Viewing Month: October 1976

Tabell’s Market Letter – October 01, 1976

Tabell’s Market Letter – October 01, 1976

Tabell's Market Letter - October 01, 1976
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. ; ,,I, , ., – – – TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCI( EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE October 1, 1976 Guriollser and Curiouser! 11 …..,.I'–,…——–..,….. … …. Lewis Carroll —–…,.. ——….,……,..-'Alice'sKdvefituresfnWonderIana-4 .– Alice's famous phrase to describe unusual happenings comes readily to mind when ob- serving the recent behavior of the stock market. A week ago Wednesday, as we all know, the Dow, for no readily apparent reason, soared 20 pOints to attain, at 1014.79, a new 44-month high. The rise took place from a not-particularly-oversold condition and, indeed, prior to its occurrence there was little in the technical picture that would lead one to expect such behavior. The rally, however, turned out to be strictly a one-day phenomenon. Although it was extended on the morn- ing of the following day, the market then turned down and closed slightly lower. With the excep- tion of a modest advance this Monday, every day since has been a declining day, and the dynamic September 22 rally was counterbalanced by a sickening 18-point drop on Tuesday. While expressing last week our willingness to assume the validity of the upside break- out, we noted that there were a number of factors which were, at least, moderately questionable. Breadth, we noted, was subpar on the advance and it has remained abyssmal ever since. The Transportation Index, while it rose along with the Dow a fortnight ago, failed to post any sort of meaningful nevi high. LIkewise, our Cumula tive Index failed on the rally to equal either its July high or its slightly lower peak of last February. The ostensible reason for Tuesday's sudden drop was the announcement of an August decline in the NBER's composite of 12 leading indicators. This brings up another curious paradox which, undoubtedly, would have appealed to Lewis Carroll. If one examines the list of the 12 indicators which go to make up this composite, one discovers that one of them is the S & P 500 C)C k in dex . If.Qne. follo;'sh is.r.eJ'-s9ningto.itslog ica l.c onc Iusion,,the–stock ma!'ket—-de0!!ned—-,I, .. at-feast' in 'part, because the stock market declined. It is also worth noting that, in and of itself, a one-month drop in the leading-indicator composite is not, historically, a cause for weeping, wailing and gnashing of teeth as far as either the economy or the stock market is concerned. In the leading-indicator expansion between 1961 and 1966, for example, there were no fewer than nine one-month drops before the eventual peak was reached, and the 1966-68 expansion saw five. In the series most recent rise from 1970 through 1973, three one-month drops occurred, all of them, interestingly, fairly early in the cycle. We are looking, to borrow a cliche from the sportswriting profession, at a market which has been unable to put it all together. Take, for example, the matter of breadth. Our week- ly breadth index has provided a classic confirmation of the new high posted in the major averages, but our daily index has, albeit marginally, failed to do so and remains lower than it was last Feb- ruary. Yet, throughout June-July, while the Dow, at least, was doing nothing whatsoever, both breadth indices decisively penetrated their downtrends and, along with the Cumulative Index, moved up at a rate considerably better than that of the Dow. In the case of the Transportation Index, its failure to post a new high constitutes a lack of confirmation in the classic Dow theory sense and, yet, what are we to make of the fact that the carriers were soaring to new peaks last summer at a time when the Dow was stagnating What we are saying, really, is that if last week's rally was insufficient to change the atmosphere of stagnation which has enveloped the market since last spring — and this apparent- ly is the case — then this week's decline has, likewise, failed to resolve the dilemma., We are on ,- '- back-to what'is'reallytne'J)asTc 'qu e-stl wl1icn'iS'wh-ether flj'e narrow trading range of recent months constitutes a distributional top or a potential upside continuation pattern. If the former is the case, then the downside implications have, by now, assumed major proportions. The problem is as we suggested last week, there is very little, if anything, to suggest weakness of those pro- portions — moderate weakness in certain areas, yes; a broad decline, no, at least at the moment. As always, the market ultimately will tell its own story, either by extending last week's rally or exhibiting further deterioration. Until the latter event occurs, however, we think a fairly positive stance is the proper one. Dow-Jones Industrials (1200 p.m.) 986.29 S & P CompOSite (1200 p.m.) 105.35 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (9/30/76) 613.82 AWT/jb No statement or expressIon of op'nion or any other moiler herein contCllned I'. Of 1 to be deeml!!d to be, directly or indirectly, on offer or the soliCitation of on offer to b…. y or sell ony security referred to or mentioned The matter IS presented merely for Ihe convetrence of the subSCriber While oNe believe the sources of our rnforma tlon to be rehoble, we In no way represent or guarantee the accuracy thereof nor of the SlOTemenTS mudc herem Any ochon to bc token by the subSCriber hould be based on hiS own Investigation and Information Janney Montgomery Scali, Inc, as a corporaTIon, and ItS offrcers or employees, may now have, or may later Toke, positions or Trodes m respect to ony secunTles mentioned In thiS or any fuTure Issue, and such position may be different from any views now or hereofter e)'pressed In thiS or any other Issue Janney Montgomery Scali, Inc, which IS registered WITh the SEC as on Investment adVisor, may give adVice to Its Investment odvuofy and other customers Independently of any stotements mode In thiS or In any other Issue Fulther InfOrmaTion on any sccunty menTIoned herein IS available on request

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Tabell’s Market Letter – October 08, 1976

Tabell’s Market Letter – October 08, 1976

Tabell's Market Letter - October 08, 1976
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JESEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE October 8, 1976 f..'….,,….., .Re'glllarcJ-eldE!r'orLtlljsleot!.wi!l,.!l.ubt be aware of our view that the essence of the problem facing the ster today is the determination of the nature of th3line- formation or'tri3'i!ln(;–I-1 range which has contained the Dow-Jones Industrial Average since early this year. The question re- lates,quite obviously, to whether this formation constitutes an area of distribution or a continuation or resting pattern preceding an onslaught to new high ground. According to the classic tenets of the chart-reading art, the final determination of the answer to such a question lies in the direction of the breakout from the trading range in question. This Simplistic approach has tended to have less validity in recent years as more and more people have become aware of, a) what a breakout is, and b) what it is supposed to signify. In any case, even the earliest writers on the subject recognized the fact that some follow-through to a breakout is necessary before a final determination of the mar- ket's direction can be made. The past few weeks of trading have provided a rather perfect case in point. On Wednesday, September 22nd, the market, in a 20-point advance, moved out of the trading range on the upside to achieve a new high for the year and extended the advance in trading early the next day. After a day and a half, the whole thing was over, and the market turned down, moving sharply lower and back in to the trading range between, roughly, 960-1000 which had confined the Bow since February. We expressed at the time some degree of confidence in the upside breakout for reasons with which we will not bore the reader here. That confidence, quite obviously, in the light of 20-20 hind- Sight, proved to be misplaced. Now, of course, we have the sequel. In a move as obvious as the previous one had been, but in the opposite direction, the Dow plunged this week to a new eight- month low, thus achieving the mirror image of its upside penetration on the downside. As previously -.ILI1—1Alas -the,ca,ge.,therewas'.Jloltal),'..l'3C.()f.fllcLW.tII9cJh..YjQ!4,fi.E()l.!!lIW- Wednesday, and a like advance Thursday afternoon. The question at the moment, course, whether it is equally as appropriate to ignore the current action as it was to ignore the past strength. The Situation Is further complicated by the fact that all of the above refers to the DoW-Jones Industrial Average. If we examine, for instance, the Standard & Poors 500, we find that this index moved to new highs as long ago as last July, declined, and then extended the advance into new high territory two weeks ago. The present drop brings It back to an area of strong support and, most interestingly, the small distributional top which has formed on that index does not suggest a pene- tration of the February-June lows. Similar action Is being shown by our Cumulative Index of the action of all New York Stock Exchange-listed stocks which currently, at 604.10, is considerably above its June low of 577 . 52. It is really not surprising that all this should be so. We have pointed out in the past that only a minority of Issues possessed Significant distributional tops and that these tops were, in fact, minor in nature. The problem is that these minor tops exist largely In the cyclical, heavy-industry stocks, which had been the bull market leaders and were, obviously, entitled to some correction of their advance. The fact that there is a concentration of these Issues in the Dow makes it not unusual that that index should be performing worse than the rest of the market or producing a pattern which, when viewed by itself, looks rather ominous. None of the above is meant to serve as an argument against a further extenSion, short term, of the decline. Indeed, we think this is the most likely course. As we suggested above, some degree of distribution does exist on most averages and the deterioration of the past two weeks does suggest -that-lower'prices are, in.fact, a ,distinct possibility.On any.uch.declineit,isikey-,!he, will overstate the real extent of the damage just as It has done so far. The real question is, or ought to be, whether there still exist individual stock patterns which suggest that the underlying security represents an attractive investment vehicle at current prices. The answer to this question is yes, in a significantly large number of cases. We suggest this is a fact to keep in mind during a period when the nature of construction of many market Indices is as much a determinant of how a given index behaves as what the stock market is really doing, Dow-Jones Industrials (1200 p.m.) 959.77 S & P Composite (1200 p.m.) 103.19 Cumulative Index (10/7/76) 604 10 AWT/jc ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or e)fpreSlon of opinion or any other matter herein cantolned IS, ar IS to' be deemed to' be, directly or II'ldll'ectly, an affer ar the sail citation of an offer to buy or el/ any secunty referred to or mentioned The matrer IS presented merely for the conver-Iena. of the Sub5rlber While we believe the sources of our Informalion to be rel,cble, we In nO' wcy represent er guarantee the occ;uroc;y thereof nor of the statements mude herelrl Any octlen to be taken by the subscnber should be based an hi! awn Investlgatlan end Infarmotlan Janney Montgomery Scott, Inc, as a corporCltlan, and Its offlcers or employees, may now have, or may later take, positions or trades Irl respect to any sec;unlles mentlened If'! thiS or ony future Issue, and uch pOSitIOn may be different frem any …..,ews new or hereafter expressed In tt-IIS or ony other Issue Janney Montgomery Scell, Inc, which IS registered With tht! SEC as an Investm(!nt adViser, may 9,ve adVice 10 Its Investment adVisory and othe! customers Independently of any statements mode In thiS or In any other Issue Further informatIOn en ony security mentlened herelll IS available an request

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Tabell’s Market Letter – October 15, 1976

Tabell’s Market Letter – October 15, 1976

Tabell's Market Letter - October 15, 1976
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-.- – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – ; ; ; , – – – – – – – – – – – – – – – – – – . TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY OB540 DIVISION OF MEM8ER NEW YORK STOCK EXCHANGe, INC MEM8ER AMERICAN STOCK EXCHANGE October 15, 1976 By this week, the rather vicious decline which ha s engulfed the stock market had pro- — . gressed far enough for a few of the usual fireworks normally seen in the advanced stages of downswings to develop. On Wednesday the drop was interrupted by a IS-point rally in the Dow. Like mosfadvances iii recenCweekii';''rCdispIayed-a s ingularlackOf'S'taYlng-power; aiiCrrnuts-day',nraClifig –1- saw the decline entirely reversed with a twelve-point drop. Breadth action, ironically, was better on the decline than on the advance. Wednesday saw only 1022 rising stocks, an unusually low number for an advance of that day's m1 agnitude. By contrast, the figure of 985 declines on Thursday was, historically, out of line in the opposite direction. We stated above that fireworks were to be expected at this stage, since drops like the present one always convince a few investors that the apocalypse has arrived and that stocks should be dumped at any price. Our own view, as readers are aware, is somewhat more sanguine, but we do think some attempt should be made to pinpoint how far the weakness might carry. In the table below, we have performed an exercise which has proved useful in the past — that is attempting to pinpoint individual downside targets for each of the 30 components of the Dow-Jones Industrials. We have given both an optimistic and a relatively pessimistic reading to each stock, and we have indicated with the letters 8 and T prior to each objective, whether the read- ing is based on a support level, a distributional top, or both. Adding up the figures and dividing by the Dow divisor gives readings of 883 and 809, respectively. It should be noted that a rule of thumb which has been fairly accurate in similar past attempts has been to add 5 to the results due to the fact that all stocks generally do not reach their bottoms at exactly the same instant. This translates to a downside target in the area of 927-850. It will be noted that we are at the moment fairly close to the latter objective and that the former objective, which we confess we regard with some scepticism, coincides with major support. The strong suggestion at the moment is that we are looking at an inter- mediate-term correction rather than a full-scale bear market. Note The above comments are based on I—–t'echntcal factors. Further information on all companie'S'is availa151e o-n re-que-st. Close 10/14/76 Downside Objectives Allied Chemical 36 8 34 T 28 Aluminum Co. 53 8 52 T 48 American Brands 41 8 37 8 35 American Can 36 8 33 8 30 American Tel and Tel 60 8 58 8 54 Bethlehem Steel 37 T 35 S 33 Chrysler Corp. 19 S 18 S 15 Du Pont 119 S 118 T 108 Eastman Kodak 86 T 85 T 75 Esmark Inc. 31 T 28 T/S 24 Exxon 54 S 47 S 45 General Electric 51 S 48 S 46 General Foods 33 S 30 8 28 General Motors 71 T 67 S 65 Goodyear 22 S 21 S 18 Inco 31 T 28 T 24 International Harvester 27 T 26 S 24 International Paper 66 S 60 T/S 50 Johns-Manville 29 S 25 S 23 – – – n – Miimesota-Mining-&'M1lfiufactUrihg-6-1 – e– T''59- –…….S55—–; Owens-Illinois 51 T 48 TIS 40 Procter & Gamble 92 T/8 88 8 85 Sears, Roebuck & Co. 65 T 60 T;S 56 8tandard Oil Co. of California 35 8 33 8 30 Texaco 27 S 25 S 23 Union Carbide 58 T 58 S 56 United Technologies 33 S 30 S 28 U. S. 8teel 47 T 42 T 40 Westinghouse 17 8 17 8 15 Woolworth 21 T 19 8 17 DJIA 936 883 809 Dow-Jones Industrials (1200 p.m.) 937.08 ANTHONYW. TABELL S &-P- Compos Ite (12.00 pm) J 00.94 DELAFIELD, HARVEY. TABELL ooY50CumuJ.q,N'c;t;,i.i!!Yi'te,ell';liJl'r…ur)i\t''rot'11!1l''0i0eY',-,anvJ,f.!t7f.w-) menl ..1e 3'r herein -me molter n contOlned presented IS, or IS 10 be deemed 10 be, merely for the converlentt of directly or mdnec1!y, the subscnber While on we offer or Ihe &ol1cllollon of believe Ihe sources of our on offer Informa- ,.-c. fa be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mode herein Any action to be token by the subScriber should be AWT /11d on hiS own Investlgallon and Informahon Janney Montgomery Scott, Inc, as a cOrporation, and Its officers or employees, may now have, or may loter toke, positIOns or trades ,n respect to any securities mentioned In thiS or any future Issue, ond such POSition may be different from any views now or hereafter expressed In thrs or any other Issue Janney Montgomery Scott, Inc, whICh IS registered With the SEC as on Investment adVisor, may give adVice to lIs Investment adVISory and other customers ,dependently of any statements mode III 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 – October 22, 1976

Tabell’s Market Letter – October 22, 1976

Tabell's Market Letter - October 22, 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 – October 22, 1976 Predictably enough, the stock market, during the six trading days ended Wednesday, -!nterptedJt sharp slide to new lows and staged a modest recovery. We'use the phrase predict- ably-enou'gh'becaGSecteclines as s'teep as the one'whidh endedforthe tiine being; at-least, OIl L , – October 12 invariably tend to be interrupted by correctionary rallies. Even the most casual ob- server, however, must have noted the relative torpor of the advance. Breadth was unimpressive on the rally as was volume,which slowly dried up as the market moved ahead. Upside volume figures were also relatively unimpressive. Moreover, at Wednesday's highs, upside objectives of the tiny base formed had been reached. All of this set the stage for the sharp decline late Thursday and early Friday. None of the above is intended to suggest that it is totally impossible for a market bottom of some importance to occur around current levels. It merely suggests that the evidence accumulated so far does not point strongly to this being the case. For a short-term bullish forecast, further evidence would have to be provided. This could take the form of continuing backing and filling at or around current levels on the Dow, broadening the potential base formation and permitting the formulation of higher upside objectives on a short-term basis. One of the fashionable reasons advanced for the market's slide in late Septemberearly October has been supposed investor disappointment with the slowness of the economic recovery. In this connection, one of the disappointing figures regularly cited is the slow increase in capital spending which has, to date, advanced only moderately from its recession lows. The NewJork Times took up this point in a rather interesting article in Thursday morning's financial section in which it examined the possibility that the feeble recovery was due to a secular slowdown, i.e., that superimposed onthe normal business cycle there exists a long-term secular shift in the economy's rate of growth which caused the recovery to be less vigorous than previous early-business-cycle expansions. The Times article cited a number of factors in support of this thesis. One is demographic, and it is undoubtedly true that a slowed-up birthrate will have some effect on the longterm economic picture although not one that could not be overcome by expansion of per capita productivity. Other reasons cited are a slowdown in technological innovation and a slowed rate of growth in the so-called sun belt area where economic expansion has been concentrated in recent years. There is, indeed, a degree of validity to all of these arguments. We would, however, be somewhat reluctant to use them as input to a stock market forecast. Indeed, it is conceivable that the stock market has, for the past half dozen years, been forecasting precisely what it has now become fashionable to talk about in economic circles, that is, a secular slowdown. It is a documented fact that the stock market on a cycle-to-cycle basis tends to lead the business cycle. It is certainly not impossible that it also does so on a secular basis and, as we hav repeatelly p,ointed out the secular.trend.oCthe.stock,market for.thepast.six years.has,. quite obviously, been flat. A great deal of the supposed impedance to a vigorous economic recovery, in other words, may already be built into a stock price structure which, as of a year ago, was valuing corporate profits at one of the lowest levels recorded in this century. Changing economic conditions are, and will continue to be, a reality and one which should be faced by investors. We think, however, that using these changes as an excuse for intermediate-term stock market movements is an exercise likely to prove futile at best. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index 00/21/76) AWT/jb 941. 66 100.38 592.86 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expression of opinion or any other rnotter herem conlolned IS, or IS 10 be deemed to he, dcrectly or indirectly, on offer or thc SOIICI'ollon of on offer to buy or sell ony secUrity referred 10 or mentioned The moiler IS pre5enled merely for the (onve/'llenc!! of the subSCriber While He believe the sources of our Informe- lion 10 be relmble, we In no woy represent or guarantee the accurat)' thereof nor of the statements mude herein Any achon to be token by the subscTlber should be based on hIS own Inveshgollon and Informotlon Janney Montgomery Scott, Inc, as a corporallon, ond ,Is offIcers or employees, moy now have, or may later toke, poSItions or trades In respect 10 any s.ecuntles men,oned In thIS or any future Issue, and such posItIon may be dIfferent from any VIews now Of hereafter expressed m thIS or any other Issue Jonney Montgomery Scott, Inc, whIch IS regIstered WIth the SEC os 0'1 mvestment adVIsor, may gIve adVIce to ,ts Investment adVIsory and othel customers Independently of any statements mode In 1TllS or In any other Issue Further ,formotlon on any security mentIoned herein IS ovallable on request

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