Viewing Month: November 1977

Tabell’s Market Letter – November 04, 1977

Tabell’s Market Letter – November 04, 1977

Tabell's Market Letter - November 04, 1977
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,/ v —, TABELL'S MARKET JLETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORI( STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE November 4, 1977 This letter has reiterated at various times In the past the rather simple axiom that moving objects. This Is an assertion that should surprise'-noone,tocksare .A- —- – ….,………..- —-,.,.- -''-.-,,- especially following –the market of the past few weeks, when the'movement h'as'beEfn all1oo a-pparentand -Ifs'-dlrectlon quite clearly down. It Is necessary, however, periodically to remind oneself of this truism since the techniques Involved In analyzing stationary and moving objects are, In fact, quite different. A stationary object can be viewed Simply In terms of Its location at a given point In time, 1. e., Its level. A moving obj ect has to be thought of not only In terms of its level but also In terms of direction. We have often used the analogy of two airplanes at Identical altitudes, one In a tail- spin and the other In a controlled, powered climb. Despite their Identical levels, one's attitudes toward being a passenger on the respective planes should be quite different. If one considers nothing more than the level of the current stock market, It Is very difficult to become concerned. It Is, Indeed, even arguable that current equity prices are, on an historical baSiS, highly attractive. This Is certainly the view espoused by large numbers of corporate managements who have, in the recent past, been willing to make bids to take over en- tire companies at prices Significantly above the levels at which the stock market was valuing them. The same sort of judgment is reinforced by looking at stock prices In relation to current earning power and dividends. When this sort of measure is employed, It becomes apparent that the mar- ket is now priced not too far from those levels which characterized the bottom in 1974, a period we know in retros pect to have been a unique historical opportunity. It Is when we start looking at direction that we begin to have difficulty with the Cur- rent climate for equity prices. It certainly does not require sophisticated technical analysis to recognize the fact that the current direction of prices is downward and has been so since the first 0t-the ,yar. It.has, mOleover, been downward with a persistence and la.k,arial1lity w,hiC;'hi..S. 1 relatively rare in stock market downswings. In addition, there Is' reasonably al5undant evidence – – that the weakness, which was confined to a relatively narrOW segment of the list at the beginning of the year, has, in recent weeks, been spreading to broad numbers of stocks. The number of new lows being attained on a daily basis attests to this quite vividly. In the face of this sort of evidence, It Is obviously rather hard to react with wild ecstasy to the current level of stock prices, however attractive that level may be on the basis of historical comparison. Nonetheless, that attractive level remains a fact of stock-market life and will probably remain so for some time. Its existence as a fact should, if we are rational, make us all the more enthusiastic over any visible evidence that downSide momentum is waning or re- versing. To this end, we presented last week a rather detailed analysis attempting to assess whether recent action had, in fact, been symptomatic of a market turn. We were forced to come to the regrtful conclusion that such was not the case. It must, however, be admitted that this sort of conclUSion Is one that can legitimately be reversed at any moment. It would, in other words, be fairly easy for the market, in a very short time, to produce the kind of performance which would suggest the advisability of a highly aggressive stance toward equities. There remains Insufficient space here to document in detail the sort of evidence which the stock market would have to provide, although we may have the opportunity to comment on this sort of thing In future Issues. Basically what Is needed, however, Is more volume and more fluctuation. Until last week, at least, volume had been holding around levels which had characterlzed it all the waythrough the decline. An historical symptom of market bottoms, by con..-.. – trast, is shrplY e';panded VOlume, -bOth on the-downside and subsequently 0;; the upside. – Llke— wise, fairly Violent fluctuations in both directions tend to be characteristic of bottoms. The warning flag provided by a few days of truly severe market decline followed by a distinct and broad rebound would, similarly, constitute bullish evidence. These signs may manifest them- selves at any moment and, were they to do so, would call for a sharp reversal of attitude as re- gards Immediate stock-price prospects. Until such action takes place, however, consideration of the direction of the stock market must take precedence over recognition of Its admittedly attractive level. Dow-Jones Industrials (1200 p. m.) S & P Composite (1200 p.m.) 806.31 91.16 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (11/3/77) 627.93 AWT/jb No stalement or eKpresslon of opinion or any other matter herem conto!ned IS, or 1 to be deemed to be, directly or Indirectly, on offer or the soliCItation of on offer to buy or sell ony security referred to or mentioned The mailer I preented merely for the Convef'lcnce of the subcrlber While we believe the sources of our Information to be reliable, we In no way represent or guarantee the occuracy thereof nor of Ihe stotements mude herein Any achon to be token by the subSCriber should be based on hiS own Investigation and information Janney Montgomery SCalf, Inc, a5 a corporation, and Its officers or t'mployees, may now have, or may loler toke, poslhons or trades In respect to any securilies mentioned In Ih,s or any future Issue, ond such position moy be d,fferent from any Views now or hereafter expressed In thIS or any other Issue Janney Montgomery Scott, Inc. which IS registered With the SEC as on Investment adVisor, moy give adVice to 11 Investment advisory ond othel customers Independently of any statements mode In this or In any other lSue Further Information on ony seC\wty mentioned herein IS ovorlable on request

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Tabell’s Market Letter – November 11, 1977

Tabell’s Market Letter – November 11, 1977

Tabell's Market Letter - November 11, 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 November 11, 1977 Broad and dynamic strength on Thursday and Friday of this week decisively violated the – s hort-term—downtrend Channel'wh-Ich.-has, conta1ned-the maJor-averages .slnce ,last .July-.A, l-I-polnt…- rally In Thursday's trading, on sharply Increased volume of 32,000,000 shares, was followed by ad- ditional wide strength early Friday. The current problem centers around analyzing the broader mean- Ing of all this admittedly Impressive strength. In the eyes of most Investors, the job of the technician is to forecast, that is, to sug- gest, with as much accuracy as possible, what the market is likely to do in the future. It is assumed that, along with everybody else, he is aware of what it has done in the past and that, therefore, comments on past history will be of little save academic interest. This view, unfortunately, is somewhat of an oversimplification. The future is always uncertain, but even the past, on occasion, Is somewhat murky. The present Instance constitutes a rather neat case in point. Have we been, for the past year, in a bull market or a bear market The answer to this question is less than obvious, and it must, It seems to us, be answered in order to gauge how one should peer into the future. . If one looks solely at the Dow-Jones Industrial Average, there is little doubt but that we have been in a bear market for the past fourteen months. The venerable thirty made their high that long ago and, early this month, were down 21 from that high, enough to qualify as a major downswing by any historical standard. The problem is that the Dow Is not, as investors are coming to realize, the only game in town. The S & P SOO-stock Index, for example, is down less than 16 from its 14- month-ago high. This amplitude, while somewhat on the extreme side, has in the past been squeezed into the context of intermediate-term declines within an ongoing bull upswing. One problem with the intermediate-term decline argument, however, Is that, In the case of both major Indices, the process has been going on for fourteen months, a rather excessive period of – time..iorac.onectionwlthln.aIlOngolngtr.eod.ILill, noneth,eleSJl,Ros.sJbJ.!! Jt;Lgi.around this dlflig,l…….. ty by looking at the action of market breadth or at an unweighted index such as our Cumulative Index. Using these Indicators, we find that the market's most recent high was made last July, a scant 3 1/2 months ago, and It is certainly possible, on the record, for a market to interrupt an ongoing upswing for this short a period. Moreover, since making its peak last July, the Cumulative Index has dropped only from 694 to a recent close around 628, a 9 1/2 decline and one, obviously, fitting the descrip- tion of an Intermediate-term correction. What we are trying to suggest, of course, Is that the Simple question of where the market has been Is, at the moment, almost as difficult to answer as the question of where it may go In the future . So what Noone, It may well be pOinted out, Is going to get rich on what the market did last year. The problem Is that deciding what It did last year is crucial, In our view, to a forecast of what lies ahead. If the period since September, 1976 Is to be considered a bear market by conven- tional standards, as the action of the Dow would suggest, It then becomes comparable to a limited and clearly definable set of past bear markets, and we would expect the same sort of action that term- Inated these downswings to be present at the termination of this one. Major declines In the past have tended, rather uniformly, to attain certain levels of downside momentum and a certain degree of over- sold condition before terminating. We devoted this space two weeks ago to an extensive discussion of the fact that the present downswing has not yet met those standards, and this week's rally does little to change the situation. If, by contrast, we are looking at the moment for nothing more than an end to a 3 1/2- month minor correction, then the standards we are able to apply are a good deal less stringent and comprehensive. If we are seeking nothing more than the end of a IS-week downturn that began last –July-; tKen the-o acUon- of th-e'last tWo we-eks qu-ite-adequatelyfits -th-e necessary -crlteda. — — – Having gone through the above exercise, we are forced further to confess that we have no immediate answer to the dilemma, at least in the theoretical context in which we have discussed It so far. In a practical context, the answer, strangely enough, is somewhat easier to find. Probabili- ties, at the moment, favor a rally, and, axiomatically, during rallies it is appropriate to own stocks. Just how far such a rally might extend in time or amplitude and where it is likely to fit into the larger cyclical puzzle are questions we shall have to allow the passage of time and the accumulation of ad- ditional evidence to answer. Dow-Jones Industrials (1200 p.m.) 842.52 S & P Composite (1200 p.m.) 95.76 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (11/10/77) 655.17 AWT/Jb No statement or exprl!SSIOn of opinion or any other mgtler herein contolned IS, or IS to be deemed to be, directly or mdlrectly. on offer or the solicliatlon of on offer to buy or sell any security referred 10 or mentioned The moiler 1 presented merely for the conver'lence of the subscriber While oNe believe Ihe sources of our Informo tlon to be retloble, we In no woy represent or guorontee Ihe occurocy thereof nor of the stotements mude herein. Any oelion 10 be loken by Ihe subscflber should be based on hiS own lnvesllgallon ond Information Jonney Montgomery Scott, Inc, os a corporation, ond lIS officers or employees, moy now hove, or moy later lake, positrons or frodes In respect to ony securities mentroned In thiS or any future lSve, and such pOSItIon may be different from any views now or hereQfter epressed In thl or ony other Issue. Janney Montgomery Scott, Inc, which IS registered With Ihe SEC os on Investment adVisor, moy give odvlce to .ts Investment odvlsory and othe, customers Independently of ony statements mode In thiS or In any ather Inue Furlher Information on ony securrly mentioned here.n '5 avorloble on request

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Tabell’s Market Letter – November 18, 1977

Tabell’s Market Letter – November 18, 1977

Tabell's Market Letter - November 18, 1977
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 PIVISION OF MEMBER New VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – November 18, 1977 . –..–…She ,market.technician,has. beOiln.defined, ,most often by…..disbel1evers.in technicalowork,. as . an analyst who is prone to comments on th-e order of, If the 'market goes up, it will go up, and, if It goes down, it will go down. The cavil, of course, is not totally fair, and it can be answered on a number of levels. Perhaps the simplest one, however, is the innocent rejoinder, So what, what's wrong with that What is wrong with it, of course, is that it goes against the grain. We are all imbued ,with the myth of the rational economic decision-maker. It is accepted as given that the only sensible attitude toward trading any good is to attempt to buy cheap and sell dear. How, then, to rationalize buying that which has just lately been cheaper or selling what has only recently been higher-priced How, also, to rationalize the converse, refraining from the purchase of assets now at substantial discounts from recent levels In defense of his own approach, the technician begins with a certain skepticism regarding the ability of others to determine just how cheap Is cheap and how dear is dear. (It is worthwhile to recall, say, the fundamental justifications advanced for buying growth stocks in 1972-73). He can go on to suggest that the idea in purchasing a capital asset, such as a common stock, is not necessarily to buy it cheaper than it has sold In the past, but cheaper than it will sell in the future. If this necessitates buying after an advance, he will aver, the premium Is simply the price one pays for a somewhat higher degree of certainty. The technician further asserts that markets and stocks tend to move In broad price trends which are most often unrecognizable at the instant of their turning. This was the rationale behind the earliest technical precepts, such as the Dow theory, which advocated gauging major movements In the I–…-tock-mak-et-by-measur-ing-.m!nor-'-Gnes .-Itisposs-lble–toquaiTelwith 's-imple-minded,acceptance 'of-the- original Dow theory tenets almost a century after their inception. It Is hard to prove, however, that the baSic premise of the theory is unsound. All of the above is not unrelated to the present case. The DOW-Jones Industrial Average in the seven market trading days between November 2 and November 11 moved up 5.62. Prior to that, it had moved down 20.3 over the ten months which had, to then, comprised 1977. What does this ability to advance suggest regarding future prospects for stock prices To begin with, the 20 decline places us In a rather unique historical category. Only six previous declines of this magnitude have occurred In the past thirty-six years of market history. It seems, therefore, at least worth examining what the ability to rally approximately 5 over a week and a half meant during the course of those previous six declines. If one looks only at the first four drops In question, those of 1946, 1957, 1961-62 and 1966, it is easy to become convinced that recent action Is encouraging Indeed. In the course of these declines, there was noadvance of as much as 5 until such'time as they had largely run their course. (In the latter two cases, a 5 advance occurred before, but fairly close to, the ultimate bottom). The most recent two bear markets, however, tell a different story Indeed. During the course of the 196870 downswing, during which the Dow dropped 45, there were four advances of 5 or more, and three of these were quite protracted, lasting for 54,73 and 47 trading days, respectively. The record of the most recent bear market, that of 1973-74, Is even more discouraging. That one,whlch reached Its high of 1051. 70 In January, 1973 and Its low of 577.60 on December 6, 1974,included no fewer than 13 flve-percent-or-greater advances. Most of these were of rather short duration, but at least one, – that of August-October; 1973; lasted 46 trading' days .'Ori tliis most recent record, It\votild -seem 'ad– vlsable to do less than wax ecstatic over a 5 1/2, shorter-than-two-week rally. We are, therefore, loath to do so, yet on the record, as we have suggested, the doctrine that the market will go up If It goes up is not all that bad. It Is worth remembering that each of the 20 declines referred to above were followed by advances ranging In amplitude from 32 to 354. If the present short-term rally can prove Itself by advancing to significant further new highs or by extendIng itself in time appreciably, the upside prospects will be worthwhile Indeed. We are perfectly w!llIng In this Instance to accept the premise that strength begets strength. Dow-Jones Industrials (1200 p.m.) S & P CompOSite (1200 p. m.) Cumulative Index (11/17/77) AWT/jb 836.54 95.30 665.75 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expression of Opinion or any other metier herem contClined IS, or IS to be deemed to be, directly or indirectly, on offer or the soliCitation of on offer to buy or sell any security referred fa or mentioned The motter IS presented merely for the convePlenceJ of the subscriber. While we believe the sources of our Informa tlon to be rehable. we 1(1 no way represent or guarantee the accuracy thereof nor of the statements ml,lde herein Any action fa be talen by the subSCriber should be based on hiS own Investigation and ,nformation Janney Montgomery Seott. Inc. as a corporohon, and Its officers or employees, may now have. or may later toke, posItions Of trades In respect to ony secuflhes menllaned In thiS or any future Issue, and such POSltlOr'l may be different from any views now or hereofter eo;pressed m thiS or any other Issue Janney Montgomery Seoll. Inc, which IS registered With the SEC as on ,vestment adVisor, may give adce to Its Investment adVisory and othel customers mdependently of any statements made In thiS or In any other Issue Further information on any seCtHIty mentioned herein 15 available on request

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Tabell’s Market Letter – November 25, 1977

Tabell’s Market Letter – November 25, 1977

Tabell's Market Letter - November 25, 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 November 25, 1977 Overbought and oversold are terms often used by technicians to describe the recent short-term behavior of the stock market. There are various techniques commonly utilized to measure the existence of these conditions, but In simplest terms, extreme overbought and oversold states signify noth, – -Ing-inore'thafithe fact'that the-markeCh-as- b;eninoving up or downwlthahOvenDrmal momentum and Yireadth. Tracking short-term overbought and oversold conditions Is a useful exercise In two respects. First of all, It helps us to gauge the short-term direction of the market and, secondly, perhaps even more Importantly, such measurements have Implications for the market's longer-range direction. Paradoxically, In this respect, both extreme overbought and extreme oversold conditions possess bullish longer-range Implications. this can be Illustrated by the chart below which shows the Dow since January, 1970. together with one commonly-used short-term Indicator, a ten-day total of dally advarces minus dally declines expressed as a percentage of Issues traded. — ——!'.;;'r;o;O;r;;N;E-T;O-P;'F;E;R;EN;CEOF-RO-V. ;OE-C-. -Q;SP;ER-C;EN;T;RGE OF-;TO;T;.-IS-SU;ES;;T-;P-OE;O-;- -. o III 1/ III Id '\ h I … ' . 1'9) 11511 1'973 1191 1916 11911 As the chart quite clearly shows, extreme oversolds, below minus 30, tend to be char- acteristic of the final decline In major or Intermediate-term corrections. The lower solid line on the chart, drawn at this level, was penetrated around the major lows In 1970 and 1974 and, also, at the Important Intermediate-term bottoms of 1973 and 1975. As we discussed a few weeks ago, we were somewhat dis- appOinted at the failure of this Indicator to move lower than minus 22.3 at the October low, thus failing to register the oversold condition characteristic of a bear market climax. ,. Just as the terminal drops of bear markets tend to reach extremes, so do the Initial ,up- . . swings of ,long-term bull markets ;-'Thus;' as,the chart again 'shdWthe extreme' oversold con'dTt!OnSmen— tloned above tended to be followed by equal extremes In the opposite direction when the market first began to move ahead. Most recently, following the moderate oversold of late October, the Indicator reached a high of 23.4. This Is Interesting, since It Is the best level reached since early 1976 and suggests that the current rally has displayed more vigor than any which has occurred during the past two years. It did not, unfortunately, approach historic peaks, and, to date, It remains well below the 30 level attained In late 1970, early 1975 or early 1976. Further strength from these levels, however, or another sharp rise following a modest correction, could produce an extreme-overbought condition and, were this to occur, It would have to be construed In a bullish sense. DOW-Jones Industrials (1200 P. m.) 841.48 -s & P CompOSite (1200 p.m.) 96.38 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (11/23/77) 677.46 AWT/jb No stalement or expPl!Slon of opinion or any other moiler herein contOlned IS, or IS to be deemed to be, directly or indirectly, on offer or Ihe sol'C.lal,on of on offer 10 buy or sell any security referred 10 or menl,oned The molter , presented merely for Ihe converlencc of the subsctlber While -Ne believe the sources of ovr informa- lion to be reliable, we In no way represent or gvarantee Ihe accuracy thereof nor of Ihe statements mode herein Any act,on 10 be loken by the subscllber should be based on hiS own investigation and ,formation Janney Montgomery Scali, Inc, os 0 corporation, ond ,Is offICers or employees, may now have, or may later lake, posll,on5 or trades In respect to any seuntles mentioned In thiS or any future Issue, ond such pOSit' on may be different from any views now or hereafter el'pressed In this or any olner Issue Janney Montgomery Scoll, Inc, wnlch IS registered wltn the SEC as on Investment adVISor, may give adVIce to Its ,nvestment advisory and otnel customers Independently of any stalemenis mode In th.s or In any otner Issue Further information on any security mentioned herein Is available on request

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