Tabell’s Market Letter – July 25, 1975

Tabell’s Market Letter – July 25, 1975

Tabell's Market Letter - July 25, 1975
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— j-' , , T , .. , – ,—,—–,- —— TABELL'S. ,! MARKET ri LETTER ,/ 909 STATE ROAD, PRINCETON NEW JERSEY 08540 DIVISION OF MEMBER NEW YOAK STOCK eXCHANGE, INC MEMBEA AMEAICAN S'tOCK EXCHANGE '.. July 25, 1975 '- –…. One measure – of-'howfar the-market4s-into'a-bul1'cydeis,the- extent to which .short— term declines tend to incite nervousness. By that standard, the amount of nervousness inspired by six straight days of decline through Wednesday, plus a generally weak market on Thursday even though the Dow closed up, suggests that the upswing is not yet in a mature stage. Nonetheless, the six days of decline did, in fact, take place and perhaps it is worthwhile to examine them and try to place them in perspective. In numerical terms, the drop amounted to 5.12 on the Dow-Jones Industrials and 5.79 on the S & P 500. It marks the third correction of slightly over 5 that has taken place since the major upswing began last December and its behavior to date, at least, is suspiciously like the others. The first such correction took place between March 17 and April 7 and amounted to 5.55 on the Dow and 6.58 on the S & P, slightly more severe than the percentage declines posted to date on the current drop. The shape of that decline consisted of five days of a fairly sharp drop, followed by a three-day rally, followed by five more days of decline to a low that was fractionally below the earlier one. Such a shape is not unusual at a short-term bottom and, indeed, might occur in the present case. The second interruption in the major advance took place between May 14 and May 29 and was slightly less severe than this one, amounting to 5.09 on the Dow and 2.8 on the S & P. This one lasted ten days in which the downward trend largely prevailed except for a two- di!Yrallyabout ha Ifway through . Thusunles stheJlresenLdeclinewor.sensit .istotallyconsls,.-,–…. – – …. – . L ' , — – – -r tent with the experience of corrections in the 1975 bull market to date. It is also worthwhile comparing the three declines in terms of breadth and of our Cumulative Index of all stocks. The first drop, that of March-April, was the only one on which our Cumulative Index performed worse than the major averages, dropping 6.56, about the same as the S & P. In the May drop, it significantly outperformed the other indices, dropping only 1. 85 and bottoming five days before the Dow and the S ; P 500. In the present instance, It has declined 5.61 to date, about equaling the major averages. About the same results are shown by the breadth index, which significantly outperformed the averages in May, dropping some 3 1/2 points. Its current performance is slightly better than in the March-April decline where it dropped 11.26 pOints versus 10.63 points currently. As we noted before, the decline could, of course, worsen, thus invalidating the above comparisons. However, for the time being, at least, we consider this less than likely. At the week's lows, both the Dow and the S & P had reached the downSide objectives of their small tops and were at fairly strong support levels, 850-820 in terms of the Dow and 95-90 in terms of the S & P which, as of Thursday, had dropped to the lower part of its support area. Were these support areas to be decisively penetrated, lower prices could, in fact, be foreseen.but there is no reason at the moment to suggest that this is likely to take place. .,. z ………… – – – ';'-t.– -' The significant story told by minor declines is often signalization of shifts in lead- – ership, and the poor performance of the first-tier growth stocks on this drop suggests that these issues may have, at best, entered into a consolidation phase and may, in many cases, test their 1974 lows. We continue to believe that this could take place without too much effect on the over- all market. The bulk of stocks remain in uptrends and show very little sign of distribution, and, until significant distributional patterns begin to form in a larger number of issues, we do not think that downside activity is likely to be serious. Dow-Jones Industrials (1200 p.m.) 835.11 S ; P Compo (1200 P.m.) 89.40 Cumulative Index (7/24/75) 528.16 AWT/jb ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No stotement or ewpresslon of opmlon or ony other maHer herein contolned 15, or IS o be deemed to be, directly or Indirectly, an offer or the sollcltollon of on offer to buy or sell any security referred to or mentioned The matter 15 presen'ed merely for the conVerlenc of the subSCriber While -He believe the sources of our information to be reliable, we In no way represent or glJarantee the occlJracy thereof nor of the statements mude herein Ally action to be taen by the subSCriber should be based on hiS own investigation and Informollon Janney Montgomery Scott, Inc, as a corporahon, and Its officers or employees, may no have, or may later toke, POSitions OT trades In respect to any seCUrities mentioned In thiS or any futlJre ISsue, and such POSition may be different from ony views now or hereafter e .. pressed In thiS or any other ISlJe Janney Montgomery Scott, Inc, whICh IS registered With the SEC as on Investment adVISor, may give adVice 10 Its Investment adVisory and other customers Independently of any statements mode rn It-liS or In any other Issue Further information on any security mentioned herein IS avollable on request

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