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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