Viewing Month: June 1977

Tabell’s Market Letter – June 03, 1977

Tabell’s Market Letter – June 03, 1977

Tabell's Market Letter - June 03, 1977
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMDEII NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK. EXCHANGE – June 3, 1977 Readers of this letter by now are familiar with our view of the current dull stock market environment. The market continues to experience an erosion which to date has corrected the Dow- – – ..-.-; – – – – – – —– , – – – ..r- ……….. -'- –'' . approximately 11 from its September, 1976 high of 1014779. -In spite of the Dow'Jone's Inaustria-r— Average recently penetrating the 900 level reaching a cloSing low of 898.66 on Monday, it is diffi- cult for us to recognize this weakness as a precursor to a major bear market phase. Confirmed watchers of the Dow-Jones Industrial Average will immediately take issue with the above statement as clearly a downSide breakout from an important top formation has occurred. In the past, occasional reference has been made to Murphy's Law which states, If anything can go wrong, it will. More recently, atten- tion has been directed to O'Toole's Law which, Simply stated, says, Murphy was an optimist. Where could the Dow Watcher go wrong It is often maintained, as this letter has recently discussed, that the popular market averages because of a limited number of issues and weighting factors have been giv- ing a distorted picture of the stock market's true picture. The Cumulative Index, we feel, clearly underscores this. Started on May 1, 1964, this Index shows the average day-to-day percentage price change for all issues traded on the New York Stock Exchange. It, baSically, is computed by adding the daily percentage change of all stocks and dividing by the number of issues traded. We compute our Index by cumulating these percentage changes. In order to make the Index compatible to the DJIA, we used the DJIA April 30, 1964 close of 810.77 as a base. The Index, we feel, gives a reasonable proxy of the performance of the average New York Stock Exchange issue. Documenting the action of the Cumulative Index in relation to the DJIA can be a more valuable tool in formulating a forecast than merely relying on the DJIA. Utilizing a 20 filter on the Cumulative Index, the table below gives the value of the Cum- ulative Index at major market turning pOints since its inception, and the corresponding level of the Dow —..,c..-…,.,…….for. the. sa me .date,.toget!!E.'N,lth l'rclltag,Q!!an.ges4between el cIlpp)li,nt,. ——' 1- – Cumulative — -…,.-' Days Dow-Jones Date Index Change This Swing Industrials Change April 30, 1964 810.77 0.00 0 810.77 0 February, 1966 High 1095.03 35.06 452 995.15 22.7 October, 1966 Low 803.42 -26.63 164 744.32 -25.2 December,1968 High 1455.59 81.17 524 985.21 32.4 July,1970 Low 681.40 -53.19 390 669.39 -32.1 April, 1971 High 1060.13 55.58 205 950.82 42.0 November,1971 Low 827.06 -21.99 146 797.97 -16.1 March, 1972 High 1044.70 26.32 74 950.18 12.1 December,1974 Low 345.61 -66.92 703 577.60 -39.2 May, 1977 High 669.84 93.81 735 943.44 63.3 June 1, 1977 Low 649.37 – 3.06 9 906.55 – 3.9 A number of observations are apparent. It is interesting to note the number of trading days in each of the last two major swings. From the 1972 high to the 1974 low, a total of 703 days were ob- served, while the subsequent rally from the 1974 low to the recent May, 1977 high took 735 days. Hectic Wide swings in relatively short periods of time reminiscent of the late sixties-early seventies has given way to more orderly, albeit more lethargic, markets, not unlike recent months. If you accept the premise that the Cumulative Index is a proxy for the performance of the average NYSE issue, we find that in every case the Dow understates the extent of this performance. For example,the,Cumulatiye Index intheshort.period of,sixyears from its 1968 high'of-l'45559'foits – 1974 low of 345.61 has lost an incredible 76.26. In other words , we have seen a market which has seen the average stock lose three-fourths of its value over a Six-year period. The DJIA from its Dec- ember, 1968 high of 985.21 corrected to 577 .60 in December, 1974, a correction of 41.37 or approx- imately one-half that of the Cumulative Index. I n addition, from as recently as the March, 1972 high of 1044.70 on the Cumulative Index to its 1974 low of 345.62, a decline of 66.92was registered. What the Cumulative Index seemS to be saying is the speculative excesses of the late sixties has, in fact, been dramatically corrected. This excess has not been properly reflected in the DJIA. Conversely, the same is true in up swings. Since the October, 1966 low of 803.42 to the 1968 high of 1455.59, an advance of 81. 17 was registered in the Cumulative Index versus an increase of 32.4 in the Dow. More recently, the Cumulative Index, since the December, 1974 low of 345.61, advanced Significantly to the May, 1977 high of 669.84 resulting in a gain of 93.81. The DJIA for the same period has ap- preciated 63.3 from its December, 1974 low of 577.60 to a recent high in May, 1977 of 943.44. Dow-Jones Industrials (1200 p.m.) 909.01 ROBERT J. SIMPKINS, JR. S & P Composite (1200 p.m.) 97.09 DELAFIELD, HARVEY, TABELL Cum\/j1A;t;;r\ti';n or cny ma-t(Onlamed orRJS ether IS, IS to be deemed to be, directly or indirectly, on offer or the soliCitation of on offer I buy or sell any seaJflty 'ton 10 be reliable we In referred no way to or mentioned The matter IS presented merely represent or guarantee the accuracy thereof nor for of the the conver'lenCC of the subscriber stotements mude herein Any V'/llile we belIeve oct Ion to be token btyhethseo usu' ' b sscrolfbeorulrs hnf'dbou k e based on hi! own 'lnvesllgatlan and Informatlo(l Janney Montgomery posItions or trades In respect Ic any securities mentioned In thiS or any Scott, futuro tnc, 05 a 11S(le, and corporatIOn, and Its officers or such pOSitIOn may be different erflployees, may from any views now now ohra vhee,reoardf tmeraye.aprleedrsetthein, thiS or any other Issue Janney Montgomery Scolt, Inc, which IS registered With the SEC as on Investment adVisor, may gIVe adVice to ItS Investment 0 visoryon 0 er customers Independently of ony statements mode ,n Ih,s or en any other Issue Further Information on any securIty mentioned herein IS ovollable on request

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Tabell’s Market Letter – June 10, 1977

Tabell’s Market Letter – June 10, 1977

Tabell's Market Letter - June 10, 1977
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TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK eXCHANoe. INC MEMBER AMERICAN STOCK eXCHANGE – June 10, 1977 , o-f-its19 77,Jt'r.ahd.e-i-nm.g-arrakne-tgeco,-nattinl–ue-ea- ss- t its schizoph –i.n—-s-o–far as-.t renic behavior, this time in the v he'Dow-J…..-t….-.-……. o-n-es-I-ndus..tr-i.a'l-A.. v-E!-r,ig'e icinity of the low end is-concerne'd;-'The, p6st'- Holiday market of May 31st saw that Index drop below 900 for the first time this year. However, the drop was quickly followed by a tepid rally which brought the average back up above that figure. It is no news to anyone that the market since the first of the year has remained in a rela- tively narrow trading range. The shape of that range, however, varies widely, depending on the aver- age at which one looks. Trading ranges are, after all, defined by J!ighs and lows, and the patterns of highs and lows have differed between the major averages. There have, during 1977, thus far, been five separate up-down cycles for the market with a sixth possibly now underway. The following table based on intra day figures, attempts to examine separately the highs and lows for each of the three major Dow-Jones Averages, the Industrial, Trans portation and Utility. HIGHS – 1977 The pattern of successive highs for the Dow-Jones Industrials shows an unrelievedly doleful pattern. No rally since the first of the year has been able to equal the high achieved by the previous one, with the average now almost 100 pOints below the year's high. For the Transportation Index, the picture is somewhat brighter. Neither the March or April rally equaled the January peak, but the early- May short-term rise brought that Index to new highs as did the subsequent advance into mid-May. A consistent pattern of higher peaks has been maintained ever since March. The best pattern, however, is shown by the Utilities. With the exception of March, every single rally has taken that average to new highs and, indeed, the intra day peak for Wednesday of this week constituted yet another yearly high, this achieved within a week of a new low by the Industrials and the day after a minor low made by the Trans portation Average. Strangely enough, the pattern of lows made by the indiVidual indices is somewhat unlike the pattern of highs. This is not true of the Utility Average which has maintained an unbroken uptrend with each successive minor low being higher than the last one, a formation similar to that of the in- dividual highs. For the Transportation stocks, successively higher lows have been posted ever since March-April, although that pattern apparently has been broken with the recent move to a new low below the May 9th bottom. It is the Industrials, however, that show the greatest discrepancy between peaks and troughs. — – -, Although'ea-ch'hew'IlIdustrial 'll'eak'nas'been-appreciablylower than the last,the'average'managed,to '-'- hold its April 5th low until just recently and, indeed, penetrated that low by only a minor amount. Thus, the Industrial pattern has been more or less one of a descending triangle — not, historically, a notably bullish formation. It is not quite clear what is to be made of this disparity in patterns. For this year, at least, the Utilities have shown a tendency to lead the other two indices, and, in this sense, the recent new high must be conSidered as being bullish. On the other hand, a similar leading tendency on the part of the Transportation Index appears to have disappeared in the recent decline, and whether it will reemerge remains to be seen. We have, in any case, one more set of numbers which strongly suggests the disparity which has existed in the marketplace during the past year. Dow-Jones Industrials (1200 p.m.) 908 ..75 S & P Composite (1200 p.m.) 98.15 ANTHONYW. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (6/9/77) 658.51 AWT/jb –I , No statement or expression of OpInion or any otner motter herein contOlned IS, or IS 10 be deemed to be, dtrectly or indirectly, on offer or the solicltotlon of on offer to buy or sell any secunty referred 10 or menhoned The molter Is presented merely for the convertence of the Sl,IbKrlber WhIle Ne believe the sources of our InformatIon to be reliable, we m no woy represent or guarantee the accuracy thereof nor of the statements mude herem Any action to be laken by the subscriber should be based on hiS own mvest,gat,on and mformotlon Janney Montgomery Scott, Inc. as a corporat,an, and Its officers or employees, mol now have, or may later toke, pOSitions or trades In respect 10 any seCUrities mentiOned In Ih,s or any future Issue, and such POSition may be different ffom any views now or hereafter expressed In Ih,s or any other Issue Janney Montgomery Scott, Inc, whICh IS registered WIth the SEC as on investment adVisor, may give odvlce to Its Investment adVisory ond othel customers Independently of any slotements mode In thiS or In any other Issue Further information on any sccuoty mentIoned herein IS available on request

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Tabell’s Market Letter – June 17, 1977

Tabell’s Market Letter – June 17, 1977

Tabell's Market Letter - June 17, 1977
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TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VOAK STOCI( EXCHANGe, INC MEMBER AMERICAN STOel( EXCHANGE June 17, 1977 One of the more perceptive and lucid wrlters regularly appearing in the Wall Street – . 10urilarisDr.- Irvlng Ktistol;-'res1dents-cholar a1 ther'A-merican EnterpriseInstitute and a—member'— of the Journal's Board of Contributors, which position ensures his regular appearance on the editorial page of that publication. His latest article, which appeared last Tuesday, is entitled, The Foxes vs. the Hedgehog, and it likens the current apparent disparity between the stock market and the economy to the ancient distinction between the hedgehog and the fox The clever fox knows a lot of little truths whlle the wise old hedgehog knows only one big truth. And adding up all those clever little truths never does bring one close to the one big truth — the simple wisdom — that counts. Dr. Kristol draws the distinction between the consensus economic forecast, at the moment unreservedly bullish, and the behavior of the market which, he says offers only melan- choly price/earnings ratios … and .. appears to foresee minimal economic growth (or none at all) and the probability of greater inflation. He goes on to note the prospect of a substantial increase in the 1978 Federal defiCit, the fact that consumer spending is being fuelled by debt rather than by increased purchasing power, and that productivity lags whlle Government-induced ',- inflation and high tax rates continue. The stock market, Dr. Kristol says, notes all these facts and incorporates them into its underlying theory which is hardly a theory at all, but simply an old-fashioned diagnosis of the conditions of economic growth. This is the one big truth the stock market knows the 'secret', of growth—which is no secret at all, except from certain economists and politicians. Now, we have little with which to quibble about Dr. Kristol's basic thesis, and we would hate to be put in the position of defending the rationale behind some of the economic think- , ing now coming out of Washington. As market technicians, a basic tenet of our faith has always – I -oeen thanhematKefltseU'!s-'''r!ghe'-moreoftentfian1ns'''wrong'';'i!ndwehegtlarly-p6intea.—-.–.-.1 out the utter futility of using economic forecasts to predict the stock market, since we are fully ,I, aware of the fact that the market has a far better predictive record than most forecasters. However, ; while the market often has an almost oracular record as a predictor, it often speaks in accents that are less than clear. Hence, it is probably worth some effort to decipher what the stock market is currently trying to say. I I .- – Let us take, to begin with, price/earnings ratios. They are, admittedly, historically low but they have, on the other hand, been so for some four years and, indeed, reached their low as far back as the end of 1974 — from which level they have recovered, albeit modestly. That low was reached after a high made in 1962, 15 years ago. Anyone who has studied the phenomenon is aware that the price that the market is willing to pay for a dollar of earning power tends to change over long (25 year) cycles. It is, thus, somewhat unfair to explain the current low level of this statistic totally in terms of skepticism as the prospects for economic recovery, however well-founded that skepticism might be. A much more important question is whether the long-cycle low for earnings multiples was, in fact, reached in 1974, a question to which the answer, even after three years, is not yet clear. The last time multiples reached their current levels was, of course, in the latter part of the 1940's, and conditions then were not totally disSimilar to those of today. As in the present case, recovery was underway, and, then as now, the market was evincing skepticism about that recovery, skepticism based at that time on the Depression that was supposed to follow World War II. It was the failure of that Depression to materialize that produced one of history's great bull markets. .,' . . – '—– The'problem'for-sTockniarket anilIYSls';'of course, s -noteconomic'foieiastlng7'Th-at I , i I ,i r I j ,,,. ! j activity, as Dr. Kristol rightly pOints out, is an uncertain one at best. It is, rather, the determina- tion of investment odds. Those odds shift in the investor's favor to the extent that potentially unfavorable developments become bullt into the market's price structure. Thus, whether the spectres that haunt Dr. Kristo1 — and, undoubtedly, the stock market — wlll, indeed, materialize in the present instance is a question we do not profess the competence to answer. Yet, while the market's current languor may be frustrating, we must confess our preference for a price structure obviously aware of potential trouble to one where, as was the case a decade or so ago, such trouble is blithely ignored. Dow-Jones Industrials (1200 p. m.) 920.45 ANTHONYW. TABELL S&P CompOSite (1200 p.m.) 99.88 DELAFIELD, HARVEY, TABELL Cumulative Index (6/16/77) 668.64 I I i 1 1 I ! j AWT /jb No statement or expressIon of opinIon or any alher matter herem contolned IS, or IS to be deemed 10 be, dIrectly or Indlrec1Ir.' on offer or the soliCitation of an offer to buy or selJ onr. security referred to or mentioned The matler IS presented merely for the convertenc;e of the subscriber Whl e e believe the Ources of our Informahon to be rehob e. we In no way represent or guarantee the occurocy thereof nor of the statements mude herein Any action to be token by Ihe subrlber should be based on hIS own If\veshgotlan and InformallOn Jenney Montgomery Scolt, Inc, as a corporation, and Its offIcers or employees, may now have, Or may rater tol.e, positions or trades In respect to ony secuntle, menltoned In thiS 0- any future Issue, and such POSitIon may be drfferent from any VleoNS now or hereafter expressed In this or any other luue Janney Montgomery Scolt, Inc. which IS registered With the SEC os on IfIveslmenl advisor, may give adVice to Its Ir\Vestment advnary and other C\Jstomen Independently of ony stalements mode In thts or In any other Issue further information on any secunty mentioned herein IS available on request

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Tabell’s Market Letter – June 24, 1977

Tabell’s Market Letter – June 24, 1977

Tabell's Market Letter - June 24, 1977
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VOAI( STOCK EXCHANQE, INC MEMBER AMERICAN STOCK EXCHANGE June 24, 1977 Trend lines have been a major weapon in the technician's arsenal for many years. – HlstoffcallY7ihese lii'ies-haveoeerldfawnUSr;tlieeyeoa11 -inetliod;,,slmply'by'ifpplylng-a–niler- -. – and pencil to a stock price chart. The advent of computer-stored price data allows employment of a more sophisticated technique — mathematical computation of a channel describing price action between any two points in time. The method involves choOSing a given prior-high and low, computing a channel which describes price action between these two pOints and projecting that channel to the present to ascertain whether it is still descriptive of current price action. The technique has been applied in the chart below. INTERMEDIATE &MINOR COMPUTED OOWNTRENDS – DJIA .J.nE 22. 1m f f — OCT ,.,. … ' Ff81m '971 -' 177 We have, in recent history, two recognizable highs for the Dow-Jones Industrial Average, that of 1014.79 on September 21, 1976, and the year-end high of 1004.65. The most ,-;orecent low is,.of course,898.66 on May.31,1977. The,chart presentsg,computed channels —-.,' drawn from each high to that low. – – As can be seen, both channels have largely contained price action since their in- ception. The wider one, from the September high, is declining at the rate of .28 DJIA pOints per day and is some 78 pOints wide. The more recent, dropping at some. 53 points per day, is 52 pOints wide. The upper limit of the first is now around 961 and the latter at 932. Both channels have now been established long enough and fit the data closely enough to assume, in our view, some importance. We think eventual upside penetration of the two channels (to be decisive that penetration must last for a few days) will constitute an impor- tant first indication of reversal of the market's current slow downtrend. Dow-Jones Industrials (1200 p.m.) 928.77 ANTHONYW. TABELL S & P Composite (1200 p.m.) 100.99 DELAFIELD, HARVEY, TABELL Cumulative Index (6/23/77) 677 ; 23 pWT/jb No totement or expression of opinion or any olher moIler herein (Contolned IS, or IS to be deemed fa be. directly or indirectly, en offer or Ihe SollCllotlon of on offer to buy or sell ony security referred 10 or menlloned The motler 15 presented merely for the conveltlence of the subscriber While oNe believe the sources of our Informa- han to be relioble. we In no way represent or guarantee the accuracy thereof nor of the statements mode herein Any octlon fa be token by the slJbscnber should be bosed on hiS own mvestllJotlon and infOrmotlon Janney Montgomery Scott. Inc. as a corporation, and Its officers or e'l1ployees, moy now hove, or may later toke, poslhons or trades In respect to any securltlE!S mentioned In thl or ony future Isue. and such pOSition moy be different from ony views now or hereofter expressed In thiS or ony other Issue Janney Montgomery xott, Inc, which IS registered With the SEC as on Investment adVisor, may gIVe odvlce to lIs inVestment adVisory ond other customers Independer'ly of (my statements mode In thiS or In any other ISsue Further information on ony security mentIOned herein IS avalloble on request

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