Viewing Month: July 1977

Tabell’s Market Letter – July 01, 1977

Tabell’s Market Letter – July 01, 1977

Tabell's Market Letter - July 01, 1977
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TABELL'S MARKET LETTER – 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VOAK STOCK eXCHANGe, INC MEMBER AMERICAN STOCK eXCHANGE — …. –July …. r-,.0- …. –,.- 4. ..–..- –Y – ………. -r l;;l-977—'—-..;,;- -F-r Independence Day eve is an appropriate time for our traditional examination of the widely- heralded summer rally. Herewith, then, that examination with the usual cautionary notes. Ending Month January February March April May June July August September October November December Total ONE-MONTH PERIODS Advances Declines Avg. Chg. 34 17 1. 24 28 23 0.04 28 23 -0.08 28 23 0.93 26 25 -0.81 25 26 0.93 33 18 1.90 33 18 1.47 22 29 -1.36 28 23 -0.24 29 22 0.40 38 E 1.37 352 260 0.48 TWO-MONTH PERIODS Advances Declines Avq. Chg. 34 17 2.58 29 22 1. 28 25 26 -0.14 31 20 0.93 30 21 0.35 25 26 0.08 32 19 2.78 35 16 3.53 30 21 0.07 25 26 -1. 56 31 20 0.20 ..1! E 361 251 1.80 0.99 The table above shows the action of the Dow-Jones Industrial Average in every one-month and two-month period from 1926 to 1976. For each period the number of instances when the market ad- –..-.vanced-and-declinedis-shown,together-with-the average'PercentageChange;for–theper-i)d.-A-pre- '….,;'- liminary look at the table, indeed, supports the notion of a probable summer rally. The average monthly advance for the Dow over the period has been .48, whereas the average performance in July is an advance of 1.90, almost four times as great. Likewise, the average advance of 3.53 for the two months ended August is a good deal larger than the average two-month advance. It would, Indeed, appear that the expectation of an advancing market during July and August has some solid grounding in fact. Having made this statement, however, a few doubts must be raised. The first factor which needs to be pOinted out is that a large part of the high average advance for the summer period rests on the accident of the 1932 bottom's having occurred at the end of June. Thus, July and August of that year produced the largest two-month advance In stock-market history, an astounding 70 rise. If this single year is eliminated from consideration, the results for July and August are much closer to normal. Secondly while it Is true that July and August do show significant pluralities of advancing months over declining months, It must be remembered that advancing periods tend to outnumber declin- Ing ones over the 51 years by almost three to two. When standard tests of statistical Significance are applied, the period with the clearest seasonal action Is the month of December, wblch is why this letter has always emphasized the Importance of the year-end rally. Likewise, the tendency, toward a declining market in September Is statistically more significant than that of a rise in July or August. Interestingly enough, none of the other months show any discernible seasonal pattern what- soever. Lastly, in looking for seasonal patterns, it Is wise to examine the most recent data to see-If it seems to be deviat-lng from-the past,and'ilndeed'i thisis apparently the-Gase–T-he,eleven – – -'- 'C-t years between 1966 and 1976 have produced three rallies and eight declines in July and five rallies and six declines In August, and the two-month period ended August has produced four rallies and seven declines with an average percentage change of -1.63. Interestingly enough, a new seasonal tendency, not heretofore apparent, seems to be emerging — that of a decline In May-June. Every May, from 1965 through 1977, with the exception of 1972 and 1975, has produced a declining market, and twelve of the thirteen years since 1965 have shown a two-month drop in May-June. The moral of the whole exercise, we suppose, Is that the stock market is a difficult and changing beast, and, while certain seasonal tendencies are apparent, they constitute only one factor In what is Invariably a highly complex equation. Dow-Jones Industrials (1200 p.m.) 910.96 ANTHONYW. TABELL So. P CompOSite (1200 p.m.) 100.06 DELAFIELD, HARVEY, TABELL Cumulative Index (6/30/77) 681.22 AWT/lb No talement or e)(preS510n of opinIOn or cny other matter herem contained 1S, or IS 10 be deemed to be, dlrediy or indirectly, on offer or the SoilCllotlon of an oHer to buy or sell any security referred to or mentioned The matter I presented merely for the canver'lencc of the subscriber While He believe the sources of our Information to be reliable, we m no way represent or guarantee the accuracy thereof nor of the statements mode herein Any action to be token by the subSCriber should be based on hiS own mvesl1gatlon and information Janney Montgomery Scott, Inc, as a corporation, and lIS officers or employees, may now have, or may later lake, positions or trades 10 respect to any seCUnlles mentioned 10 thiS or any future ,ssue, and such poslhon may be different from any views now or hereafter e)'pressed '1'1 thiS or any other Issue Janney Montgomery Scali, Inc, whld! 15 registered WIth the SEC as on Invcstment adVisor, may 9,ve advlf;e to Its Investment adVIsory and other customers mdependently of ony statements mode In thiS or In any other Issue forther information on ony seC\Jflfy menTIoned herein IS available on request

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Tabell’s Market Letter – July 08, 1977

Tabell’s Market Letter – July 08, 1977

Tabell's Market Letter - July 08, 1977
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,———————————————————————————————- TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK eXCHANoe, INC MEMBEA AMERICAN STOCK EXCHANGE Tuly 8, 1977 high. We write this week in celebration of the stock market's achieving a new bull-market – — – – Noiw-ehavenot be-ensom-ewhere in70uterspace'for-the'pasts-lxmonths ;-.and;yes i we are aware that the DOW-Tones Industrial Average has spent the last seven trading days headed generally southeast toward a confrontation with its May 31st, 1S-month low. We are perfectly willing to stand by the statement above. The following chart shows, on the upper set of bars the Dow, on the middle line our dally breadth index, and on the lower set of bars our Cumulative Index. As the chart clearly shows, breadth achieved a new peak a week ago, on Tune 27th, and the Cumu- lative Index scored a new high as recently as this Tuesday. In the case of the Cumulative Index, the recent high is the second consecutive major peak scored, the last one having occurred in May. It is, of course, possible to analyze this strange phenomenon — a confirmed downtrend in the Dow while other indices move to new highs — in great depth and complexity. We suspect, however, that a simple analysis will suffice. That simple analysis hinges on a basic tenet of ' t e c h n ical 'w o r k , . l . e . ,. . th e stoc ….– k,Lmarke t t-,e-…l.. ls its own story — best, and there is .,,-. little ne. ed ….. ., to worry about a market which iso, reg-ularly, making new highs. That is precisely what the market, as measured by the latter two indices, is doing. The only other question which need be raised concerns the validity of such indices as breadth (based on numbers of stocks advancing and declining) and our Cumulative Index (rep- resenting the average percentage change of all NYSE issues). Suffice it to say both, in our view, are statistically valid representations of the market as a whole. This being the case, it seems to us, there is little need for excessive concern, whatever the Dow may do, as long as these in- dicators continue their current buoyant action. Dow-Tones Industrials (1200 p.m.) 909.35 ANTHONYW. TABELL S & P Composite (1200 p.m.) 100.06 DELAFIELD, HARVEY, TABELL Cumulative Index (7/7/77) 683.06 AWT/Jb No stafement or exprelSlon of opinion or any other motler herem contolned IS, or . to be deemed 10 be, dlrect!y or indirectly, on offer or the solicitation of on offer to buy or sell ony secuflly referred to or mentioned The motter 1 presented merely for the conver-Ience of the suscllber While -Ne believe !he sources of our mforma lion to be rehable, we In no way represent or guarantee the accuracy thereof nor of the statements mde herein Any action to be token by the subSCriber should be based on hiS own Inveshgohon and Information Janney Montgomery Scott, Inc, aS a corporation, and Its offICers or employees, may now have, or may lofer toke, POSltlOM or trodes In respect to any SeCUrities mentioned In this or any future ISSUe, and such position moy be different from any views now or hereafter elpressed In thiS or ony other Issue Janney Montgomery Scoll, Inc. which IS registered With the SEC 0 on Investment odvlsor, may gIVe adVice 10 lIs ,vestment adVISOry and other customers ,dependently of any stolements mode Ifl thiS or In ony other Issue. further 1I1formotlon on any security mentioned herein IS aVailable on requesl

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Tabell’s Market Letter – July 15, 1977

Tabell’s Market Letter – July 15, 1977

Tabell's Market Letter - July 15, 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 STOCI( eXCHANGe July 15, 1977 As full-time students of the stock market, we have never ceased to marvel at its Infinite ,….;.v.a..rlety. For all this variety, however, there are still occasions when the regular commentator on the market finds Itd1fficurfto'iine'arths'6if,irthlng-new abOutwnichtYwritForbecome-s'tked of harpl.ngofi … the same old familiar story. For the better part of a year now, this letter, we will be the first to admit, has been attempting to play variations on the same theme, that theme being the fact that the popular market averages are understating the performance of the bulk of listed stocks and that indeed, while the aforementioned averages are moving down, the great bulk of issues Is actually moving ahead. To this end, we featured in last week's issue, a chart — the product of one of our newest mechanical aids, a plotter linked to our computerized data base. The chart was Intended graphically to demon- strate the fact that, at the very same time that the Dow-Jones Industrial Average was moving down- ward, da lly breadth and Our Cumulative Index — two indices we feel to be most representative of the whole universe of listed issues — were actually moving to new 1974-77 highs. We have been reiterating this theme for so long now that the regular reader has undoubted- ly either tuned us out or accepted the thesis. Having proved to our own satisfaction, at least, what is, in fact, happening in the marketplace, some speculation is perhaps in order as to why it is happen- ing and precisely what the phenomenon means. Unfortunately, much of the discussion can be little more than Just that — speculation. The reason Is that this sort of action is, to a great degree, historically unprecedented. Take the tra- ditional behavior of market breadth, for example. Breadth indices, which are based on the number of issues advancing and declining, have generally moved to new highs along with the averages through- out the early stages of bull markets. As those bull markets reached a mature stage, breadth has tended to lag and, uniformly in the post-war period, has either peaked out well in advance of most market aver.l'gsor begun drastlcally.to underperform.those averages as the market began to decline. All of – thetechic;l -literature-on breadtha'r;alysls,-tlierefO're, has-c-;;-ntered On\letectlnc;j breadth underperform- ance as a harbinger of market weakness. The phenomenon of breadth outperforming the averages, as It is now doing, is one that has received little or no analytical effort. The phenomenon Is also difficult to reconcile with the normal behavior of high-grade vs. low-grade stocks. To the extent that the market averages represent highet-grade issues and unweighted indices of the broader market reflect the action of low-grade Issues, we quite clearly have the phenom- enon of second-tier stocks moving ahead while first-tier stocks decline. This, however, does not square with traditional patterns. Historically, as upswings reach a mature phase, secondary and tertiary issues tend to move ahead sharply as the speculative confidence engendered by a long bUll market begins to take hold. Generally, though, at this stage, market averages are also moving up, albeit at a slower rate. Furthermore, as noted above, the terminal phase of a bull market is generally characterized by a topping out of the broad mass of stocks while the hlgher–grade Issues represented by the averages tend to move ahead. With the Dow not having made a high since September, this Is at distinct odds with what Is happening at the present time. Furthennore, It seems to us, what is taking place with the broad bulk of listed stocks can hardly, in our view, be characterized as speculative activity. Rather, we have moved from a period 2 1/2 years ago, when all stocks were ridiculously cheap by historical standards, to a point where that undervaluation has been at least partially corrected In the case of most better-known equities. The result has been a catch-up phase on the part of secondary stocks,whlch still represent uncommon historical value. ,-0,. Weare, f.inally ,unable,to,refra.ln.from,commenting on,recentbehavlor .in the. light of-the…,.. grOWing interest in indexing — gearing an institutional portfolio to match the performance of an average. This interest arose out of a period in which many portfolios failed to match the performance of market averages. We have now, during 1977 at least, apparently entered a period where the average stock is outperfonnlng the market averages by a statistically demonstrable margin and where even randomly selected portfolios apparently have a good chance of beating the averages. The emer- gence of this unprecedented behavior at this particular point in time may, In view of indexing activity, be something more than pure accident. DOW-Jones Industrials (1200 p.m.) S & P Composite (1200 p. m.) Cumulative Index (7/13/77) AWT/Jb 904.00 '99.80 684.35 ANTHONY W TABELL DELAFIELD, HARVEY, TABELL No slclemenl Of eXpression of opmlon or any other motte herein contatned IS, or IS to be deemed to be, dnedly or indirectly, on offer or Ihe solicltotlon of on offer to buy or sell any setunty referred 10 or mentioned The motter I presenled merely for the converlence of the subscrIber While we belIeve the sources of our informa- tion to be reliable, we In no way represent or guarantee the accuracy thereof nor af the statements mude herein Any ac/lon to be taken by the subscnber should be based on hiS own Investlgahon and Information Janney Montgomery Sco11, Inc, as a corporation, and Its offlcer or employees, may now have, or may later toke, po,lttons or trades In respect to any securities mentioned In thiS or any future Issue, and such pOltlon may be different fro'll any views now or hereafter epressed In thiS or any other ISSue Janney Montgomery Scott, Inc, which 15 registered With the SEC as an lneStment adVisor, may give adVice to 115 Investment adVisory and othel customers IIldependentJy of any statements mode III thiS or In any other Issue Further information on ony security mentioned herein IS avollable on request

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Tabell’s Market Letter – July 22, 1977

Tabell’s Market Letter – July 22, 1977

Tabell's Market Letter - July 22, 1977
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TABELL'S MARKET LETTER 909 STA.TE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER New YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE July 22, 1977 — — — ——' .One of the things the stock market has been consuming in its meandering – around'the-9DO-I000 level in t….h-e-.Dow fo,-r'the past–s.i-x- te-en mo- nths fs-tim- e. — T- hi-s-,e-ro-s-i-on –of , time has, not without reason, caused a certain degree of malaise among investors. Most people are aware that, historically, market upswings do not tend to extend beyond a certain tlmeframe before ultimately giving way to bear markets. The date on which the current market phase began is now, of course, a known quantity. It is December, 1974, at least if one uses the Dow Jones Industrial Average as a market measure. (If the S&P 500 is used, the bottom was two months earlier.) As we conclude July, that date fades two years and seven months into the past. It is, therefore, perfectly reasonable to ask whether the current cycle is not approaching a mature, or indeed a senile, phase. A great deal of serious analytical work has been done on the stock market periodicity, and it has been discussed in this space at some length in the past. A fairly well- known phenomenon is generally called the four-year cycle. This term is only a bit of a mis- nomer. There is indeed a roughly regular pattern to stock market history for the entire 20th Century, exhibiting a cycle approximately four years in duration. The actual average length of these cycles over nineteen instances in the 20th Century has been some 42.3 months. This is a bit shorter than four years, but if one looks at more recent history, the appellation is more accurate. Taking into consideration only cycles since 193B, the mean length is 4B.3 months, and if one takes the post-war period only, it is 51 months. –,– -'—'– –. -,,——- -' At this pOint, one fact must be emphaSized. When we talk about length, we are talking about the entire cycle—both up and down phases. (All of the time periods referred to in this letter measure from market-low to market-low). Since one fixed low point is now known, we can thus use history as a guide to the possible dating of the next market bottom. Using the century-long average, that bottom should occur around June of 197B, and using only the post-war experience in computation, one would expect it in March of 1979. The shortest cycle on record in this century is 36 months, producing a possible low as early as December of this year, and the longest on record is 56 months, which would stretch the next low point out to August of 1979. However interesting the above may be from a scientific point of view, it is singularly unhelpful for practical investing at the moment. With the Dow, even at current levels, up over 300 pOints from its low, one is hardly interested in the date of the next market bottom. He is rather concerned with the shape of the cycle, knowledge of which might point out the date of a market high—possibly even a market high which has already occurred. On average, cycles in this century have spent just under 70 percent of their time advancing. This is true also in the post-war period but in this case, the pattern is interesting. The first four cycles since June, 1949 spent BO percent of their span in an advancing phase. The last two (October, 1966-December, 196B and May, 1970-January, 1973) have -only spent 60.perc!nt of ,their totalJife advancing,.-What is-interesting at the-moment is that we are now approaching, although we have not yet reached, that 60 percent figure for the current cycle. What cycle work tends to suggest, we think, is that there is still more room in the historical tlmeframe for new highs to be achieved on the current upswing. What could also be suggested by a continued rising phase throughout the rest of 1977 is a return to the highly bullish sort of cycle shape which categorized the period from the 1940's to the 1960's. Dow-Jones Industrials (1200 p.m.) 921.26 ANTHONYW. TABELL S & P Composite (1200 p.m.) 101.57 DELAFIELD, HARVEY, TABELL Cumulative Index 692.32 AWT!jt No statement or expressIon of opinion or ony other matter herein contolned IS, or IS 10 be deemed 10 be, directly or ,ndirectly, on offer or Ihe SOIICllol,on of on offer to buy tlon to or sell ony security be reliable, we m referred no way 10 or mentioned The motler '5 presented merely represent or guarantee the accuracy thereof nor for of the the convenience Motemen!s m of ud the subSCriber e heem Any While Ne believe action 10 be fa!.;en yheIheousrucbssconfbeorursanuftdomkbee based on his own positions or trades Invesllgatlon and mformatlon Janney Montgomery In respect to any securities menlloned m thiS or any Scali, future Inc, os a Issue, and corporation, and Its a,f'eers or such posLtlon may be dlfferen employees, may from any views now now have, or may later or hereaJter e)(prese d h,n' Ihls or any other Issue Janney Montgomery Scott, Inc, whICh 15 registered With Ihe SEC as on Investment adVisor, may give adVICe to Its Investment a vlSoryon at I'll customers Independently of any statements mode In thiS or In any other Issue Further mformatlon on any security mentioned herem IS avaIlable on request

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Tabell’s Market Letter – July 29, 1977

Tabell’s Market Letter – July 29, 1977

Tabell's Market Letter - July 29, 1977
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANoe, INC MEMBER AMERICAN STOCK eXCHANGE Well, now, what have we here July 29, 1977 , – -.- '. ,As.. recently,aslast Fdda'ythestock.markeothad,be.en.beha.1ngin Jhe.same .. , '– familiar, if boring, fashion we have come to know, if not, particularly, to love. The Dow, after six straight advancing days, had risen once more to the top of its 1977 downtrend channel while the S & P 500 had reached its best level since last March. Our Cumulative Index, as it had been doing ever since spring, had moved to a new 1974-77 high, and most broad-market indicators were happily in gear on the upside. At this point, the proverbial roof fell in. The week opened with a nine-point decline, another six points was subtracted on Tuesday, and Wednesday produced a rouser of a 20- point drop that moved the Dow to a new 19-month low. Early trading on Friday was extending the drop still further. Two pOints, it seems to us, are worth noting. The first is that there is no deny- ing the severity of the decline and, thus, the potential technical damage that has resulted. It has been possible on many occasions so far this year to point — with justification — to the fact that the averages were understating the market's performance on downswings and that the bulk of the list was not, in fact, acting all that badly. Such was most certainly not the case early this week. Wednesday's trading saw 1327 declining issues, a number sufficient to suggest a relatively ex- treme degree of severity. The Transportation Index, until lately an above-average performer, broke to a new low underneath a line formation which had contained it since late May. 64 new lows for the year were scored in Wednesday's trading, and, in a weekly scan which we regularly perform, 197 issues,or almost 14 of the stocks under survey, declined 5 or more on the week. — – …I.t.w,as-,'-i'n–schort, a nasty piece of work. While all this must be admitted; it must also ! be not;;jttiat one week is . . '' still ' only one week. As we suggested above and as we discussed at length in this space three weeks ago, most indices of overall market behavior have been demonstrating perfectly satisfactory up- side action despite the weakness in the Dow. That upside action continued unabated through last Friday. While the sharp correction has certainly created the potential for a fair amount of techni- cal damage, it is hardly by itself enough to constitute a harbinger of extreme weakness. In most cases, and we do not think that the present one will be an exception, it is not short-term down- swings which provide clues as to the market's future direction; it is, rather, the nature and extent of the rallies which follow. A weak rally attempt and subsequent turndown after whatever bottom is reached on the current move would certainly have to be viewed with suspicion. Needless to say, this chain of events has not yet occurred and would, at a minimum, require a few more weeks to complete. Even the action of the Dow, furthermore, was well within the context of the downtrend which has been established since the first of the year. We have drawn attention to that downtrend channel in this space in the past. Its lower limit, even recomputed to include the re- cent lows, is at around the 878 level. Thus, the drop has done nothing mOre than bring the 30 Industrials back to the bottom of a channel which has contained them for all of 1977 thus far, the fourth time this year that a move toward the bottom of this channel has taken place. What, then, of the immediate future The short duration of the decline to date, while it places a limit on the long-term technical damage done, also raises the possibility that – the-doWnswingmay-'liol'iet'ha-verun'its cciUrS.' 'In-afeWdays, shortterm marKet oscilliitOrs'llave not yet had a chance to reach the sort of oversold territory from which a rebound might be expected to take place. However, further weakness would create such a condition and provide the back- ground for a short-range advance. It will be the character of this advance, as suggested above, that should be watched. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (7/28/77) AWT/jb 883.40 98.09 675.95 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expression of opmlon or any olner matter herein contaIned IS, or .5 to be deemed to be, directly or Indirectly, on offer Of the oll(llol1on of on offer fa buy or sell cny securrty referred to or mentioned The moiler 1 presented merely for the converlence of the subscriber While we believe the sources of our Informa lion fa be reliable, we In no way represent or guaronlee the accuracy thereof nor of the s'alements mode herein Any action to be toen by the subscnber should be based on hiS own investigation and InfOrmalion Jonney Montgomery Scali, Inc, os 0 corporation, and Its officers or employees, may now have, or may rater lake, posilions or tr.cdes .n respoct.lo .cny secu.utJeSmenllOned In thIS or. any bture'Sve. and;uch pOSIIJOn.IIl!JY be different from ony views now or hereafter expreSed In thu or any other Issue Janney Montgomery Scott, Inc, wh,ch ,s registered With the SEC as on ,nvestment adVisor, may give adVICe to Its Investment adVisory and othe. customers .ndependently of any statements made In thiS or In any other Issue Funner Informallon on any securoty mentioned herein IS oVOIlable on request

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