Tabell’s Market Letter – March 25, 1977

— TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE March 25, 1977 Last week's intraday high of 971. 58 on the DOW-Jones Industrial Average approached the 9749ao-short.rirft;'objective-s mentlorimfii1thrStet–er'laSt'week . Sinc; th'Jfe DJIA h-a-g' ciecline;'d– 32.33 pOints in six consecutive trading days and as we have discussed, appears to be testing the previous lows in the Average. We continue to feel we are in a time-consuming process of broaden- ing a potential base which would be sufficient enough to ultimately penetrate the heavy overhead supply present at 980-1020. However, the ability to break decisively the November, 1976 low of 924.04 would destroy this sideways action of the market. Since December 5, 1968, when give-up checks were terminated, through May I, 1975, when negotiated rates went into effect, the brokerage industry has been faced with the prospect of reduced commissions and reduced volume. Since 1968, these various factors have had an influence on total volume, but to date only in degree. Last week the New York Stock Exchange released their Monthly Review and we discussed the series Margin Debt. Another series mentioned in that re- lease was the number of shares listed on the NYSE. This figure, like margin debt, has reached an all-time high. In itself, this figure is constructive and not surprising due to the many stock splits and new issues admitted to the NYSE. However, looking at the figures compared to the average daily volume per month on the NYSE, we find some mteresting comparisons. Date DJIA Chg. It Days It Shares Avg. Daily Shares/ this Swing Listed Volume Volume 12/ 3/68 985.21 13196 14860 .888 5/26/70 631. 16 -35.94 367 15551 12296 1. 265 1/11/73 1051.70 66.63 12/ -6/74…–5-77-,,60., –45-;e08 665 19323 18750 1.031 –48f.-……,..–2-l737..,…. -1'5007 . – -1-;448,–' – 9/21/76 1014.79 75.69 452 24080 19741 1.220 2/28/77 936.42 -7.72 III 24612 20971 1.174 A 25 percent yield filter was run against the DJIA and the above exhibit shows the highs and lows from December, 1968, to date. The number of shares listed and the average daily volume for each respective month is also shown. From December, 1968, to February, 1977, the number of shares listed increased from 13,196 million to 24,612 million or 86.51 percent increase. More surprising was the fact that average daily volume for the same period mcreased from 14,860 million to 20,971 million or an increase of 41.12. In other words, volume is increasing but at a slower rate than the increas ing number of shares listed. A major factor affecting the volume figures is the large block activity on the NYSE. Since 1968, the institutionalization of the stock market can be shown by the block share (10,000 or more) volume as a percentage of total monthly volume. In December of 1968, this figure was 12.50 percent. In the short period of less than eight years, the figure has increased to 22.22 percent in September of 1976. Although the current figure is below this all-time high level, there is evidence that this percentage will continue to remain high for at least the immediate future. Date DJIA Chg. It Days Monthly Block Trans Ratio this Swing Volume (thou) 12/ 3/68 985.21 267480 33425 12.50 5/26/70 631. 16 -35.94 1/11/73 1051. 70 66.63c 367 66.5 258220 393750 32647 12.64 -81090- 20.59,., 1.2/ 6/74 577.60 -45.08 481 315150 44829 14.22 9/21/76 1014.79 75.69 452 414550 92101 22.22 2/28/77 936.42 – 7.72 III 398440 77397 19.43 Total volume has been down but relative block activity has been greater. A subtle reason I !I for the ability of this ratio to remain at its relatively high level might be the new institutional in- vestor's acceptance of indexing, investments weighted in line with one of the popular stock aver- ages. It is interesting to speculate on the potential negative effects indexing could have on total volume after participating institutions have completed their conversion to indexing. Dow-Jones Industrials (1200 p.m.) 933.59 S & P Composite (1200 p.m.) Cumulative Index (3/24/77) 99.56 622.64 RJS/jb ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL No statement or expression of opinion or any other moiler herein contained 1, or 15 to be deemed to be, directly or rndmcty, on offer or the sollcltolLon of on offer 10 buy or sell ony security referred 10 or mentioned The mailer IS presented merely for the conver'1en of the subscriber While 'l'Je believe the sources of our mformatlon 10 be reliable, we In no way represent or guarantee the accuracy thereol nor of the statements mude herem Any action to be toen by the subscrtber should be bosed on hiS own mveshgctlon and Information Janney Montgomery Scoll, Inc, os 0 corporotron, ond Its officers or employees, moy now have, or may later loke, positions or trades In respect to any securities menttoned m thiS or any future Issue, and such POSition may be different from ony views now or herellfter erpressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment odvlsor, moy give adVice to Its mvestment adVisory and othel customers Independently of any statements mode ,n thiS or In any other Issue Further Information 0'1 C'ly security men honed herem IS available on request