Tabell’s Market Letter – October 11, 1974

.- – – – – – – ——, TABELL'S MARKET LETTER I L – – – —- 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION 01 MEM8ER NEW VORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE October 11, 1974 The stock market finally got around th,s week to turning in a reasonably exciting performance!c-.;,al- ,..I …- h0ii9fllii many ways -,t caiihardtybe' sald t,ilaVebeensur'Pii'Sfi1g.In-aii'y2ase;'theDawopenecttl1e week with a 23-point rise and, after a mild retracement on Tuesday, scored its best advance in SlX- teen months on Wednesday w,th a 28-pomt rally. This nse was further extended through midday Thurs- day, when profit-tabng set in, but Thursday's close, nonetheless, still showed a 17-point improve- ment on the day. All in all, from last Friday's intraday low of 573.22 to the Thursday mtraday high of 664.03, the total advance was some ninety pOints, or a nse of 15.8 in a four-day period. – We said above that the performance was hardly surpnsing. This is true in a sense that it obviously was going to take place at some time and some place, the only questlOn being when and where. The spectacle of a deeply oversold stock market probing for a bottom is in no way new and has been re- peated in essentially the same fashion for as long as markets have eXlsted. In this sense, at least, the week's action, for all the fireworks, was famlliar to the paint of being dreary. Whether the low of a week ago will ultimately turn out in the light of history to have been the low of the 1973-74 bear market is a question we do not think can be answered with certamty at the moment, although the probabilities of th,s bemg the case are perhaps better than they have been at any time so far. Thursday's advance, during which 26 million shares changed hands, met the volume standards which have characterized major turning paints in the past. Breadth, on the other hand, was disappOint- ing. Neither the 1301 advances of Monday, the 1220 advances of Wednesday or Thursday's 1338nsing issues met the standards of prior major turning pOints. Such a standard at the moment would call for a slightly over 1400 advanCing issues, a performance we have not, as yet, been able to achieve. Also disappointing was the renewed appearance, on Wednesday and Thursday, of the sort of strong selling 'I'p';re-sWs!u1raeCsiswpheirchhahpas ve turned well-to-)( back previous eep lD mlnaaY rally fliis ' attempts stage tstf ieaafr-lhioetrttohm,sS,yheiasrt.o ri c a U f , ' li a v e – a s suiile1i-dif– ferent forms and different shapes. For example, May 29, 1962, for many stocks, constituted the effective bottom of the 1962 bear market as the Dow touched an intraday low of 552. After a two-day rally, it fell again to an intraday bottom around 525 in June before reversing sharply. It then returned to the May low four months later in October, at the t,me of the Cuban missile crisis. In 1966, two successive lows' were made, the first m August and the second in October, and m this mstance the second low was moderately lower than the first. In 1970, of course, the May 26 low was never really tested, and, as it built its base for the 1970-73 advance, the market edged slowly higher. Such was also the case in 1957-58. Thus, wh'le history shows it is dangerous at this early stage to try to predict the course of the averages, it is hlghly possible that, in the case of a good many individual stocks, important bot- toms may already have been reached. The action of the market from here on out wlll be interesting and probably, in addltion, highly infor- mative. What most of the major indices have now done is to return to trading ranges which have a good deal of potent,al significance. The Dow-Jones Industrials, for example, traded m a range roughly be- tween 650 and 680 during the latter two weeks in August and early September. While this month of tradmg is not particularly slgnificant from a time point of view, it assumes a high degree of technical importance, due to the volume and pnce actiVlty that took place. The recent rally, of course, has brought the average back into this range, and the most constructive action it could possibly show would be to remain within the confmes of the 650-680 area and ultlmately penetrate ,t on the upside. Were this sort of action to ensue, something that could deservedly be called a bull market could appropriate- ly be foreca st. . The Transportation and-Utility mdices have patterns which are the s-arriein prln'ciple;- aHhough some- what different in specifics, These two indices did not make new lows on the recent downswing (The Transportation index did do so, but only fractlOnally) and are now moving toward the trading areas of late July and early August. They still have some d,stance to go to reach these areas, 150-160 on the Transportation index versus the present level of 145 and 68-72 on the Utilities versus a current level of 67. However, as is the case with the Industrials, could these levels be attained and held, the action would have to be considered constructive. It is best, at times Ilke the present, to remember the Blbllcal injunction that we see only through a glass darkly. As patterns like the present one slowly unfold, the specifics become clearer and a more rational forecast becomes poss,ble. Last week's action, however, must be regarded as a possible initial link in the constructive chain of events. Dow-Jones Industmlls (1200 p.m.) 646.59 S & P Compo (1200 p.m.) 69.80 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (10/10/74) 387.27 AWTjc No statement or exprenlon of opinion or any olher malter herein contOlned IS, or IS 10 be deemed to be, directly or mdnec1ly, on offer or the OIICllotlon of on oHer to buy or sell any secunty referred to or menlloned The mOiler IS presented merely for The convellenc of Ihe subSCriber While -Ne believe the sources of our Informotlon 10 be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mode herein Any adlon to be To!.en by the subSCriber should be bosed on hiS own investigation and Informallon Janney Montgomery Scott, Inc, as a corporation, and 11 officers or employees, may now have, or may later lak;.-, positions or trades In respect to any SeCUrities menllaned In thiS or any fuTure Issue, and such position may be different from any Views now or hereafter eJOpressed 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 uotements mode In thiS or In any other luue Further information on any security mentioned herein IS available on reque