Viewing Month: May 1976

Tabell’s Market Letter – May 07, 1976

Tabell’s Market Letter – May 07, 1976

Tabell's Market Letter - May 07, 1976
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 081540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE. INC MEMBEA AMERICA.N STOCK EXCHANGE – May 7, 1976 In contrast with the normal content of this letter, we will not be able to concern ourselves – i n this'issue with'the current.stockmarket.-This .isnot possible-since theletter.is.being..written,,. some three days prior to the issue date. This, in tum, is due to the fact that, at the time readers receive it, the writer, along with those of his associates who would normally prepare these comments in his absence, wlll be m WIlliamstown, Massachusetts, attendmg the First Annual Seminar of the Market Technicia ns Association, an organization which the writer has the honor, this year, to serve as Pres ident. In conducting the Seminar in Williamstown, the MTA is fulfilling one of the purposes stated in its Constitution, to provide meetings and foster the interchange of material, ideas and informa- tion for the purpose of adding to the knowledge of the membership. The Association is pleased to have as its honored guests many noted leaders of the securities mdustry among the 150 who will be attending, and we look forward, as we always do, to meeting with our colleagues and exchanging views and ideas on the ever-changing and expanding techniques involved in our profession. The MTA, moreover, which is now three years old, has a number of other worthwhile pur- poses and some of them, we think, are worth enumerating here. One, for example, again quoting from the Constitution, is to establish, maintain and encourage the highest standards of profession- al ethics and competence among technical analysts. We think this is important. One of the less attractive characteristics that has been known to appear from time to time among investors is that of greed, and there have been those, unfortunately, who, sometimes under the guise of technical analysis, have catered to that greed with claims to prescience that they — and, indeed, all mOr- tal men — lack. Thus, the Constitution contains the following language. The analyst shall not make statements which he knows or has reason to believe are inaccurate or misleading. He shall, in particular, be careful 11—-…–toavoidleadinghisaudiencet0believe.thathis.technically.der-lv.edvlews of future stock price behavior reflect foreknowledge rather than estimates and projections subject to re-examination and, as circumstances may dic- tate, to change. The analyst shall not make statements concerning the current tech- nical position of the stock market or any of its components or any of its as- pects unless he can demonstrate that such statements are reasonable and consistent in light of the available evidence and of the accumulated know- ledge in the field of technical analysis. New departures in technical anal- ysis as well as modifications of existing techniques or concepts are to be fully documented as to procedure and rationale. Another stated purpose of the Association is to educate the public and the investment community to the uses and limitations of technically-oriented research and its value in the formu- lation of investment declsions. As we all know, the value of investment analysis is, these days, being called increasingly into question. The MTA stands squarely for the fact that effort in money management is, indeed, not worthless and, again, its Constitution adumbrates this principle as follows. Moreover, the tendency of price trends to persist and of investors' behavioral patterns to recur enables the technical analyst to recognize and antiCipate potentially favorable or unfavorable investment environments. Indeed, the recognition of extremes in investor psychology is one of the technical market analyst's unique contributions to the field of investment techniques;- . – .. '- liThe Association asserts, in sum, that the technical analysis of — — ….. stock price movements and of the supply-demand relationships underly- ing them is a valid, indeed an indispensable, element in the formulation of a 'reasonable basis' for investment decisions. 11 In summary, we think that the MTA has in the past and will continue in the future to make valid contributions to technical analysis in particular and security analysis in general. We are proud, therefore, to have played a part In the organization over the three years of its existence, and we look forward to continuing to do so. Dow-Jones Industrials (1200 p.m.) 993.31 S & P Compo (1200 P.m.) 101.59 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (5/6/76) 596.27 AWT/jb No statement or expression of Opinion or ony other moiler herein contamed 15, or IS to be deemed to be, directly or mdlrectly, an offer or the solicitation of tm offer to buy or sell anI. security referred 10 or mentioned The matter IS presented merely for the convef'lenCt of the subscrlber While we believe the sources of our Information to be fel'ob e, we ,n no way represent or guarantee the accuracy thereof nor of Ihe statements mude herem. Any ocllon to be IQen by the subscriber should be based on hiS own Investigation and 'r'lformallol1 Jonney Montgomery Scott, Inc, LIS (J corporation, and ,ts officers or employees, may now hove, or may kl!er toe, positions or trodes In respect to ony Securities menlloned In Ihls or lny future usue, ond uth position moy be different from ony views now or hereofter epreHed In thiS or any other ISsue Janney Montgomery Scott, Inc, which IS regl!otered with Ihe SEC as on InveStment adVisor, moy give adVice la lis Inveslment odvlsory and olhe CU'tomers Independently of ony statemenlS mode In Ihls or 10 (lny other Issue Further InformotlOn on any security mentioned herein IS available on request

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Tabell’s Market Letter – May 14, 1976

Tabell’s Market Letter – May 14, 1976

Tabell's Market Letter - May 14, 1976
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TABELL'S MARKET LETTER 909 STATE. ROAD, PRINCETON, NEW JERSEY 08540 DIVl910N OF MEMBER NEW YOAI( STOCK EXCHANGe, INC MEMBER AMERICAN STOCK eXCHANGE May 14, 1976 May has arrived, and it has brought with it a number of events, including a successful — First -. and'a Ann sPEl ual,M Ctilcu arket lardo Techni gw'ood c'isa'nas'ioAn sso in ciati Prin on cet Seminar on, 'New , – 0 J which eiey. w – e It disc l'ias ussed also'o in fo t u his gnt space witlnr last -tne sweaeseonk,al,-J appearance of FORTUNE magazine's compilation of statistics on America's 500 largest industrial cor- porations. I Those who have been exposed to this letter in past springs will know that we are some- thing of a FORTUNE 500 freak. There are, almost invariably, we feel, investment parables that can be adduced from a scanning of the figures, and we think this year to be no exception. Such a scanning is, of course, at least partially, an exercise in hindsight, and it should be stressed that no implica- tions are being made here about the investment merits at the moment of any of the companies men- tioned. Nonetheless, we think a look at the record is interesting. Perhaps the most fascinating statistic that FORTUNE has compiled is the total return, including capital appreciation and dividends, on each of the 500 companies. It has done this for both the year 1975 and the 10 years ended December, 1975. The first set of figures underlines the fact that 1975 was, indeed, a rather good stock market year. The median total return for all 500 companies in 1975 was 5f. 23 per cent and investment in American Bakeries, the best-performing stock on the list, produce a 251 per cent total return. Nonetheless, 44 of the 500 companies produced a negative total return in,1975 in the face of one of the most expansive bull markets in history. It is, however, the figures on total return for the decade which are most intriguing. Purely by accident, the base period 1965-75 is particularly faSCinating in that the Dow, on December 31, 1965, was exactly 969.26, within just a few pOints of where it is today. The difficulties accom- panying stock market investment over the past decade are underscored by the median total return for '' .. ,….the.,,5.00companiesP4lt..3.0JLper9.entandth.ef;'lctthi;l.t.J 76 of the 500 showl'.rta Ilg!ltive total.!tu,,rn….IJ…,.. over 10 years. ' . . .. . .' . It was, nonetheless, possible to earn above-average rates of return in the marketplace. The following table shows the ten highest stocks in terms of total return over the decade as computed by FORTUNE together with their price/earninqs ratio on December 31. 1965. Name Total Return 1965 PiE Ratio Name Total Return 1965 PiE Ratio Fleetwood 43.05 8 Baker International 24.87 13 Archer Daniels Midland 27.70 16 Westmoreland 24.49 12 Utah International 26.89 9 Philip Morris 24.40 12 MAPCO 25.45 14 Masco 23.02 16 Pittston 25.44 12 Burroughs 21.63 22 The list is interesting, we think, in that, with the single exception of Burroughs, it in- cludes none of the typical institutional glamour issues (Philip Morris may now be a member of the club but was not 10 years ago when it was purely a tobacco company). Advocates of growth via technology will find the list disappointing. In addition to three coal stocks, whose presence can be explained by the peculiar energy developments of the past decade, it includes a mobile-home maker, a soybean processor, a pipe line, an oil well driller and, of all things, a manufacturer of faucets. Likewise, the advocates of paying high price/earnings ratios for assured growth will be disappointed by the list. GOing back to the end of 1965, the S & P 500 stock index was selling for 17.8 times earnings and the Dow 18.3 times. Again, with the Single exception of Burroughs, every one of the best performers was, in 1965, selling for a multiple lower than that of the Dow. –Indeed i it can be'conversely argued' that investment in high-muHiple growth stocks ex-. . – poses one to a greater risk of being wrong if the growth potential fades. FORTUNE (1965 price/earnings ratios in parentheses) also provides us with a list of the five lowest total returns over the decade which comprises Lockheed (13), Addressograph Multigraph (24), Genesco (15), Avco (14) and Litton Industries (38). As can be seen, at least two of these issues were accorded growth multiples accord- ing to the conventional wisdom of ten years ago only to be shattered when the growth failed to materi- alize. The FORTUNE figures strongly suggest, we think, the validity of the age-old axiom that concentration on values is the best way of achieving investment results. Dow-Jones Industrials (1200 p.m.) 994.02 ANTHONY W. TAB ELL S & P Compo (1200 p.m.) 101'.51 DELAFIELD, HARVEY, TABELL Cumulative Index (5/13/76) 603.97 AWT/jb No statement or expression of opinion or any other motter herein contaIned IS, or IS to be deemed to be, directly or Indirectly, on offer or the soliCitation of on offer to buy or sell any security referred to or mentIOned The matter IS presented merely for the conVel'lenCE of the subscriber WhIle e believe Ihe sources of our mforma- han fa be relIable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action to be token by the stlbscnber should be based on hIS own Investigation and Informatron Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, may now have, or may lofer tae, POSItions or trades m respect 10 any securlfles menfloned In thiS or any tllure Issue, ond such position may be different from any views now or hereafter expressed rn thIS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may 91ve adVice to Its Investment adVisory and other customers Independently of any statements mode In thiS or In any other Issue Further Information on any security mentIOned herein IS available on request

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Tabell’s Market Letter – May 21, 1976

Tabell’s Market Letter – May 21, 1976

Tabell's Market Letter - May 21, 1976
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE May 21, 1976 By now everyone is almost agonizingly familiar with the lateral trading range that has con- tained the Dow-Jones Industrial Average since late February following its meteoric rise in the first two tnonthsol'the-y,-ar' Likewrs e anyone wnotl'aS'been read ing -any -farm'Of'techllifalffia rKetcOiiiiiient'isi' – aware of the fact that, throughout this period, the Dow has been outperforming most breadth indices, indicating below-average performance by the broad range of stocks. We conducted, this week, an in- vestigation to ascertain whether this underperformance extended to the American Stock Exchange and the Over-The-Counter market as well, and the general conclusion is that this is, indeed, the case. While American and Over-The-Counter issues underperformed the Dow in the early phase of the advance, they moved with it and even ahead of it on into mid-February. Since that time, both Amex and OTC indices have been performing less well than the Dow ,and as measured by breadth, the average ASE issue has been underperforming the average NYSE issue. Finally, interestingly enough, there is some suggestion that this trend, at least as far as the Amex is concerned, may now be reversing itself. The following table shows some relevant market statistics for selected dates since the Decem- ber 5 low. The first column shows the DJIA, the second, the American Stock Exchange Market Value Index and the third, the ratio of the latter to the former. Obviously, when this statistic is rising, it means the Amex index is outperforming the Dow and vice versa. The next two columns are breadth indices for the New York and American Stock Exchanges starting from an identical base. The last two columns give the NASDAQ OTC Composite Index a'nd its ratio to the Dow. ASE Ratio Ratio Mkt. Val. ASE/ NYSE ASE OTC OTC/ Date DlIA Index DnA Breadth Breadth Compo DII-A 12/5/75 818.80 82.40 .1006 780.62 781.20 74.72 .0913 12/26/75 859.81 82.58 .0960 785.46 780.58 77.13 .0897 ….'.22.,//'22''45''/!7i766………S99-99734-…55,572–;;11;00-55-..-12.15.;.1;;;.1050-588- 826.98 804.09 82'67'4'5-803-9'2 91. 73 9'27'09 .0923 0920—– 2/26/76 978.83 104.17 .1064 823.57 802.66 91.45 .0934 3/5/76 972.92 103.65 .1065 820.99 800.54 89.47 .0920 3/11/76 1003.31 105.30 .1050. 823.75 801.23 91.21 .0909 3/24/76 1009.21 104.71 .1038 822.56 799.17 90.93 .0901 4/21/76 1011.02 103.47 .1023 820.02 795.14 90.77 .0898 5/12/76 1005.67 105.01 .1044 818.70 794.10 90.64 .0901 5/13/76 1001.10 105.48 .1054 817.95 793.85 90.22 .0901 5/19/76 988.90 104.67 .1058 815.91 792.44 89.25 .0903 Scanning down the dates reveals some interesting facts. Both the American and OTC markets underperformed the Dow on the initial phase of the rise as shown by the declining ratios between Decem- ber 5 and December 26. Indeed, in that period the Amex index hardly moved at all. When we come to the three days at the end of February, however, some interesting changes have taken place. First of all, both the ratios have improved dramatically, indicating relatively stronger moves on the part of secondary issues. NYSE breadth reached its high for the year on February 24 as did American Stock Exchange breadth. A glance down both columns shows the failure of breadth on either exchange to post new peaks after February. This suggests that the average stock on both exchanges has been underperforming senior issues, since the capital-weighted Market Value Index on the ASE, like the Dow, reflects largely the action of larger companies. The OTC index reached its high on February 25,and that high has not yet been dupli- cated. Likewise, the ratio of the OTC index to the Dow reached its peak on the next day. A few days later,on March 5,the ratio of the Amex index to the Dow reached a peak at .1065, a high that, likewise, has not been duplicated since then. As the table shows, we have seen a series of successive highs on the -Dow unaccompanied by ne'; peaks -on any of theotner ind'icators- This 'remained -true until MayI3'- – ;..- when, as the table shows, the ASE index moved into new high territory, if only marginally, while the Dow remained below its high. At .10S8,its ratio to the Dow on May 19 was just about the highest it had been since back on March 5. It is yet too early to tell whether this recent awakening on the Amex is the precursor of any wave of interest in secondary issues or just a flash in the pan. It is also worthy of note that it has not to date been confirmed with rising breadth action. Nonetheless, we think the figures suggest a total ab- sence of any sort of speculative activity,and,while speculative activity is not the only precursor of mar- ket tops, it is generally the precursor of the more dangerous sort of decline. Dow-Jones Industrials (1200 p.m.) 994.21 S & P Compo (1200 p.m.) 101.73 ANTHONYW. TABELL DELAFIEW, HARVEY, TAB ELL Cumulative Index (5/20/76) 601.66 AWT/jb No statement or e)(prCS!on of opinion or ony other matter kerCH) contolned 15, or IS 10 be deemed fa be, directly or Indirectly, on oHer or Ihe soliCItation of on offer 10 buy or sell ony secutlly referred fo or mentroned The matler rs presented merely for the conver,enc& of the subscrrber Whrle we belreve the sources of our mforma- tron to be relrable, we m no way represent or guorantee the accuracy thereof nor of the statements mude herein Any action to be taken by the subscriber should be bosed on hIS own investigation and InformatIon lonney Montgomery Sco't, tnc , os a corporation, end Its offIcers or employees, moy now hove, or may later toke, posItions or trades tn respect to any securitIes mentIoned en thIS or any future Issue, and such posItron may be dIfferent Irom any vIews now or hereafter expressed In thIS or any other Issue lonney Montgomery Scoll, Inc, whIch IS regIstered WIth the SEC as an enveslment adVIsor, may gIve odvlce 10 ,ts Investment adVISOry ond other customers Independently of any statements made In thIS or In any ather Issue hrrther Informalron on cny securIty mentIoned herein IS avcllable on request

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Tabell’s Market Letter – May 28, 1976

Tabell’s Market Letter – May 28, 1976

Tabell's Market Letter - May 28, 1976
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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 May 28, 1976 We stated in our letter of AprIl 30 that time is slowly beginning to run out for the mar- ket ins ofar a sups idea cJion.is ,con.cerDed …,.,l'!r-9dE; ,.pt.!r,! dJ!1g..wJthin-,.rsJrif.t.ed rngl'l.s\IQ1,.a I the one that has eXIsted swce late February do not, historically, last all that long, and, If the current trading range is not to be ultimately VIewed as a penod of distribution, it will have to be penetrated with some decisiveness on the upside before too much more time has elapsed. Thursday may come to be known as the day when time finally ran out. The pentration of the 1010970 trading range took place — but on the downSide rather than the upside,with the 965 level bewg reached intra-day before a modest rally at the close. This downSide breakout, coupled with the desultory breadth action which has characterized the market Since late March, strongly suggests, at least in the conventional wIsdom, a correctionary phase. Downside objectives center around the 910-860 range in terms of the Dow-Tones Industrials and around 91 for the S & p 500 stock composite. Both these objectives coincide with strong support levels. As we said above, these conclusIOns are the obvious ones m terms of conventional wisdom. However, a few additional factors must be noted. The first of these is the pOSSIbility of false breakout. Breakouts from tradwg ranges more often than not foreshadow the direction of the next move. If they invariably did so, however, technical work would be a perfect forecaster, and we, certainly, have never asserted this claim. False breakouts most often occur when the eXIstence of a tradwg area is widely known and wide- ly observed and this is, we thInk, the case in the present instance. Thus, the possibility, at l';j.,e)(t't;;th.atth.rT1ket,haym(L n.cved down…9…pJt,.may sharply reverse Itself and returnt the trading range. — – – — – ThIS leads us to the other method in which the market might surprIse the conventional wisdom, i.e., by going down further than the technical pattern mdicates. We confess we consider this eventuality as hIghly unlikely. The sort of distribution that would foreshadow a major declIne sImply does not eXIst w ind,v,dual stock patterns at the moment, and the 860-850 level in the Dow-Jones IndustrIal Average provides massive support which should be sufficient to halt a ny declIne. This leads us to a dIScussion of context. If a decline were to ensue from this point, we think it would have to be viewed as an wtermedlate-term declIne WIthin an ongoing upward cycle. Indeed, a decline to the support levels mentioned above would put the market in a much healthier technical pOSItion than it IS in at the moment and could be the base for a new upward leg which would carry to new highs. This, m turn, might have considerable long-range significance,as it would break the Dow deciSIvely out of the thIrteen-year trading range WhICh we have referred to so often, presentwg important long-range cyclical connotations. The final powt to be made IS the generalIty that, by and large, Wdlvldual stock patterns do not look anywhere nearly as bad as do the patterns on the averages or general market ind,cators. 1\ few stocks have mInor tops, to be sure, but they are defmitely minor In scope,and a vast horde of ISSUe-S show -little s;;ggestlOn 6rany great downsicte-';ulneraSllItY. – 1\11 of whIch leads uS to the basic question as to whether Investment polIcy should be altered in the light of existing techmcal cIrcumstances, 1. e., should equitIes be sold here In the hope of repurchase at lower prIces later on. ror the ogIle trader who IS WIllIng qUIckly to reverse h,S policy should' conditions change, such actIOn mIght be appropnate. ror the longerrange In- vestor, however, we thInk that the better policy would be to ride out the storm. Dow-Jones Industrials (1200 p. m.) 967.99 S & P Compo (1200 p.m.) 99.66 Cumulat,ve lnde)' (5/27/76) 5fl3.fl5 I\WT/jb I\NTHONY W. TI\!lLLI. DJLllrIrl.D, HI\RVI;Y, TI\!lJLL No ,Iolemenl or expreston of optnlon or any olher moiler herein conlalned IS. or ! to be deemed to be, dtrectly or Indtrectly, an offer or Ihe soltltotton of on offer to buy or sell any eunty referred 10 or menttoned The matter tS presented merely for Ihe converdenct of the subscrtber WhIle oNe bel(cve the soures of our (nforma lIon to be feltable. we In no way represent or glJarantee Ihe acclJ(ocy thereof nor of the stotements mude herem Any octlcn to Iw token by the lJb5cnber sholJld be based on hiS own tnVesligotton and tnformotlon Janney Montgomery SCali. Inc. as 0 corporation, and lIS officers or employees, may now have. or may later toke. paslhaM or trades In respect to any securities mentIoned In thIS or any future Issue, and such posillon may be different from any views now or hereofter expressed In this or any other Issue Jonney Montgomery Scott Inc, whlh IS regISTered With the SEC as on Investment adVisor, may give adVIce to .t Ivestment adVisory and olhel customers Independently of ony statements modc In thu or In any olher Issue Further information on any setuflly menlloned herein IS available on req\..est

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