market in September is statistically more significant than that of a rise in July or August. Interestingly enough, none of the other months show any discernible seasonal pattern whatsoever. Lastly, in lookingJor seasonal patterns, it IS wise to examine the most recent data to see If It seems to be deviating from the pst and, indeed, this is apparently the case The eight years between 1966 and 1973 have produced three rallies and five declines in July and five rallies and three decline m August, but the two month penod ended August has produced three ralhes and fIve declines with an average advance of less than 1. Even the familiar December rally appears to have lost ItS recent reliability, and, mter- estingly enough, a new seasonal tendency, not heretofore apparent, seems to be emergmg — that of a decline in May-June. Every May, from 1965 through 1974, with the smgle exception of 1972, has produced a declining market, and all two-month periods ending in June have shown declmes for the past ten years. The moral of the whole exercise, we suppose, is that the stock market IS a difficult and changing beast, and, while certain seasonal tendencies are apparent, they constitute only one factor in what IS mvanably a highly complex equation. Dow-Jones Industrials '1200 p.m.) 787.39 S & P Camp. (J200 p. m.) 83.62 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (7/18/73) 472.03 AWT/jb No stctement or expressIon of opinion or any other matter herein tonlClined IS, or ,s to be deemed to be, directly or Ind,rectly, on offer or Ihe sol,c,tot,on of on offer to bvy or sell any setullly referred to or menhoned The molter 1 presented merely for the COl'wef'lence of the subscrober While -He beheve Ihe sources of our Information to be reliable, we In no way represent or guarantee Ihe accuracy thereof nor of the sotements mode herein Any ac;tlan to be talen by the subSCTlber should be based on tliS own mveslllallan and mformatlon Janney Montgomery Scoll, Inc, as 0 corporat,on, and lis officers or employees, moy now have, or may iater lake, posillons or Irades In respec;t to any securities mentioned In thiS or any future Issue, and such position may be different from any views now or hereafter expressed In th or ony other Issue Janney Montgomery Scali, Inc, which IS registered WITh Ihe SEC as on investment adVISor, may give adVice to Its Investment adVISOry and othel customers mdependently of any stotements made m thiS or In any other Issue Further ,nformatlon on any security mentioned herem 1 available on request

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Tabell’s Market Letter – July 26, 1974

Tabell’s Market Letter – July 26, 1974

Tabell's Market Letter - July 26, 1974
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— — —, TABELL'S MARKET LETTER —— – – —- —- —- – 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVI910N OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE July 26, 1974 The market continues to be beset by crosscurrents whlCh are, to say the least, confusing. A major downside penetration of the early-1974 trading range took place in the early part of the – month, 'wi th 'the DoW'rea cnTnga'low' of '7 53 13oiijulY-'rf th-Thi'i;- penetrat16fi-W'a s -fflowed b2y—1 a sharp, two-day rally, followed by another two days of retracement. Following that, until Thursday's weakness, the market edged irregularly higher, posting an intraday rally high of 809.76 on Wednesday. Despite the fact that the advance was a great deal more orderly than the one last June, which saw the market move up almost 70 points in the short space of eight trading days, Internal indices of market vitality behaved a great deal more positively on the recent rise than they did a month ago. Indeed, the improvement was sufficient to cause major buy signals to be glven on a number of the most highly sensitive technical ind1cators. It should be recalled, however, that the very sensitivity of these same indicators has caused them to give numerous false buy signals during the cour'se of the 1973-1974 decline. It 1S often helpful in times of market confusion to outlIne the various possible scenarios which could anse out of what we already know has taken place, These poss1ble scenarios, as we see it, are four In number, and we will try to discuss each one briefly. 1. The low of the 1973-4 bear market occurred on July 11th. There is very little, on the face of it, to support th1s argument. None of the normal technical indicators, such thIngs as h1gh odd-lot short sales, increaSIng short Interest, expanding volume, extremely sharp recovery, etc., etc., all of which have tended to charactenze major bottoms in the past, were present at the low of a couple of weeks ago. Its only plaus1bility lies in the contrary opinion which has been suggested in recent issues of this letter, the theory that the bottom of the present bear market, whenever 1t occurs. will not be accompanied by the usual. easily-recognizable techni- ,.,.. ea l's 19na-lsWe- thin-kthat-;fortlrefirs tti meSince' th'e '-ea rlyl9-S-0 s7th-e-precnnd1tiCYrisf6rthYs–,'-I kInd.of a bottom are present. and we must, therefore. at least recognize the possibihty that the lows were, in fact, seen two weeks ago. Further fuel for this argument is provided by the fact that a fair-sized mInority of 1ssues. steels being a particular case in pOint, have begun to show highly dynamic upside action In the face of an apparent continued bear market. 2. A typical selhng climax, carrying the Dow to the downs1de objectives in the low 700s mentioned previously in this letter. The arguments In favor of this poss1bility are the obviOUS ones. contending that this sort of bear-market termInation has been the typical experience of the recent past. The counter-arguments are those stressed above. We cannot get away from the feeling that somehow the market 1S not going to make it all that easy for the by-now large numbers of practicing technicians to pinpoint the preC1se turnIng point. 3. A continued slow drift to new lows. With lower downside objectives In fact existing. there 1S much to be said In favor of this scenario. Whether or not it occurs. 1t seems to us. will depend on whether the new emergIng strength in heavy Industrial stocks will be great enough to offset any weakness which might take place in the as-yet-uncorrected glamour 1ssues. That the former will outperform the latter has been our 10ng-heJd contention. The exact mix of performance will go a long way toward determining whether or not the averages do, in fact, post new lows. 4. A vInd1cation of the Super-Bears. We are. at the moment at least. willing to reject this scenano out of hand. Our own view of the economic outlook does not support the forecast of continued double-digit-Inflation. followed bY,a-necessary corrective depression. which 1S the forecast used to buttress the arguments of the gloom-and-doom proponents. We thInk, on the other hand, that the present level of stock prices, In the majonty of cases. already d1S- counts the possibihty of a sharply reduced level of bUSiness activity. and we feel that. were such reduced levels not to materiahze. the enSUIng ups1de action could be dynamic Indeed. In summary, there appears to be little for the Investor to worry about in the case of any of the scenarios mentioned above. other than the last. and we have already stated our willingness to reject that last. If this 1S the case, carefully selected common stock portfohos at today's prices could tum out, over the long term. to be well bought Indeed. Dow-Jones Industnals (1200 p.m.) 787.70 ANTHONYW. TABELL S & P Compo (1200 p.m.) 82.92 DBLArrELD, HARVLY, TAB ELL Cumulative Index (7/25/74) 471.69 AWTJc No sfatement or e)(prenlon of opinion or any other motter herem contained IS, or I to be deemed to be, dlrectly or indirectly, on offer or the sol1Cllollon of on offer to buy or sell any security referred to Or mentioned The mailer IS presented merely for the converlenCE of the subscriber While we believe the sources of our Info rma han to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statf!ments mude herein Any action to be token by the subscriber shOUld be based an hiS awn investigation ond information Janney Montgomery Scott, Inc, as 0 corporation, and lIs officers or employees, may now have, or may lofer toke, poslhons or trodes In respect to any securilies mentioned In thiS or any future Issue, and such position lI'OCIy be different from any views now or hereafter expressed In thiS or ony other Issue Janney Montgomery Scali, Inc, which IS registered With the SEC os on onvestment adVisor, may gIVe odvlce to liS mvestment adVISOry and athel customers Independently of ony stotements mode In thiS or In any other Issue Further Informotlon on ony secullty mentioned herein IS ovollable on request

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