Viewing Month: August 1976

Tabell’s Market Letter – August 06, 1976

Tabell’s Market Letter – August 06, 1976

Tabell's Market Letter - August 06, 1976
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TABELL'S MARKET LETTER 909 STATE ROAC, PRINCETON. NEW JERSEY 08640 DIYISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE August 6, 1976 —''''-''''–''',,—;T'h- e' m,(rJet ''ch'a-nffle.itrial t'w e e KS'trading -to- re s 01v,,–'Th1;di reinmapose(rbythelong-'—I trading range between, roughly, 960 and 1010 that has contained the Dow-Tones Industrial Average since back in February. Whenever a trading range such as this one takes place after a sharp rise, there is always the possibility that it constitutes potential distribution. There are a number of factors, however, which suggest that the eventual resolution could be on the upside rather than the reverse. We have enumerated some of these factors in past issues of this letter, and others are comparatively recent developments. The purpose of the current exercise will be to try to summarize some of them. Action of the Utilities. It is only necessary to inspect the chart which appears every day in the Wall Street Tournai to note the fact that, while the Industrial Average has been moving sideways, utilities have been moving ahead to new highs. This, we think, in a market especially sensitive to mterest rates, IS not without significance. It is also worthy of note that most utilities have a bit of room on the upside before reaching overhead supply levels which would be a logical stopping place. The Election-Year Pattern. We remarked quite some time ago that this pattern generally calls for higher prices in the second half of an election year. Were this pattern to hold, the eventual penetration of the trading range should be in an upward direction. 1- The Gumulative -which measures Index. We noted a the action of all New couple of weeks ago the relative improvement of this index, York Stock Exchange-listed stocks, vHf'-a-vis tne oUi',,-r averages. Th,s Improvement continues and should be regarded as a positiv(' factor. HIstOry of Similar Trading Ranges in the Past. We covered this point in our letter of Tuly 2 when we suggested that the historical record strongly favored long trading ranges, such as the current one turning out to be consolidations rather than reversals. We noted at the time that 11 of 15 similar consolidations occurring after up-markets turned out to be part of a continuation pattern. The Still Relatively Low Level of Stock Prices. Despite the relatively sharp advance from 1974 lows, the average stock, with economic recovery now well underway, has seen a comparatively low mark-up in terms of the price being paId for underlying earning power. We noted this fact last week when we suggested that, with the single exception of 1953, no major correction has taken place at a time when corporate earnings were being valued at as Iowa figure as is reflected in current prices. Individual Stock Patterns. That individual top formations exist at the moment cannot be denied. However, with a very few exceptions, they are relatively minor in nature and suggest nothing more than a move back to major support levels. Such tops as do exist would be entirely consistent with a sort of rolling readjustment which could see indIvidual stocks correct and consolidate while others moved ahead. Meanwhile, the vast bulk of issues show little sign of technical price vul- — – – –. — – -'—– – – — – — — – We admit to the view that all of the above factors taken concurrently constitute a conVincing, if not conclUSive, case. We would certainly be willing to overlook any or all of them were the market to begin to demonstrate the signs of serious Internal deterioration. The point IS, we think, that the factors above and others suggest that it would be desirable to wait for such deterioration rather than antICIpate it. Dow-Tones IndustrIals (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (8/5/76) AWT/jb 983.28 103.55 615.10 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or expression of opinion or anv olher motter herem contOlned 15, or IS 10 be deemed to be, directly or ,ndlfectly, on offer or the SOllcllollon of on offer to bvy or sell any security referred to or mentioned The motter IS presented merely for the convellenCf! of the subSCriber Whlle.,e believe the sources of our mformatIon to be fellable, we In no way represent or guoronlee the accuracy thereof nor of the statements mude herein Any action to be tai(en by the subscriber should be based on hl own Investigation and Informatlo'l Janney Montgomery Scott, Inc, as a corporation, and lIS offICers or employees, may now have, or may later toke, positions or trades In respect to any securl!les mentioned In thiS or any future luue, and slIch posItion may be different from any views now or here;lfter evp'!!ssed In thiS Of any other Issue Janney Montgomery Scali, Inc, which ' registered With the SEC as an Investment adVisor, may g,ve adVice to Its mvestment adVISOry and othel customers mdependently of any statements mode In thiS or In any other Issue Further Infcrmotlon on any security mentioned herein IS available on request

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Tabell’s Market Letter – August 13, 1976

Tabell’s Market Letter – August 13, 1976

Tabell's Market Letter - August 13, 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 AMEAICAN STOCK EXCHANGE August 13, 1976 -f!e! close to,tw..dies..2Lcommenti!lg on the stock market, one galns, if nothlng e-lse, a familiarity with the cliches and platitudes 'of financial';fifing', and one'suchcllcneii,-t!1e-' phrase shifting leadership. This one has been applied, with some frequency, to the recent stock market and, actually, not without justifi cation. It is thus, perhaps, worthwhile to examine exactly what sort of leadership shift has been taking place. The following table is based on the relative price action of the major S & P industrial group averages. Admittedly, somewhat subjective, it separates the industry groups that have been in uptrends relative to the S & P 500 from those that have been in downtrends relative to the market in, roughly, the mid 1975-early 1976 period. It then further tries to identify whether there has been, in fact, deterioration or improvement since that time. Uptrend Uptrend Uptrend Downtrend Downtrend Downtrend No Some Serious Pronounced Some No Deterioration Deterioration Deterioration ImErovement ImErovement ImErovement Aerospace Auto Chemicals Banks-NYC Banks-Outside Brewers Air Transport Bldg. Supplies Aluminum Cont.-Paper Auto Acces. Hotel-Motel Farm Equip. Leisure Machinery Radio-TV Mfg. Machine Tools Rubber Radio-TV Toys -& Games Broadcasters Soft Drinks Truckers Meat Packing Forest Prod. Motion Pict. Paper Disc. Stores Variety Chains Shoes Steel Text11es- Cont.Met&G1. Copper Elec. Equip. Electronics Ins ta 11. Fina n . Mobile Homes Office Equip. Offshore Drill. Oil-Domestic Oil-Int'1. NYC Gold Mining Cosmetics Liquor Drugs Restaurants Canned Food Dept. Stores Foods-Dairy Groc. Chains Packaged Food Mail Order Home F'urnishoDacco Pollution Publishing Soaps ……. Apparel Oil Well Mach. Textlle- Ra 11 Equip. Products Real Estate Saving & Loan Vending A few conclusions immediately present themselves. Interestingly enough, the groups that have been in uptrends with no Sign of weakness are, with a few exceptions, small groups which attract a comparatively small amount of broad investor interest. It is, also, inter- esting to note the inclusion in the list of groups which had been in uptrends but are now showing some signs of deterioration, the bulk of the Smokestack-America stocks which had been market leaders throughout the final phase of the bear market and the first two phases of the current mar- ket advance. This coincides with downSide breakouts from minor tops in the past few weeks by a goodly number of such issues, particularly in the steel, paper and copper groups. The word minor should be stressed here, however. In most cases, the downside objectives suggest nothing more than strong support levels and indicate no deterioration of the very-long-term major -0 ptrends. ….!. – —–1.. It is on the right-hand side of the table, of course, that we should look to try to identify new leadership. Notable by their presence in the downtrend group showing pronounced improvement are energy-related stocks such as oils and oil well equipment. Likewise, prominent are interest-rate-related stocks, such as banks. Insurance and Utility stocks, although not in this particular compilation could also be included in this category. The relative strength improve- ment and the point-and-figure patterns of the indiVidual issues involved suggest that stocks of this type deserve an increased emphasis in portfolio policy. Dow-Jones Industrials (1200 p. m.) 985.70 S & P Compo (1200 p.m.) 104.04 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (8/12/76) 570.71 No stQtement or expreslon of opInion or any other to buy or sel! any security referred 10 or mentioned matter herein The molter IS contOlned presented IS, or IS 10 b merely for the deemed to be convefllcnce of tdhierecsutlbySCorribienrdirWehcltlly on oNe offer or believe the soilcltotlon of on offer the sources df our Informa- hon to be rehable, we In no way represent or guarantee the accuracy thereof nor af the stalements mude herem Any action to be taken by the subSCriber should be based on hiS own mveshgatlon and information Janney Montgomery SCott, Inc, as a corporation, and Its officers or eMployees, may now have, or moy later toke, POSitiOn! or trades In respect to ony SeCUrities menlloned In thiS or any future Issue, and such position may be different from any Views now or hereafter expressed In th or any other ISsue Janney Montgomery Scott, Inc, which IS registered With the SEC as en Investment adVisor, may give adVice to Its Investment adVisory and othel customer. Independently of any statements mode In thIS or In any other ISsue Furlher information on any seOJflly mentioned herein IS available on request

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Tabell’s Market Letter – August 20, 1976

Tabell’s Market Letter – August 20, 1976

Tabell's Market Letter - August 20, 1976
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,f \ L TABELLS MARKET LETTER 909 STATE ROAD, PRINCETON, NEW .JERSEY 08540 DIVISION OF MEMBER NEW VORl( STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – -! Random thoughts in a desultory market. August 20, 1976 On the election and the stock market — This has been a bad summer for those who love to explain daily stock market fluctuations as being the market's response to headline news events. Most of the headlines have been grabbed recently by the two political conventions and by speculation as to the outcome of the Presidential race. It is, however, rather difficult to explain stock market action in the light of these events since, as we are all too painfully aware, the market over the past two months has done absolutely nothing. The success of Mr. Carter in the polls, for example, has revealed, on days when the market went up, that Mr. Carter was pro-business and, on days when the market went down, that Mr. Carter was a big spender. Duly, when the market declined on Thursday, we were told by no less an authority than the New York Times that part of the rea son was Mr. Ford's selection of Senator Dole. We consider this a bum rap on the Senator, especially since the poor man will have troubles enough if he actually succeeds in being elected Vice-President. On Minnesota Mining — As many investors are aware, the first new name to enter the DowJones Industrial Average in 17 years joined the circle on August 9th when Minnesota Mining and Manufacturing Company replaced Anaconda in the venerable 30-stock index. There have actually been a fair amount of substitutions over the years. Among the more lovable names that have been included in the index at various times in the past are Distilling & Cattle Feeding, U. S. Cordage Pfd., Central Leather, Pacific Mail Steamship and Standard Rope & Twine. The possible results of this change are probably of interest only to numbers freaks like ourselves. As most people are aware, the Dow uses an arbitrary divisor which is changed when splits or substitutions take place. Since Minnesota Mining sells around 62 and Anaconda at 28, the substitution caused the divisor to increase to 1.504 from its former 1.473. -Th iinediate result will be an increase in the volatility onhe-Index. A–TOrrse!'-ih-Nllnnes-oUI L Mln1ng-ewill cause the Dow to rise by 4.12 pOints whereas a 10 move in Anaconda would have caused a move of only 1.9 points. Such are the delightful uses of statistics. On the suitability of indicators — There has been some comment here and there about the low level of odd-lot short sales and the conclusion that this low level bears a negative inference for the stock market. This inference rises from a widely held but badly mistaken assunption about the nature of technical indicators — the assumption that an indicator which, by behaving a certain way, tends to reliably forecast bottoms, by behaving in the opposite way, reliably forecasts tops. By and large, it just ain't so. It is absolutely true that sharp short term rises in odd-lot short selling have generally occurred around a period of market bottoms. There is, however, precious little historical validity to the indicator as a tool for forecasting peaks. On the barbarous relic — Wednesday afternoon's London fixing this week saw the price of gold hit a new low at 108.10 an ounce. This is a decline from a high of 197.50 an ounce which, ironically, occurred the day before the U. S. Government, in its infinite wis dom, did U. S. investors a questionable favor by allowing them legally to own the stuff. Gold attracted a good deal of attention when its price rose from 35 to just under 200 an ounce at a time when the stock market generally was heading due southeast. Its current 90 slide, coming at a time when the Dow-Jones Industrial Average was moving from under 630 to over 1000, may serve to diminish a bit of the luster. On why it is all taking place — Those who are pained by the recent sideways action of the stock market can take at least partial comfort from the fact that it, or something like it, was probably inevitable .. In the.first .two.months, of.19(6.,.the.Dow,advance!Lfrom a.level of.852.to.one.of995.. . . Annualized; if one care to work it out, this is a percentage change rate of 153 per cent.-'Now we-all know that markets do not tend to go up 153 per cent in a year's time. Therefore, some sort of consolidation or correction which would produce a more sustainable rate of advance was obviously necessary. By contrast, the annualized rate of advance over the December-July period works out to a figure of around 40 per cent. That annual rate of change is, indeed, relatively believable. Dow-Jones Industrials (1200 p.m.) S & P Compo (1200 p.m.) Cumulative Index (8/19/76) AWT/jb 976.89 102.73 607.29 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No stotement or expression of opinion or any alher matter herein conlolned IS, or IS to be deemed to be, dHeclly or Indirectly, on offer or the sollcltotlon of on offer to buy or sell anr. security referred to or menl!oned The molter IS presented mer(!ly for the converlence of the subSC(lber While -Ne believe the r.ources of our information to be rellob e, we In no way repreent or guarantee the accuracy th(!reof nor of the statements mode herein Any actIOn to be toen by the subsc(lber should be bosed on hiS own inVestigation ond Informollon Janney Montgomery Scott, Inc, as a corporatIon, and Its offtcers or employees, may now have, or may later toe, pOSitIOns or trades In respect 10 any securItIes mentioned In thiS or any future ISHle, and such POSITion may be dIfferent from any VH!W now or hereafter expressed In thiS Of any other Issue Jonney Montgomery SCali, Inc, which IS registered WITh Ihe SEC (IS on Invesfm(!nf adVisor, may give advice to ItS InvesTment adVISory and othel customers Independently of any statements mode In thiS or In any other Inue Further mformatlon on any security me'ltloned herem IS available on request

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Tabell’s Market Letter – August 27, 1976

Tabell’s Market Letter – August 27, 1976

Tabell's Market Letter - August 27, 1976
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— '- TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMSER AMERICAN STOCI( EXCHANGE -..- ,,-'',' — . – … – August 27, 1976 ;!o . – .;- After five straight sessions of decline through midweek, the stock market made an – attempt to turn on Wednesday, posting an almost 8-point rally. This rally failed to hold in early Thursday's trading, however, and a plunge Thursday afternoon dropped the Dow to a new closing low. We think that the level of prices, 960-970 on the Dow, at which the current fluctua- tions are taking place, is not entirely without significance. To begin with, the trading range in which the market has stagnated since February has been defined to date, at its lower end, by the June 7th cloSing low of 958.09 which was accompanied by an intraday low of 951. 70. The index posted a cloSing low of 960.44 on Thursday and an intraday bottom of 956.37 on Wednesday. The trading range parameters thus, for the time being, at least, remain in effect. It should be noted that indicies other than the Dow were, as of this week, in far less danger of having their prior lows penetrated. The prior intraday and closing lows for the S & P 500, for instance, had been 97.97 and 98.63, respectively. On Wednesday that index never moved below 100.43 and re- mained at Thursday's close at 101.32, comfortably above its lowest level of last June. The same can be said of our Cumulative Index of all New-York-Stock-Exchange-listed stocks. It bottomed in June at the 575-577 level, and closed on Thursday at 596. This action reinforces the supposi- tion that the Dow may, in fact. be distorting the overall market picture. An elementary technical technique for smoothing time-series data, such as a market index, is the use of moving averages, and, as many investors are aware, a 200-day average is . commonly cus ed to. smooth-the-act-ion 0fthe-D0w-and-s'imHa r-indicatorsl'he-us eof-thi's,particula r length is not a matter of convenience but has demonstrated practicality in terms 6f past market cycles. In any case, at recent lows, the Dow, at least, had declined to just about the level of its own 200-day moving average which, as of Thursday. was at approximately 956. It is a not uncommon event, especially late in a bull market cycle, for a secondary reaction to carry to or close to a 200-day moving average before resuming an upswing. Again, the action of the S & P 500 and the Cumulative Index is superior. The former index at around 101 is comfortably above its 200-day average of 99.34 and the Cumulative Index even more comfortably above its 200-day figure of 576. The most significant facet of the current levels of the Dow, however, lies in their ,relationship to the long uptrend which began from a low of 577 .60 on December 6, 1974 and carried to a high, to date, at least, of 1011.21 on July 12. Regular readers of this letter will be aware that it is our pra ctice mathematically to fit a trend to long upswings such as the one just defined. Thus, in terms of mathematical best fit, the Dow has been rising at a rate of .86 points per day over the past year and one-half. The bulk of closing prices have fallen within a statistically derived trend channel some 84 points wide, the lower limit of which is now at around 967. Thus, a decisive penetration of that level would move the Dow below the channel and would call the entire upswing into question. It should be noted at this stage that, in the terms we are talking, the penetration, in order to be cons idered decis ive, would have to move well below the lower limits of the channel and remain there for a protracted period of time, say, two weeks. ' , We ,noted,in,this-space,as far bacbasJuly,2nd'that th'erehad'be'enln'the'pas't-only— 18 occurrences of a trading range similar to the one that has contained the DJIA since February. We suggested then that the current impasse could continue until as far as October 6th without setting any new records for longevity. It has, of course, continued for almost another two months since we first did the study. However, the critical levels of most major indices and especially the Dow at the present moment suggest that the dilemma may be solved fairly shortly one way or the other. Dow-Jones Industrials (1200 p.m.) S & P Compo (1200 p.m.) Cumulative Index (8/26/76) AWT/jb 962.43 101.33 596.18 ANTHONY W. TABELL -DELAFIELD, HARVEY, TABELL No statement or expression of opinion or ony olher matter herein onlolned IS, o 15 10 be deemed 10 be, directly or indirectly, on offer or the soliCitation of on offer to buy or sell any security referred to or mentIoned The moller IS presented merely for the conve('lInCE of the subcrlbef While 'f'Ie beheve Ihe sources of our Informa lion to be reliable, we In no way represent or guarantee Ihe accuracy Ihereof nor of the statements mude herein Any oc;tlon to be tolen by the subscriber should be based on hiS own Inveshgatlon ond ,nformotlon Janney Montgomery ScOll, Inc. oS 0 corporoTlon, ond Its offICers or employees, may now hove. or may later toke. poslhons or trodes In respect to any secUrities mentioned In thiS or ony future Issue, Qnd such position may be different from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS regIStered WITh the SEC as an Investment adVisor, may give adVICe to I'S mvestment adVISOry and othe, cuslomers mdependently of any stalements mode In It-liS or m any other Issue Further ,nformat,on on any security mentioned herein I' aVailable on request

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