Viewing Month: May 1977

Tabell’s Market Letter – May 06, 1977

Tabell’s Market Letter – May 06, 1977

Tabell's Market Letter - May 06, 1977
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j , iil.G CE fl..!l. ' S lRfr! & . RH'A; Gi.J PI1'Ub! 909 STATt RO …. O. PRINCLTON NLW JEUEV OHl.. .,O ntvr .. r. or t.'!Ff';t.P. NLW OKL1UC' 1 C,)ANUt JNL MEMOER AMERICAN STOCK EXCHANGE May 6, 197'-'-l A good deal of recent market discussion has centered around the difference in per- I formance of various market averages. We intend, therefore, as space permits, to discuss some aspects of the more widely-followed indicators. As a start on that process, we rec(mtly compiled the following table which shows the 30 Dow stocks, with their weight In that average, and the 30 heaviest-weighted stocks In the S & P 500. The list for each average shows the stock's weight in the other average and the difference in those two weights. 30 DDwJOtS STOCKS STOCK T IN OJlA .0 UIFf . I 30 AVltST.EIGHTED 1 1 1 .O D.II . ST OC &P 500 STOCKS X T IN S&P a l IT IN D0 JlA O.IF'F' , . ! d i 1., .j 1 OU POT DE NEMOuW 'Ide 1,00 li,li! 1 ! B i PflUCH F. GAMblE 5.71 1.07 4.bll 1 AMRICAN Tf & TtL GEERAL MOTORS CORP ,'Il 3,cl I .71 1 t.XXON CORP EATrA KOnAK CO 4,6t 1.78 3.06 I GeAl MOTORS COR MtNICAN TEL TEL 4, b,23 -1.11 I GENeRAL tLECTQIC CD SEARS kOEUCK CO ' n 1,57 2,80 I EASTMAN KODAK CO UNIO tAIU COP 4,lb a,!)!! 3,58 1 SEA5 IOEI'UCK CO ALUMINUM CO Of AMt N 4,011 0,32 3,J7 I STANDAID all IOIANA ITtNATluNAL PAE 1l.0 0,3 3.0 1 ROYAlOUTCH f'OLEU OWS lLLlOIS INL 3,'11 0,15 3,6 I HXACO l!C EHO CORP !.b!) .5, T1- O,Ob 1 MOBIL LOkI' MINNtSuTA MINING M 3,b2 0,\15 2.b7 1 DOw CHtMICAL CO GlNEkAL ELtCTRIC CD 3,5'1 1,64 1 ,14 I STAuAka OIL CALif UNITtD STATts STEEL 3,2'1 O,bl a,b6 I PROCH & ('AMALE AMH'JCA\ ekAr.,liS Jolt 0, 1!j r.,96 1 au PONT DE NtMOUNS ALLIu CHtMICAL CO 3,10 a,co 2,'10 1 MINNeSOTA MlING MFG AMEIC.N CAt CO c,S'I 0,12 2,71 I GULF all CORP STANOAO vIl CALIF i!.j 1,09 1 , T 1 ATLANTIC ICHFIEO UNITt TECHNOLDulES c.'1'1 0, 1 2.34 1 ORO MOTO CO bElhLtMtM STEEL COk .'1b O,e 2.21 I SCHI.UMfIGtR INTtNATNL ARVE5TE c,'1l 0,1 b 2,21 1 EVf.HHAutSE CO coJONS ANVILlE CORP 2,31 0,11 2.20 1 S'UL OIL GENEkAL FOUnS COMP c.ea O.eb 2,0' 1 AMfR1CAN HOME PROD INCU 2.eO 0,.51 1.8S 1 CATERPILLAR TAC10H ESMAK INC c,ttO 0,09 ., oil I COCA COLA CO TEUr.O INC 1, '13 1,1'1 0,7'1 1 HILLIPS pETROLEU wOllLoOklt F CO 1,11'1 0,12 GOUUYEA TIR & RUbR 1. 0.24 Cl1kY5ltF! ('OHP 1,SoS 0.16 1 .72 I MEkCt( 1\ co l/'C ,c1 1 I GEN TEL ELECTRONIC I.! 1 KRESGE S 5 CO lSTINGHOSE ELECT 1.21 O,e5 I.O.! I JOHNSON JOHhSON b,14 0,00 &,14 b,23 .52 1 ,71 3,11 3,&5 0.0& 3,ci 4,111 01,11 1,84 J,II -1,74 1,18 ,6b -3,08 1,7 ,37 -2.80 1,ii! 0.00 I, c2 1. C!0 O.ClO 1.20 1,1 1,'13 0,14 1,1& 0,00 I, 1& 1,15 0,00 1,15 1. 0'1 .83 -1,14 1,07 5,71 -4.&/1 I, 00 ',12 -!l.12 0.5 3.&2 -2,&1 O,eq 0,00 0,89 0,6'1 0,00 0,6'1 0,65 0.00 O,5 0.e3 0,00 O,B3 0,81 0,00 0,81 O,6/) 0.00 0,60 0.16 0.00 1'1,78 0,17 0,00 0.11 0,7& 0,00 0,76 O,bQ 0,00 O,&q D,b8 0,00 0,18 0,05 0,00 0,65 O,b5 0,00 0,&5 0,&11 0,00 0.&4 TOTAL That there should be differences in the performance of the two indicators is hardly surprising. The table for the Dow stocks shows that they account for only 28 of the weight of the S & P 500 and that 28 of the 30 carry a heavier weight in the Dow than they do in the S & P (largely due to the fact that the Dow contains fewer stocks and weights, effectively, by price). On the other hand, while the 30 most lmportant stocks in the capital-weighted S & P 500 account for 45 of the total weight in that average, 19 of these stocks are not in the Dow, including IBM, the most heavily-weighted company In the S & P. Furthermore, 9 of those 11 are weighted more lightly in the S & P than in the Dow. We will be commenting in future Issues on the construction of these and other Indices and the implications thereof for Investment pollcy. Dow-Jones Industrials (1200 p.m.) 937.58 S & P Composite (l200 p.m.) 99.61 ANTHONYW. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (5/5/77) 663.86 AWT/lb ,- .1 ;-j —————– ——————————– ! 1. I. 1'1 I ' ,. , ' I f , ,II ,01' I, ., I,t,'. j F, ,1. J,.. , I I ! . d r ,.. ' , I, . , .\, – ' ' I 1 ,I( , I. j y , 11 '. , ''''' ,,' .I I. , ,I, ,,,.I Ii. '''''!il' P'''I,tl wi I,,, II,.. r ,' ,., ,, II,,,1. , \' \VII. ' I, I .., I,,, ,I''', tol, ,,) 1101, f' I. , I. I' I ' , ,. 'I' I/. I ,II, I ' I. I ' , (.1, ' ,,/ I, ' ,\,,1' H,' 1., I I' l.t' I),,, 1,,' ,I, t -,J,,,),j J,,, 1.,1.1,,, ,,,11'01,,,,'1,,1 . t. 1,,,,,,.'.1,, . , . , , , I oI'Oj .,,',' I I , , . ' . ' I . ',.. I ,I, ' f 1,.k ' ''I I I y . ' ,,,,.,,,,,.,,, 1 , tI. i I,,, ,. ', ''',,( .I. I' ,',., ' I. I,ll., ' to .., 1 . ,,1. i ,I, I' ..1 ' ''I'\'.,\ ,,' ''''1'''',.,( ,- c' h,,,,,.v,\ '''Y ., II I .lill I I, I. '1'''.1 ,1111 110. ,II ,,,' ,,,.' ''' III ,,., '''' . ,,,I,,, I. III ,-, . I ,f.. .,(, ,,1 ,I, L. ' – -,. ,,' ' .. , i ! ' ,., ' ' ' . , I ' … ' I ' I , ' .I, ,II.' I i , ,. I ,I ,d i. I I

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Tabell’s Market Letter – May 13, 1977

Tabell’s Market Letter – May 13, 1977

Tabell's Market Letter - May 13, 1977
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, . — — – – j TABELL'S ! MARKET LETTER 1 JI 909 STATE ROAD, PRINCETON, NEW JERSEY 081540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE May 13, 1977 We began last week a discourse 9n the composition of some of the more widely-followed – market.verIges withthe npte ,that wein!el1d9.1o,;c.optinue. hisdiscuss ion,in future-1etters. Our.;;.. …- 1–work with averages at this time is motivated by a bit more than the Simple desire to fill up space in a rather dull stock market. As readers will be aware, there has been growing interest of late in a technique called indexing. This latest of panaceas to gain a following among professional money managers involves the construction of a portfolio so as to duplicate, as precisely as possible, the performance of a given market average — in most cases, the S & P 500. We will have some thoughts on this subject before we are done. Before discussing the concept, however, it is worthwhile to have some idea of the criteria used to index a portfolio. Hence, some further discussion of the two most popular indicators, the Dow-Jones 30 Industrials and the S & P SOD-Stock Index. The anomalies in the Dow have been pointed out by many writers. They start out with the fact that the average sells for over 900 despite the fact that no one of the 30 components sells for anywhere near that price. This stems from the method used to adjust for splits, additions and deletions since the average was first put together in its present form in 1928. The computation of the average simply consists of adding up the closing prices of the 30 indiVidual issues and dividing by a constant divisor. When a split or other adjustment takes place, it is that divisor which is changed, not the process of cumulating the prices of one share of each stock. After almost 50 years of adjustment, the divisor is now 1.474, thus producing the current high level of the average. Strangely enough, it is not the divisor itself but the technique of using the price of just one share of each stock which causes the distortion in the index. The method causes high-priced stocks to be weighted more heavily than low-priced ones. Thus, Dupont accounts for 9 of the Dow Simply by virtue of its currently having the highest price while Chrysler is the least lmportant component by reasOnof b-elnc;i tlierowest'-pficed'iSStfE;7'WeteDuP6Iit to spliCterlforone-; it wOulalmmediatel'Y' change from the most important factor in the index to the least important one by a considerable margin. Most portfolios, obviously, are constructed around equal market value holdings of all component stocks, certainly not on the basis of an equal number of shares. Yet, it is precisely this basis on which the Dow is put together. The need for a broader and more scientific index led to the origination, over 20 years ago, of the S & P 500. Paradoxically, the S & P, despite its 500 components, is not a broad index at all. The reason for this, again, lies in the details of computation. The method essentially is to take the price of each of the components and multiply it by the total number of shares outstanding. The resultant total market value is then diVided by a base — originally calculated to make the index equal to 10 in a 1941-43 base period. The result is, to paraphrase George Orwell, that some stocks wind up being a great deal more equal than others,and the larger companies bear a disproportionate weight in the index. The table below illustrates the phenomenon. With this capital-weighting, IBM and American Telephone between then account for the same weight in the index as the 283 lowest-ranked companies. 1st 2 stocks 1st 4 stocks 1st 11 stocks 1st 22 stocks —1st 37 stocks Weight in 500 Weight in 500 13 Lowest 100 stocks 1.4 20 Lowest 200 stocks 5.8 30 Lowest 300 stocks 14.8 40 Lowest 400 stocks 30.0 -. – -50—-' -Lowest.,450 stocks-'-'-43-6 — –.- The above remarks sound more critical of the two market indicators than they are, in fact, meant to be. They are meant only to point out the fact that both indicators have limitations for statistical purposes, and it is best to be aware of these limitations before proceeding further, let alone measuring portfolio performance on the action of these averages. The fact is, quite simply, that there is no such thing as a perfect market average nor will there ever be. The appropriateness of a given average is solely dependent on the use to which it is being put. Whether a given index is an adequate measure of portfolio performance will depend, moreover, on the characteristics of the portfolio for which it is used as a benchmark. This is a point to which we intend to return in future discussion. Dow- Jones Industrials (12 00 p. m.) S&P CompOSite (1200 p.m.) Cumulative Index (5/11/77) AWT/jb 927.49 98.88 662.66 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expreSlon of opinion or ony other matter herein conlolned IS, or IS 10 be deemed to be, directly or IndHectly, on offer or the Ol,cltollon of on offer 10 buy or sell ony securrty referred 10 or mentioned The motler 15 presented merely for The convel'tence of The subscriber While -He believe Ihe sources of our information 10 be reliable, we In no way represent or guarantee Ihe accuracy thereof nor of the statemenTS mude herein Any action to be laken by the subSCriber should be based on hiS own Investigation and 'nformatIon Janney Montgomery SCali. Inc, as a corporation, and ,ts offICers or employees, may now have, or may laler tke, palllon! or Irades In respect to any secUrities mentioned In thiS or any future Issue, and such POSition may be d,fferenl from any views now or hereafter expressed In Ihls Of any other Issue Janney Montgomery Scali, Inc, which IS regluered With the SEC 05 an Investment adVisor, may give adVice 10 liS Investment adVISOry and athel customers ,ndependently of any STatemenls made In 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 – May 20, 1977

Tabell’s Market Letter – May 20, 1977

Tabell's Market Letter - May 20, 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 May 20, 1977 '- ..,…..,..- -Ithas -to- end'S0met-i-me;– What-we-are-referr-ing-to,–of'course-;-is. the-torpor-beingdis–. . played by the equity market which, on a macro basis, has been locked at essentially the same level for what is now longer than 15 months Expressed in terms of the Dow-Jones Industrial Average, the market has held between, approximately, 920 and 1020 ever since February of 1976. To be sure, as is almost always the case when the market remains in a protracted trading range, there have been individual areas which have proved themselves either rewarding or painful. During the past five quarters, both transportation and utility issues have been edging in the direction of new highs with s orne cons istency while, at the sa me time, the action of the growth favorites of a few years ago has been something just short of catastrophic. These crosscurrents have tended to cancel each other out, so that the sideways action of the Dow more- or less fairly describes the market as a whole albeit, perhaps, with a slight downward bias. Fifteen months is, after all, a long time, and the trouble is that we are getting used to this sort of thing. We tend to forget, therefore, that this sort of action is contradictory to the great bulk of historic stock market experience. HIstorically, the market has spent the bulk of its time moving — with some rapidity and sense of direction — from one price level to another, often quite disparate, price level. It is, therefore, almost axiomatic to suggest the likelihood of a move to some price level quite different from 920-1020 on the Dow before too much more time has elapsed. Given the above rather obvious statement, it would be helpful, to say the least, to have some idea as to what the direction of that next move might be. One of the frustrating facets of .– …,.-the recentmarketisthatit -has ,..bYtechnicala ctton-tn-date, provided4.ittlein'the- wayOf such an idea, and what clues there have been tended to be contradictory, confusing and vacillating. It is, perhaps, worthwhile, therefore, to view the latest evidence. Recent market action has provided us with a few tentative gestures in the direction of the ups ide. Through Wednesday of this week, the Dow had edged ahead in four consecutive trading sessions after digesting a fairly solid advance in late April-early May. At the Wednesday intraday high of 947.34, the Dow had returned to a level approximating its May 5th high of 949.46 and the earlier April 14th high of 956.07. Internal action was once more impressive. Our Cumulative Index, at a high of 672, was only two points away from the bull market peak scored last January, and breadth indices were continuing, as was the case last winter, to diverge positively from the Dow. The downtrend in the Dow, as measured from the year-end 1976 high, is close to being broken and would be decisively penetrated were any firmness to take place this week. The stage, in a sense, is set, but it has been set a number of times in the past 15 months without the a'udience ever having shown up. Being optimists at heart, we would like to think more positively than the above paragraphs suggest, but, on the basis of current scanty evidence, we are unable to do so. The most impressive arguments in favor of the upside at the moment are negative ones. Postulating, as we have above, an ultimate decis ive move from current levels, it is difficult, in our view, to build a persuasive downside case. Where, one may well ask, is downSide leadership to come from It has centered, so far, around the growth stocks. That these issues might trend — somewhat lower-isplausible,and thatthey might- not-move up verymuch–even more plausible.Expecting them to produce major bear-market leadership from these levels, however, appears rather far-fetched. We are, at current levels, moreover, enjoying an historically low level of stock prices at a time when what may well be a protracted earnings recovery appears underway. This sort of thing is hardly a precursor of a typical bear market. As we have reiterated almost to the point of distraction, all of the evidence regarding the market's direction is not yet in. Yet, it would be unwise, in our view, consciously or unconsciously, to project the last year's action indefinitely into the future. Dow-Jones Industrials (l200 p.m.) 930.72 S & P Composite (1200 p.m.) 99.47 Cumulative Index (5/19/77) 669.38 AWT/jb ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or IIxpresslon of opln!on or any other mal1er herein conlcllned IS, or IS to be deemed 10 be, directly or Indirectly, on offer or Ihe solicitation of on offer to bvy or sell anv security referred 10 or me'llioned The motter IS presented merely for the conveJ'!nnce of the subSCriber. While .JVe believe Ihe sources of our Informa tlon to be reliable, we In no way represent or guaranlee the accuroty thereof nor of the stotement mude herein Any action 10 be token by the ubcrlber should be based on hiS own mvestlgatlan and mformallon Janney Montgomery Scott, Inc, as a corporollon, and Its officers or e'T1ployecs, may now have, or may lotcr toke, poslt'OM or trades In respect 10 any seCUnties menlloncd In thiS or any future Issue, and such poslllOn may be different from any views now or hereofter expressed In thiS or any other Issue Janney Montgomery Scott, Inc which 1 registered With the SEC as an Investment adVisor, may give adVice 10 lis mvestmenl adVISOry and othel customeu Indcpendenlly of any stolemen! mode In this or In any other Issue Further informatIOn on cny security mentioned herein IS oVOIloble on request

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Tabell’s Market Letter – May 27, 1977

Tabell’s Market Letter – May 27, 1977

Tabell's Market Letter - May 27, 1977
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08!540 DIYISION OF MEM8E' NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE May 27, 1977 I…., -c hara- cter i zeWd tehealrlruidajebdr last week to the rather obvious fact 'stock-mai'Keeaverages-for-the'besrP that the sideways action which had art'bf 1976;;77 -would is-omeday;,cb-me- – — to an end. This week's action tended to suggest that that someday was still off at some in- definite point in the future. On Wednesday, May 18, the Dow closed around the 942 level. At that price, it was flirting with a breakout from the calculated downtrend channel measured from the December 31, 1976 high, and a number of stock market areas were showing some signs of underlying firmness. Bullish hopes, however, were soon dashed as the Index, in the next five trading sessions, ptunged some 40 points to return again to around the 900 level. We are once more, apparently, back at square one. It is, perhaps, worthwhile to see if we can put what is going on into historical per- spective. The Dow, at Wednesday's low, was down just over 10 from its 1976 closing high of 1004.65. Measured from the three-month-earlier September high of 1014.79, to date the absolute high for the current cycle, the decline was just under 11. Neither of these figures should be too terribly startling. Stock market history in the post-Worid-War-ll period finds itself well supplied with examples of market drops which have extended to the 10-plus level without having developed to the 20 threshold generally used to categorize major bear markets. The 1946-49 period, one not without resemblances to the current one, contained no fewer than three such drops. Most major bull markets in the period in question have been interrupted at least once during their course with intermediate-term declines of around the current magnitude. One, indeed, has occurred already during the course of the current upswing, the Dow having dropped off 11. 07 —–OetWeen JuryanaOctoJ5er, r97The last previous-Sun market-, that of 1970'73, was interrupted- by a 16 per cent drop during the middle part of 1971. We are, thus, in one aspect,at least, on not totally untrodden ground. Market swings, however, as we have often pointed out, have two attributes — those of amplitude and time. It is the latter of these two attributes that lends a somewhat dif- ferent quality to the current decline. Measured from the December high, it has gone on for 102 trading days and from last September, a dreary 172 trading days. The deep sleep actually has gone on for even longer. Although the Dow did, indeed, make a new high last fall, the current period of sideways action, by many market measurements, began sometime in February of 1976. It is this 15 months of inaction that tends to distinguish the current stock market period from so many of its predecessors. For example, the 1975 decline referred to above burned itself out in just 55 trading days, and the one in 1971, somewhat longer, was over in 146 days measured from high to low. To find a period roughly comparable to the present one, it is necessary to go back much farther into history. In 1953, the Dow took 176 trading days to go down 13, and between June, 1948 and June, 1949, it required 281 trading days to decline by 16 (Saturday sessions explain the fitting of that many trading days into a one-year period). In any case, the modest downward bias exhibited over the past year or so stands out fairly clearly as something not all that common. The central question, of course, remains. Does this week's weakness signify noth- ing more. than the continuance of this relativly modest erosion, or are w.e experiencing, with.the currentdownswing;the beginning of an accelerating drop leading into a major bear market phase — the familiar downSide breakout from an important top formation. For reasons discussed at length in prior issues, we incline toward the former view. The failure to follow through on the upside certainly suggests the possibility, nay, indeed, the probability, of somewhat lower prices. We think, however, these lower prices if they occur will fit squarely into the context of the rather dreary stock market environment which we entered some 15 months ago. Dow-Jones Industrials (1200 p.m.) S & P CompOSite (1200 p. m) Cumulative Index (5/26/77) AWT/jb 903.32 96.62 651. 81 ANTHONY W . TABELL DELAFIELD, HARVEY, TABELL No statement or exprenlon of opinion or any olher motler herern contolned IS, or a 10 be deemed to be, directly or indirectly, on offer or 'he OIiCIIOllon of on offer 10 buy or sell any security referred to Or menlloned The moiler 15 presented merely for the convef'ience of the subscnber White He belIeve the sources of our mformahan to be rei table, we m no way represent or guarantee the accuracy thereof nor of the statements mude '-Ierem Any achon 10 be taken by Ihe subscrtber should be based on hn own InveSligotlOn and Informahon Janney Montgomery Scott, Inc, as a corporation, and Its ofhcers or employees, may now have, or may loter lake, POSItions Of trades In respect ta any seCUflliei mentioned m thIS or any future Issue, and such POSItion may be different from any Views now or hereafter expressed In thh or any other Issue Janney Montgomery Scali, Inc, which IS regIstered With the SEC as an Investment adVisor, may give adVice to Its Investment advISOry and other customers Independently of any statements made In Ihls or In any ather Issue FUr1her mformatlon on any secunty mentioned herem IS available on request

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