Viewing Month: February 1977

Tabell’s Market Letter – February 04, 1977

Tabell’s Market Letter – February 04, 1977

Tabell's Market Letter - February 04, 1977
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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 February 4, 1977 The stock market definitely exhibited deteriorating action last week although that deterioration Is difficult to describe. Basically, It consisted of a continuing decline In the Dow-Jones Industrials . coupled with some mlnor.weaknessln.the broad.gene.raLrn,,-rkeLwhicJ1J1q.,,!.ntl.Li!et.,gR,t ast., .- . essentially been moving ahead In the face of a declining Dow. There Is, at the moment, no slnglelndi' cator which adequately describes the recent action of the stock market. It Is perhaps, therefore, worth while to take a look at some of the Individual components. As an Introduction to this exerCise, It Is useful to conSider various reference points. Most major market Indicators made a noticeable high sometime during last summer. In the case of the Dow- Jones Industrials, S & P 500 and the New York Stock Exchange CompOSite, that high was In September. In the case of the DOW-Jones Transportation average, the American Stock FJchange Index and our Cumula- tive Index, It was In July. Most Indicators also show a noticeable low occurring sometime during the fall, In November In the case of some Indicators, October In the case of others. All, moreover, rallied from that low up to the end of the year. Likewise, most, but not all, have formed distributional patterns since the end of the year. It Is the Interrelationship of all these various reference pOints that determines the configuration of each Individual Index's pattern and helps determine the likelihood of whether recent action constitutes major distribution or only a pause on the way to higher levels. With this In mind, let us review the major Indices. Dow-Jones Industrials .(949) This Is one of the weaker patterns. The September high barely ex- ceeded previous peaks and lasted only a few days. The November low, In tum, fairly decisively violated all previous lows so that, on the face of It, the pattern looks suspiciously toppy. We chose to disregard this action at the time since almost no other average, as of November, had a similar pattern. The rally at the end of the year failed to make new highs, and a fairly substantial distributional top was then formed. However, most downside objectives of that distribution are now being reached, and there Is minor support at present levels . . -S-&-P.50.0..(W2) .As .was.not.the case wlth;lhe.Dow.,the.Septemb.erpeak w.asa.,declslve-.ney.r hlgh.. Also In contrast to the Dow, the decline In November did not carry to a new low. The January peak .- equaled, but did not exceed, the previous high, and subsequent distribution has been minor. A decisive break below the 99 level would be required to call the pattern Into question. Dow-Jones Trans portatlon .(227) Here the co nfiguratlon Is entirely different. The July pea k continued an established uptrend,and,at the low In October, preceding by a month the low In the Industrials, down- side objectives had been reached. The rally In December car-led to a decisive new high, and the subse- quent distribution suggests a downside target of no worse than 220. Dow-Jones Utilitles.(109) Stili another cnflguratlon. No notable Interruption of the uptrend took place last summer and fall, and the Index spent the month of January achieving new peaks while the other Indices were declining. Absolute ly no new short-term distribution currently exists. The problem for this Index will be massive overhead supply which exists just above current levels, supply which dates back to the 1971-72 period. New York Stock Exchange Composite. (55) The pattern here roughly parallels the S & P 500, not surprising due to their similar construction. A downside breakout to 52 would be disturbing In the case of this Index. American Stock Exchange Index. (113) For the past two months, this has clearly been the best per- former among the Widely-followed Indicators. After a July high and an October-November double bottom, the index spurted ahead In December to well above Its July peak. Like the Utilities, It continued to rise In January, reaching a new high just a few days ago. Cumulative Index. (662) This Index, our own construction measuring the action of all NYSE-listed stocks, shows a pattern very slm!!ar to that of the Amex Index although with somewhat less volat!!lty. The December rally carried to decisive new high territory and contlnued,albeltat a-relatively tepid pace, on Into January. No distribution has yet been formed. On a long-term baSiS, this Index has an unre- servedly bullish configuration. Ab!!lty to move above the 630 level constituted a major breakout from what appears to be a three-year base formation and suggests notably higher levels. Just how to view this configuration In the light of the action of the other Indices Is the major question at the moment. If all of the above suggests that the picture Is somewhat jumbled, we cannot help It. Unfor- tunately, such Is precisely the case. It Is certainly Impossible to say, In the light of some of the action noted above, that recent market action has been all we would like It to be. However, the picture Is also totally uncharacteristic of the sort of major deterioration which one would expect If an Imoortant top were being formed. Dow-Jones Industrials (1200 p.m.) S & P Composite iI200 p.m.) 950.63 102.14 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (2/3/77) 661.62 AWT/jb . 1 No statement or expreSSion of Opinion or any other matter herein contained 15, or IS to be deemed 10 be, directly or IndIrectly, on offer or the SOllCIlolion of on offer to buy or sell any security referred 10 or menhoned The moller IS presenled merely for the conver-Ience of the ubscr,ber While Ne believe the sources of our mformolion to be rellOble, we m no way repreent or guarantee the accuracy thereoF nor of the sotements mude herem Any octlon to be token by the subSCriber should be bosed on hiS own mvestlgatlOn and Information Janney Montgomery Scott, Inc. as a corporation, and Its officers or employees moy now have, or may later to\-e, poshlon! or Irades In respect to any seCUrities mentioned In thiS or any future Issue, and such posdlon may be different from any views now or hereafter c)lpressed In 11-11 or any other IHue Janney Montgomery Scali, Inc, which IS reglsle'ed With Ihe SEC as on Investment adVisor, may give adVice to Its Investment adVISOry and othel customers mdependently of any satemenls mode m thiS or In any oher Issue Further Information on any seClJrlty mentioned herein IS available on request

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Tabell’s Market Letter – February 11, 1977

Tabell’s Market Letter – February 11, 1977

Tabell's Market Letter - February 11, 1977
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERtCAN STOCK eXCHANGE February 11, 1977 THE VESTAL VIRGINS REVISITED .. – …. rq..,… Orthe FinI.Qne-Decision – – – …. -;— —– -.-'.- -…. .- –. -…. Over thirty years of publication, this letter, we will be the first to admit, has issued its share of iC comments and forecasts that were less than helpful to its readers. We were lucky enough, however, some four years ago, to take rather violent exception with the then-fashionable one-decision school of invest- ment management — the theory which held that above-average investment results could be achieved simply by buying and holding that minority of issues with unbroken growth records, regardless of the price being paid. The collapse of the growth favorites in 1973-74 is now history and the painful experience of watch- ing these issues becoming the downside leaders of that bear market is now undeniably etched in the minds of investors. That bear market, however, came to an end over two years ago, and the bull market of 1974- 197 has ensued. It is, perhaps, time for another look at the record. To this end, we have constructed an index based on equal investment made at the 1973 high in thirteen growth favorites. () (To eliminate bias, we used a list that was actually chosen in mid-1973). Using the 1973 high for each issue as a base equaling 100, the index declined at the low of 1974 to 34.72, a drop of over 65. This compares to a 45 drop in the Dow-Jones Industrials and a 48 drop in the S & P 500. The initial bounce-back was fairly sharp, and the index doubled in early 1975, recovering to 72.98, although this performance was not a great deal better than either that of the Dew or the S & P. Since the recovery high, however, whlle the general market has been holding reasonably steady, most of the stocks in the Index have been selling off rather sharply from their recovery peaks. The Index now stands at approximately 48.34 indicating that almost two-thirds of the advance since the 1974 lows has now been given up. The Dow at this moment stands 10 below Its all-time high and some 64 above Its 1974 nadir. Comparable figures show the S & Pare 15 down from Its peak and 62 up from Its low. The growth stocks Index, by contrast, Is still more than 50 below Its all-time high and now up less than 40 from Its bottom. ,. Nor is anjfsJgl)–Q.Lrlief,i)LsIg/lt. Jj1eJellivestrengthof the gr9j11Tj!jY9rttes haJee,,-almot — uniformly subpar In recent months, and many of them have recently broken ouron tiie downside -of fairly – — substantial distributional top formations. Indeed, two of the thirteen stocks In our list are now below their 1974 lows, and a number of others are close. The dogged proponent of the one-decision theory, assuming one still exists, has not only been decimated in the late bear market, he has missed the entire subsequent bull market as well. How long can this all go on Unfortunately, excesses in one direction tend to correct themselves via excesses in the opposite direction. That growth stocks were ridiculously overvalued In 1973 Is now obvious. As the one-decision theory ultimately begins to writhe In its final deaththroes, they may become equally undervalued. At Its 1973 high, our growth stock Index sold at an astronomical 53.4 times trailing l2-months earnings — 3.4 times the multiple which then existed on the Dow and 2.85 times the multiple on the S & P. At the tall end of the 1973-74 bear market, this disparity had narrowed, but only partially. The growth stock multiple of 15.5 times earnings at that low was 2.65 times the Dow and 2.2 times the S & P. Two years later, growth stocks earnings have continued to Improve. (Indeed, every one of the thirteen issues will show earnings In 1976 well above 1972-74 levels). However, the multiple Is only 16.3 times, 1.7 times the Dow and 1.6 times the S & P 500. In our original 1973 critique of growth stock Investment, we said, It should be made clear that what is being said here Implies no criticism whatever of the fundamental merits of recognized growth Issues, suggests that they should not sell at some premium over other Issues or affirms that they cannot under any circumstances be attractive purchase candidates. The question, at the moment, Is whether that premium Is yet suffiCiently eroded. Technical work at the moment would suggest that such Is not the case, Were,however, the growth index to come close to its 1974 low (and remember somelssuesarRal- – …… 1 ready there) and general stock market levels to remain unchanged, the growth stock premium over the rest of the market would have about disappeared. This would be a state of affairs comparably ludicrous to the fifty-plus times earnings of four years ago. The point at which the last growth stock advocates gave up the ghost would coincide with the point at which the Issues finally became again attractive for purchase. The 13 stocks are – Eastman Kodak Polaroid Corp Avon Products Burroughs Corp IBM Int!. Flavor & Frag Proctor & Gamble Sea rs Roebuck Coca Cola Disney Prod Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Johnson & Johnson McDonalds Corp 931. 52 100.64 Xerox ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (2/10/77) 659.55 AWT/lb No statement or expression of opinion or ony other matter herein contaIned '5, or 15 to be deemed to be, directly or mdH('ctly, an offer or the soliCitation of on offer to bvy or sell any security referred to or mentioned The motler IS presented merely for the converlenc! of the subSCriber While we believe the sources of our Information to 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 subscnber should be bol!d on hl5 own InvestIgation ond Informolron Janney Montgomery Scoll, Inc, as 0 corporotoon, ond It5 off,,.ers or employees, may now hove, or may laler loke, poSitIons or trodes In respect to any seCUrities mentioned In thiS or ony future Issue, ond such position may be dlffere'lt from any views now Or hereafter expressed In '''115 or ony other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to Its Investment odvlry and other CUtomer Independently of any statements mode In thiS or In any other Issue. further Informahan on ony secvllty mentioned herein '5 oValloble on request

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Tabell’s Market Letter – February 18, 1977

Tabell’s Market Letter – February 18, 1977

Tabell's Market Letter - February 18, 1977
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—————————————- —————- TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON. NEW JERSEY 081540 DIVISION OF MEMBER NEW YOPIK STOCK eXCHANOE. INC. MEMBER AMERICAN STOCK EXCHANQE February 18, 1977 The stock market is about to enjoy an anniversary of sorts,although little note thereof has been taken in the financial press. It is just about a year since February 24, 1976, on which day our daily-bre-adth index' reached th-ehlgh which climaxed-the't';io-month surge'thatushe'red in that-year, -a' , high which was not to be exceeded unt1l1ast December. On the same day the Dow-Jones Industrial Average, for the first time In the current bull market, touched 1000 on an intraday basis. Since that time, as we are all aware, the popular averages have essentially moved sideways. Harry Truman made a good deal of political capital out of what he called a do-nothing Congress. We are shortly about to celebrate the first birthday of the do-nothing stock market. When one looks beyond the averages, however, the stock market story of the past year is a bit more interesting. We maintain a year's worth of price history for a representative list of 282 Issues, including the 30 Dow components and the largest components of the S & P 500. An analysis of the performance of these issues between February 18, 1976, just a year ago today, and February 9, 1977, produces some interesting observations. Overall, the performance of the list is about what one would expect. For the period in question, the S & P 500 is just about unchanged and the Dow is down some 4.6. The average per- formance for the group as a whole is a 2.75 loss, and the median issue on the list shows a 3 loss. 150 of the 282 stocks outperformed the Dow and 124 bettered the performance of the S & P. The follow- ing table lists the 10 top performers on the list. 2-9-77 2-18-76 Gain Santa Fe International 49 3/4 25 1/2 95.10 Mesa Petroleum 36 3/4 23 3/8 57.22 Boeing Occidental Petroleum – – .- – Teledyne – —- – – -.—…— 40 1/4 24 3/8 60- 26 1/4 16 1/4 39 3i4 53.33 51.54 50.94- Ex-Cell-O 25 3/4 17 5/8 46.10 Atlantic Richfield 56 5/8 40 7/8 38.53 Great Western Financial 22 1/4 16 1/8 37.98 Standard Oil California 41 1/4 30 1/8 36.93 St. Louis-San Francisco RaHway 44 1/2 32 3/4 35.88 The above issues constitute a fair microcosm of the better-performing issues as a whole. As can be seen, five are energy-related companies, and there is one aerospace company, one interest- sensitive issue and one railroad. When we look at the top fifty performing issues on the year, we find that these groups, plus public utilities, account for better than half the list. The fifty top performers include 19 energy-related companies, 4 companies that can be categorized as interest-sensitive, 4 utilities and 3 rails. These fifty Issues had a median gain of 26.65 and the lowest gain among the fifty was 17. When one moves dow'! to the bottom fifty issues in the list, some consistency also be- comes apparent. The performance of these issues ranges from a 20 loss to a 62 loss, and the me- dian decline was 25. Liberally sprinkled throughout this category are the blllon dollar growth issues which we discussed last week. Twenty of the fifty worst performing issues can be classified as be- longing to this category. Also fairly well represented among the poorer performers are the basic- industry stocks which had been the leaders of the bull market up until early last year. Seven of the fifty worst performers fallinto this group. It should be remembered, however, th!'Uhe doymswi'!g in these issues constitutes a correction after a sharp advance, while in the case of the growth stocks it was a continuing decline. Finally, it is interesting to compare the stocks with the list of the favorite fifty stocks of investment companies compiled by Vickers Associates. Six of these were among the top 50 per- formers including three among the top ten. However, ten of the worst fifty performing issues were al- so In the Vickers list. If nothing else, our analysis suggests that the stock market over the past year has been one of infinite variety and not just a casual sideways drift. The wide gulf between the performance of the various issues underscores, we think, the continuing importance of stock selection. Dow-Jones Industrials (1200 p.m.) 939.08 ANTHONYW. TABELL S & P Composite (1200 p.m.) 100.42 DELAFIELD, HARVEY, TABELL Cumulative Index (2/17/77) 658.09 AWT/jb No statement 01 expreSSion of opinion or ony other mOler herem contolned IS, or is 10 be deemed 10 be, directly or 'I'\dlrectly, on offer or the oll(llollon of on offer 10 buy or sell ony security referred 10 or menl10ned The molter IS presented merely for Ihe convellenaJ of the sub5trlber. While we beheve Ihe 50Uroo of our Informa lion to be reliable, we 10 no way represent or guo'onlee the accuracy thereof nor of the statements mude herein Any action to be token by the ubscflber should be bosed on hiS own Invetlgotlon and Informotlon Jonney Montgomery Scoll, Inc, as a corporation, and Its officers or employees, may now hoye, or may later toke, positions or trades In respect to any seCUrities mentloned In thiS or any future Issue, and such poslhon may be different from any views now or hereafter expressed In th or any oiher Issue Janney Montgomery Scott, Inc, which IS regiSTered With the SEC as an Investment adVisor, may give adVice to lIs Investment adYlsory and other customers mdependently of any statements mode m thiS or In any other Issue Furlher information on any seC1.lfIty mentioned herem IS available on request

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Tabell’s Market Letter – February 25, 1977

Tabell’s Market Letter – February 25, 1977

Tabell's Market Letter - February 25, 1977
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r—————————————————————————————————- TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON. NEW JERSEY 08540 DIVI910N OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGe February 25, 1977 Random thoughts in a desultory market. Ofdihv'I's Stock Purcha–seOffer-'The anfiotincem-ent'bytheccountry's -largest (in total'mar- ket value) corporation that It plans to offer to buy 4 million shares of Its own stock came as a sur- prise to the financial community and, thus, produced copious copy In the financial press. If one can get over being awed by the sheer magnitude of the numbers (1.12 blll1on), the decision, on the face of It, appears to be an eminently rational one. IBM's balance sh eet currently shows cash and marketable securities In excess of 6 billion, and In recent years, the company's cash flow has been running well ahead of capital expenditure needs. There are actually few alternatives open to It. An attempt to purchase another company would probably Incur the wrath of the Justice De- partment, despite the fact that, for the 1.12 bllllon Involved, IBM could have purchased anyone of 399 of the 500 companies In the S & P 500. A dividend Increase had already taken place, and, It Is Interesting to note, the company's payout ratio, based on tralling 12 months earnings, Is up to 63. This Is rather at variance with the classic growth-company concept of a low payout ratio necessitated by heavy demand for expansion capital. Thus, the purchase offer appears to be a logical one. The high payout ratio and the historically high current yield for the stock raise Interesting questions of valuation. Quite obviously, at a 3.6 current return, the stock Is unattractive on an income basis vis-a-vis fixed-Income securities. But we are dealing here with a stream of In- come which presumably will continue to grow. The task of valuing such a growing Income stream Is a fascinating problem to tax the most sophisticated of IBM's own computers. On Natural Gas — We must confess our complete fallure to understand why anybody should – b-e in the least surprlse'd by-the-naturalg–asshOrtageOfieleamslnEconorniC1n tfiatwh-en-flfe –' ….,.. price of a commodity Is artificially held below what the market would normally command, shortages result. Yet, Incredibly, there are stlll those who do not see that the overriding reason for the shortage Is Inept regulation and whose solution thereto involves more regulation. What disturbs us about the whole thing Is the effect on the quality of life. In our own office, the thermostat, In compliance with State regulations, Is set at 65 0 In a word, we are cold. True, the discomfort Is not serious, and we will undoubtedly survive. However, multiplying our own discomfort by that of tens of mllllons of others results In a discomfort quotient that is fairly staggering. America has characteristically prided herself on an economic system able to provide the elementary necessities of life In abundance. The sad thing Is that that system apparently Is no longer able to do so. On Polar Bears — Discussion of the gas shortage reminds us of the fact that It has, In- deed, been a cold winter. Argus Research has dubbed those analysts who are now predicting dire consequences for the economy based on that cold as polar bears. Along with Argus, we find ourselves unimpressed by their argument. Increased energy expenditures Simply Involve a transfer of purchasing power. Under these conditions, some companies wlll do well, others less well. The stock market has been apparently reflecting this fact for over a year, if one looks at the per- formance of most energy-related stocks. The winter cold may, indeed, produce Its share of dis- comfort, rut the effect on the economy as a whole, we think, is likely to prove to be negl1gible. On Timing — We have commented in the past that the recent infatuation of many money managers with market.tIming as a royal road to riches was likely to prove ill-found,ed even though we, ourselves, as technicians, -obviously spend a greatdeaI'of effort in just that area. On look- Ing back, it appears that the bull market which began in 1974 has provided just the sort of environ- ment to make attempts at market timing difficult. The bulk of the rise came In two short bursts, one, In 1975, six months long, the other, in 1976, barely two months In duration. The rest of the time was spent in relatively flat trading ranges for the averages during which there was ample opportunity to pick above-average performing stocks. It is a typical quality of the stock market that,at a time when interest in timing is at Its greatest, an environment is forthcoming when stock selection rather than timing, turns out to be the major Ingredient of investment' success. Dow-Jones Industrials (1200 p.m.) 929.85 ANTHONYW. TABELL S & P Composite (1200 p.m.) 99.30 DELAFIELD, HARVEY, TABELL Cumulative Index (2/23/77) 654.21 AWT/Jb No slolemenl or eprcss!on of OplTlIOn or any other moiler herem ton/olned IS, or IS 10 be deemed to be dHectly or indirectly, on offer or Ihe sollcltollon of on offer to buy or sell any security referred to or mentioned The moiler I presented merely for the converlenCG of the subSCriber While oNe believe the sources of our Informa' tlon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herem Any action 10 be taken by the subSCriber should be based on hiS own Investlgallon ond Information Janney Montgomery 5alt, Inc, as a corporation, and Its officers or employees, may now have, or may later take, POSi!IOns or trades in respect 10 any securities mentioned In thiS or any future Issue, and such position may be different from any views now or hereafter expessed In thll or ony ather Issue Janney Montgomery Scott, Inc. which IS registered With the SEC as an mvestmenl adVisor, may give adVice to lIs Investment odvlsory and othel customers .ndependently of any statements mode In thIS or In any other Issue. Further mformO'lOn on any security mentioned herem IS ovorloble on request

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