Viewing Month: August 1977

Tabell’s Market Letter – August 05, 1977

Tabell’s Market Letter – August 05, 1977

Tabell's Market Letter - August 05, 1977
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TABELL'S MARKET LETTER 909 STA'rE ROAD, PRCNCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANOE, INC MEMBER AMERICAN STOCK EXCHANGE August 5, 1977 Around 1973, which seems like eons ago, we undertook to prove the thesis that the — .,theninstitutionally-favored growth – marketasil whole. -Asacounterpo stocks were less tha innofhis theme-;-we nserleeacstoena-a'baltytnvaayltuiemd-ina-rgerloautpioonft ot 11 h'e;YCrr;—,-J' cal issues which were at that point beginning to show above-average technical action, although remaining in comparative disfavor with the investment community. We have re-examined the per- formance of these 11 issues at various times during the intervening years. The present is perhaps a good time for another look. As readers will' recall, cy- clical stocks were among the leaders in the early stages of the bull market which began in late 1974. From a technical paint of view, this was hardly surprising. Mcst of them had, during 1973, a year in which the averages declined, broken out on the upside of long trading ranges, and al- though they retreated rrodestly during the abysmal market year of 1974, they did no more, for the most part, than return to support levels. This was fallowed by their 1975 market leadership. That leadership, however, came to an end for most of these issues a year and a half ago — in early 1976. This was the point at which the Dow began its current long trading range, and one of the factors undoubtedly contributing to that continuance of that range has been the depressing effect of poor action on the part of these issues, heavlly represented in the Dow. The following table, shOWing the 1974-76 move for the 11 stocks, together with their recent low and the percentage of the a dva nce retraced, illustrates this. Alcan Aluminum 1974 Low 19 Advance 58 1976 High 30 Recent Low 27 Advance Retraced 27 All1ed Chemical 24 I.-,…- —-AslceotahlehemSteel- —'-;2246 83 44 46 135 61 51 96 47 -23 i2b48;–o -,-' – International Paper 32 147 79 46 70 Kennecott Copper 26 58 41 26 lOa Monsanto 40 ISO lOa 69 52 Phelps Dodge 26 73 45 28 89 U. S. Steel 24 145 59 34 71 Westvaco 13 138 31 26 28 Weyerhaeuser 24 104 49 32 68 As the table shows, ten of the 11 are now well below their 1976 highs, and two have retraced their entire bull-market move. The bulk of the list has given up from one-third to two-thirds of its 1974-76 advance. It is, therefore, probably worth examining the status of the 11 issues at the moment. As could be expected with a list selected four years ago, the technical patterns are less consistent today than they were at the time the stocks were first chosen. There is, nonetheless, some degree of similarity. The stocks have, by and large, returned, at current prices, to the strong support levels whence they originally began their move some two and a half years ago. There is, at the moment, no evidence of improving technical action in these stocks, and, indeed, on a short-term baSiS, it remains dismal. The recent sharp declines, however, have placed the stocks in what can only be termed a sharply oversold condition. Our own analysis is that the moves of 1974-76 in these issues wer not tranSitory pJenomenona and that 'they willohave-imPlicatiOlis far oeyond the current 'cycle.-We would, in other words, look— – – ing ahead, expect these issues to rebase and resume the very-long-term uptrends which began in the early part of this decade. That process will, needless to say, take time, but it is one which, we think, will be worth waiting for. Dow-Jones Industrials (1200 p.m.) 890.68 ANTHONY W. TABELL S & P Composite (1200 p.m.) 98.96 DELAFIELD, HARVEY, TABELL Cumulative Index (8/4/77) 672.42 AWT/Jb Note AI! comments above are based solely on technical factors and further information on individual issues is available on request. No ,totemen! or eltpreSSlon of opInion or any other matter herein contOlned IS, or IS to be deemed to be, directly or Indirectly, on offer or the SOllCIIoilon of on offer to buy or sell ony security referred to or mentioned The molter IS presented merely for the convellence of the ubscflber While 'Ne believe the SOurces of our Informa Tlon to be reliable, we In no way represent or guarantee the atcuracy thereof nor of the statements mude hertlin. Any action to be token by the subscriber should be based on hiS own Inveshgallan and Informahon Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, may now hove, or may loter lae, posillons or trodes In respect 10 any seCurities mentioned In thiS or any future Issue, and uch position may be different from any views now or hereafter expressed In thiS or any other Inue Janney Montgomery Scott, Inc, whICh IS registered With the SEC as on InveSmenT adVisor, may give odvlce to Its invesTment adVISOry and oThel customers Independently of any statements mode tn thiS or tn any other Inue Further information on any security mentioned herein IS available on request

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Tabell’s Market Letter – August 12, 1977

Tabell’s Market Letter – August 12, 1977

Tabell's Market Letter - August 12, 1977
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TABELL'S MARKET LETTER 909 STATE ROA.D, PRINCETON. NEW JERSEY 08540 tlIVI810N OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AM! RICAN STOCK EXCHANGe August 12, 1977 e ..,…–. h'As deadly.seriousa41.lsiness.asthe,soc&mar.ket'may, be-,-there .have-always-been –. – those who have tried to see its humorous side. Often the attempts at humor have taken the form of so-called theories or laws to explain whatever aberration happened to be taking place in the market at the moment. Many years ago, for example, there was the famous football theory of stock-market prediction. The details of this one are mercifully lost in antiquity, but it went something on the order of, Buy the market if Army beats Navy by more than seven pOints. If not, sell unless California ties Stanford. The thing, of course, worked — at least at the time of its formulation. It successfully called the 1929 crash, the 1932 bottom and a couple of other sub- sequent moves. Later results, we recall, were somewhat less successful. More recently, in the middle 1960's, came the X theory. The basic tenet of this formulation was that to outperform the market, one Simply bought stocks whose names ended in X. That one worked for awhile, too, at least until Xerox and Syntex became slightly less stellar performers than they previously had been. We have been trying to formulate similar laws to explain the behavior of the current market, and we think we have one which we are perfectly willing to share with our readers. Here- with, then, the Tabell Obscurity Principle If you've never heard of it, you can buy it. Like the other principles mentioned above, the Obscurity Principle has some only- moderately-tenuous relation to fact. It has been impossible of late to pore through 2000 stock market charts, an exercise we perform weekly, and not be struck by the number of relatively small companies, on both the New York and American Exchanges, which are demonstrating extra ..,. ordinary-technical action .-T-his w0uld.obeunsuf'!)ris ing.were-wes omewhere'in'the-blowoff-pha-s e – – of a bull market with all the juices of a typical speculative upsurge running freely. Such, how- ever, is hardly the case at present, as the better known companies on the American industrial scene lead the DJIA and the S & P 500 in a general southeasterly direction. It is difficult to say just why this should be so. Our own gues s, however, is that the phenomenon is not unrelated to the emerging acceptance of certain tenets of modem portfolio theory. One of the cornerstones of this theory is the concept of the effiCient market, a market in which all relevant information is held to be instantaneously known to all participants, thus making it impossible for any investor, however well informed, to take advantage of information not already reflected in the current price. Our own opinion is that, while the efficient-market theory may possess a bit more academic respectability, it has about as much intrinsic merit as the football theory discussed above. Let us, for a moment, however, posit its partial truth. If there is an element of reality here, it would be most applicable certainly to large companies being followed by many investors and to gargantuan money managers with limited flexibility to move in or out of stocks. It is, indeed, just possible that the m'arket, insofar as these investors and these stocks are concerned, might just be efficient in the sense in which the word is currently used. It is less likely, however, that the same premise is as applicable to the stocks of smaller companies which are effectively unavailable as portfolio choices to those who must move mammoth amounts of money. Thus, the discrepancy between the action of these companies and – .- – – -..—……… -…..—..';. -….–;;.—–…— – – that-of the'largecompany-dominated market'averages-;– Much has been made of the institutionalization of the stock market and the flight therefrom of individual investors. It is ironic that,at the height of this phenomenon, the number of attractive investment opportunities apparently available to the individual investor and effective- ly unavailable to financial behemoths appears to be increasing at an unprecedented rate. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (8/11/77) AWT/jb 875.52 98.02 672.06 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No totemenl or e)(preulon of op'nton or any other moiler herein contOlned IS, or , 10 be deemed to be, dHeqly OT indirectly, On offer or the SOIIC1tot,on of on offer 10 buy or sell any securlly referred 10 or mentioned The matter IS presenled merely for the cOl'wel'iencc of the ubscnber While 'Ie believe the sources of our Informolion to be reiJoble, we In no way repreent or guarantee the accuracy thereof nor of the statements mude herc!ln Any action to be to\…cn by the subSCriber should be based on hiS own Inve;llgoloon and InfOrmalion Janney Montgomery Scali, Inc, as a corporation, and Its officers or employees, may nON have, or may later lake, poslhons or trades In respect to any securities mentioned In thiS or any luture Issue, and such pOSition may be dlffe'ent from any views now or heteafter expressed In thiS or any other Issue Jonney Montgomery Scoll , Inc, which s registered with the SEC as on Investment adVisor, may gIVe adVice to lIs Investment adVISOry and other C'Ustomers Independently of any statements mode to Ihls or to ony olhe' Issue Further mformotlon on ony security menlloned herein IS available on request

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Tabell’s Market Letter – August 19, 1977

Tabell’s Market Letter – August 19, 1977

Tabell's Market Letter - August 19, 1977
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY OB540 DIVISION OF MEMBER NEW VOAK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE August 19, 1977 One of the many functions of the technician on the investment scene is that of market histo',' – riail fhus;-eIther subconscfously'or15efteryet;-c01isciouslyCan(nonnBlIY7he examiilespast'iiiarKet history and divides it into periods of bull and bear markets. Within each of these bull and bear mar- kets, he also attempts to identify intermediate and minor moves opposite in direction to that of the major trend. As one approaches this level, the definitions often become somewhat fuzzy and less precise. Nonetheless, they are, it has always seemed to us, an important part of the intellectual baggage a responsible market analyst brings to his work. When one looks at market history far enough in the past, the definitions of bull and bear markets become fairly clear and, in effect, a permanent part of the record. Very often, however, recent history is less clearly defined, and it is not until long after the fact that we can definitely identify a given market period as a bull market, bear market or something in between. Such is the case in the present instance, which, as we have been regularly noting, offers one of the more complex equity markets in recent memory. In attempting to classify it, however, we do have a few firm and and permanently fixed facts to work with. To begin with, the Dow-Jones Industrial Average is now down just a shade under 14 over a period of 160 trading days from December 31, 1976. If one cares to measure from the high of last September 21, the decline is 14.8 and is now 230 trading days long. This much, at least is unalter- able. Now, a decline on the order of magnitude of 14 can wind up as only one of two things when it is finally classified and catalogued by the market historian. It can be either an intermediate- term drop within the context of an ongoing bull market or it can be a part — either a major or minor , –' part — of an sta'geTritoWhi ongOing major bear cycle. ch of these two slots future Here, then, is the dilemma. It hfstortaiiSViiIti'iiimately place remains uncertain at t the first eightrronths h0i1s……….- 1 1977 . Let us examine the first possibility. A 14 bull-market correction, while not all that com- mon a phenomenon on an historical basis, still possesses ample precedent. As we hit the 14 level, however, we are approaching the maximum size for this particular species of market beast. If an intermediate-term correction, therefore, is all we are looking at, an end thereto should be approach- ing, regardless of whatever short-term horrors may be in store over the next few weeks. The only source of worry for the investor and portfolio manager, therefore, should be the possibility that, eight months to a year ago, we embarked on a new major bear cycle. It is thus worthwhile examining just how much paniC this particular prospect should engender at this particular stage of the game. The answer, if one looks at most recent history, is that the panic button should be pushed rather firmly. The two most recent bear markets were 1968-70 and 1973-74. Those little beauties took us down 36 and 45 on the Dow, respectively. A repetition at this point would take us to somewhere between 640 and 550, not a prospect to be regarded with tranquility. It is, there- fore, appropriate to ask whether most recent history is currently our most reliable guide. We are not so sure that it is. If one believes that a major cycle low occurred at the end of 1974, then bear market definitions for that cycle are no longer valid. During the previous cycle, that of the 1950's and early 1960's, we were accustomed to use a 20 screen as a filter for bullbea cycles. There were, indeed, identifiable bear markets during this period with corrections as small as 13. Thus, if we are to use this period as our guide, the worst could be just about over. —As we said above, we do not believe the 1968-74 experience is necessarily applicable in . …. —– – -. —-..- .. – – — — – —-,.– —— –…- …. ,.- the present instance. Without in any way minimizing the extent of the technical distribUtion Wh ich has taken place over the past summer, it is quite clear that there exists no distribution on the order of magnitude that was beginning to take place a decade ago. The phenomenon of massive distribu- tional tops, following a protracted rise fueled largely by speculative expectations, is one that is notably absent today. It would seem, therefore, that investment action based on the presumption of massive vulnerability from current levels would be premature at best. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p. m.) Cumulative Index (8/18/77) AWT/jb 861. 57 97.40 666.57 ANTHONY W . TABELL DELAFIELD, HARVEY, TABELL No statement or elpreS510n of opinion or any otner moffer herein contolned 15, or IS to be deemed 10 be, directly or indirectly, on offer or the solrcllollon of on offer 10 buy or sell ony security referred to or mentIOned The moiler IS presented merely for the converlence 01 the subSCriber Whde we believe the sources of our informa- tIOn to be reliable, we In no way represent or guarantee the accuracy thereol nor of the statements mude herem Any action to be token by thc subSCriber should be based on hl own IOvestlgahon and Informahon Janney Montgomery Scott, tnc, as a corporation, and Its officers or employees, may now have, or may later loke, pOllIons or trades In reSpect to cny securities mentioned In thiS or cny future Inue, ond such posilion may be different from ony Views now or hereJiter expressed In thiS or any other Issue Janney Montgomery Scali, Inc, which IS regnlered With the SEC as on Investment adVisor, may give adVice 10 Its Investment odvlsory ond olher customers independently of any statements mode In thiS or In ony other rssue Further Information on cny sccuroly mentioned herern IS available on request

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Tabell’s Market Letter – August 26, 1977

Tabell’s Market Letter – August 26, 1977

Tabell's Market Letter - August 26, 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 August 26, 1977 We have repeatedly discussed the difficulties involved in trying to discuss the current stock market in terms of the averages, which, as we have noted, have failed to reflect the price action -…. 9 l'l..rg,equ'!ll;,-ersofLin,divigu!l; sjQc!ss.Yw,Q J!his,,el-l ,tlierefpre,,,Jota ke,another-ta c k ,a n d '- become more specific — to see if we can learn anything about the equity-market cl1mat from the re- cent price action of two individual issues. We have deliberately chosen two issues which possess practically no similarity other than that their names begin with the same letter of the alphabet, Bethlehem Steel and Burroughs Corporation. The recent price action of the two issues is typically disparate. Bethlehem sold over 40 at the beginning of this year and as recently as last June was in the low 30's. It closed Thursday at 20 1/2. Burroughs, on the other hand, touched 54 1/2 as recently as April and sold this week over 70, all this at a time when the market averages were trending generally lower. Both these moves, the strength in Burroughs and the.weakness in Bethlehem, constitute reversals of recent form. Burroughs, which reached a peak of over 120 at the height of the growth- stock craze in 1973, declined to the low 60's in the 1973-74 bear market and then, after recovering to 110, moved below its 197iJ-low on its recent slide to the middle 50's. Bethlehem, by contrast, was essentially unaffected in the 1972-74 slide and, between the end of 1974 and early 1976 moved from below 24 to 48. In terms or price performance, then, we have one former market leader recently fallen on hard times and what was recently a subpar performer now acting considerably better. As everyone is aware, the fundamentals for the two companies are as different as their comparative price action has been. Burroughs has enjoyed more than a decade of uninterrupted earn- ings growth of the sort that, a few years ago, made it the darling of those who believed in the one- decision school of investing. There has, in the recent past, been no deterioration of this fundamental picture. Earnings have continued to expand at a rapid rate, and both of the first two quarters of this 0;;I – year -new asialw-timcoemmhelgnhda'abtl4g.a8i9nspevresrhsaursetheBceotmhRleahreambl,ealga1in.Rbeyr'clOodll,i,;w'asitt,h 12-mol1lbearningsmoYlngtoa has fallen recent and we'll' – . advertised hard times — a deficit in the first quarter, a desultory second quarter and a recent slash in the dividend from 2 to 1 having been just a few of the recent unfavorable news items concern- ing the company. What moral are we to draw from all this The pOint, it seems to us, is that, if we are to postulate considerably lower prices for the market as a whole, we must be able to foresee further substantial weakness in both Burroughs and Bethlehem. Both these issues are reasonably representa- tive of whole classes of securities which are fundamentally important to the marketplace. We must ask ourselves, therefore, what is th plausibility of this concurrent weakness occurring. As far as Burroughs is concerned, the whole of the last five years has been, essentially, a markdown process from the ridiculous overvaluation of 1972-73, when at the craze of the growth- stock mania, supposedly rational investors were willing to pay over fifty times earnings for the stock. This markdown continued until just recently, when the stock, with no change in the fundamentals, was available as low as 13 times trailing-12-month earnings. It would seem a fair conclusion that at that level the reevaluation proces s might have been at leas t largely complete. 1 What about Bethlehem If the near-term outlook is as questionable as it appears to be, is not further weakness a possibility Here, we must recall, we have a stock whose price has already returned to around the level of its 1970 low. We have, furthermore, a company which, as recently as two years ago, managed to earn 8.70 in a single 12-month period and now sells for 20. It seems to us equally valid to question the downside possibilities in this Instance. ,–, ,If downside possibilities are.limited., one mustloQk at the c!f.J!u!r2-ugh-.h.as, -ccimpleteathe correctional' its-'19-72'73 overvaluatiOilai1d Bethlehem has been driven to a level where it is oversold on an intermediate-term basis, both stocks could enjoy a fairly decent recovery from these prices. Were the growth and cyclical universes, which these two issues tYify, begin to move concurrently to the upside, the market results could be positive indeed. Dow- Jones Industrials (12 00 p. m.) 849.45 S & P Composite (1200 p. m.) 95.58 ANTHONYW. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (8/25/77) AWT/jb 660.11 C' Note All comments above are based solely on technical factors and further information un individual issues is available' . on request. No statement or e)(preSlon of opinIOn or ony other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, on oHer or the SOllcltotlOn of on offer to bvy or sell any security referred 10 or mentioned The matter IS presented merely for the converlenc of the subSCriber While He believe the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action to be tc\l-el' by the subSCriber should be based on hiS own investigation and Information Jonney Montgomery SCOIl, Inc, as a corporation, and Its officers or employees, moy now have, or may later toke, POSitions or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such position may be different from ony VieNS now or hereafter expressed In lhls or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to Its Investment adVisory and othel customers IndpendentJy of any statements mode In thiS or If! any other Issue Further information on any secuflly mentioned herein IS available on request

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