Tabell’s Market Letter – August 13, 1976

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