Viewing Month: January 1978

Tabell’s Market Letter – January 06, 1978

Tabell’s Market Letter – January 06, 1978

Tabell's Market Letter - January 06, 1978
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r—- — TABELL'S MARKET LETTER .. 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF' MEM8ER NEW YORK STOCK EXCHANGE, INC MEMBER .ERICAN STOCK EXCHANGE January 6, 1978 The market's memory is often a short one. For 79 years through 1975, the year- 'end rallY'hadinvariablycontinued,for at.leasta-day–or so.on-into,the-new-y-ear';cIn19.767.z..this ……. failed to happen, with the Dow moving immediately down from its December 31 high. This year, apparently, instead of returning to the long-term pattern, the market is trying to repeat last year's performance with the major indices having consistently moved lower from their December 30, 1977 closes. In the process of that drop, the December low of 806.22 on the Dow, to which we drew attention last week, has been decisively penetrated, and, as we noted a week ago, this phenomenon, on the record, does not augur well for the market pattern in 1978. This year-end rally pattern, as our readers are aware, is an indicator to which we have been drawing attention for a number of years. It has, of late, begun to attract fairly widespread notice, especially since last year's January a'ction proved an accurate harbinger of the year's trend. Many writers have suggested that the first five or the first ten days of January, or the month itself, tended to fore- cast the year's action. There is some truth in this, but a look at the record shows that it is not all that simple. The following table summarizes January action for the past 52 years as related to the subsequent year's market trend. It shows the number of times the market was up or down for five, ten, fifteen and twenty day-trading periods, plus the month of January as a whole, followed by the year's trend in each instance. For example, the first line shows that the market was up 34 times and down 18 times for the first five days of January. In the 34 years of a five-day up- trend, the full-year trend was up 26 times and down eight times. The 18 five-day downtrends produced seven up markets and 11 down markets. Similar figures are shown for the other periods. '0 ,. —. JaJ)!!ary '. Ma!ketYearsTLend . JI4a!let .cc. Y.e.ar.s Trend ,…. Period Up QE Down Down QE Down 1st 5 days 34 26 8 18 7 11 1st 10 days 32 23 9 20 10 10 1st 15 days 28 22 6 24 11 13 1st 20 days 30 22 8 22 11 11 Entire month 34 26 8 18 7 11 An initial glance at the table would suggest that January, indeed, does have some forecasting properties. However, more rigorous examination will suggest reservations. It it necessary to recall, for example, that, in the 52 years in question, the market was up 33 times or 63 of the total. Thus, a naive procedure of forecasting, on the first of the year, that the market was going to be up would have been right almost two-thirds of the time. To qualify as an oracle, January must better this record. It does, indeed, do so, but not by much. Indeed, the record for all five January periods in forecasting up markets fails most standard tests of statistical significance. Downward trends in January have a better record. While the forecasting records of ten and twenty-day periods are little better than could have been produced at random, down- ward trends over the first five days, the first 15 days and the entire month of January do appear to be related to the year's trend as a whole. Thus, the fact that the first five days of this year will probably see the market down reinforces the significance of the December low penetration discussed above. . — . Having documented—– —- – – ……,., .-……. – t–he- u-n–p'l'e-a.-s-a nt-a-u-g-uries–w-ith..w..h.i-c h.. stat-i.s&tical i-n fe……… r- ence . – – – – … provides us for 1978, we must confess to a certain amount of intuitive skepticism. A year-old downtrend remains in effect, and, at no time during 1977, did the market provide truly convincing reversal evidence for that trend. Certainly, market action so far suggests the continuation of that downtrend, at least over the short-term. Indeed, the immediate weakness could, we suppose, carry far enough so that 1978 will eventually come to be viewed as a downward year. The overall pattern, however, suggests to us that at some level, a level perhaps not too far from the present, a significant reversal could well take place. Looking for evidence of that reversal will be the most important task for stock market analysis in 1978. Dow Jones Industrials (1200 p.m.) 797.82 S & P Composite (1200 p.m.) 92.12 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (1/5/78) 663.25 AWT/jb No stalement or expression of opinion or any other matter nereln contOlned IS, or IS to be deemed to be, directly or mdlrectly, on offer or Ihe soliCitation of on offer to buy or sell onf, secJrlly referred to or menlloned The matter IS presented merely far the convenience of the subscriber While we believe the sources of our informa- tion to be rei lob e, we ,n no way represent or guaranTee the accuracy thereof nor af the statements mude herein Any action to be token by the subscriber should be based on hiS own Invesllgatlan and information Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, may now have, or may later toke, posll1ons or trade, Ifl respect to any securities mentioned Ifl thl Of any future Issue, and such posilion may be different from any views now or hereafter eJpressed In HllS or any other Issue Janney Montgomery Scott, Inc, which 15 registered With the SEC as on Iflvestment adVisor, may give adVice to Its Investment adVisory and other customers ,ndependently of any statements mode Ifl thiS or In any other Issue Further information on any security men honed herein IS avolloble on request

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Tabell’s Market Letter – January 13, 1978

Tabell’s Market Letter – January 13, 1978

Tabell's Market Letter - January 13, 1978
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f– I TABELL'S MARKET LETTER 1 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC. MEMBER AMERICAN STOCK EXCHANGE January 13, 1978 It Is difficult to recall a stock market year that began with a worse set of portents than the first t'110 weeks of 1978,provided us, ,As we discussed at length in our last letter of 1977, an early break- of the-December low-has often tended -to- be a forecasterofIower prices for-the y';ar – –. to come. That low was broken In the first week of 1978. We suggested last week that January action has some limited validity as a model for the market year. That action, at least untll a rather feeble rally attempt at the end of this week, has been little short of abysmal. At its midweek low this week, the Dow found itself down 6.6 percent from its year-end close after just seven trading days and down 8.3 percent from its last rally high, scored back in mid-November. If the performance has been painful so far, there is very little to suggest any immediate relief. To date, at least, despite the rather drastic 1978 weakness, there Is little or no sign of the sort of deeply oversold condition which would tend to suggest that a major bottom is at hand. Under these conditions, any rally attempt from current levels would have to be viewed with a great deal of suspicion and might well turn out to be as abortive as the short rally in the first two weeks of November, which started from the same sort of semi-oversold, rather than deep oversold, condition. The late October bottom, which preceded that rally, was, of course, broken decisively last week. Indeed, in many ways, the least constructive thing that the market could do would be to attempt to rally at this juncture. We have reached that stage where the strongest technical action would be the sort of sharp terminal decline which would effectively clear the air and pave the way for a meaningful advance. Any attempt on the part of the market to move ahead immediately would Simply push that process further Into 1978. Having unourderied ours elves- of tne above gloo-my musiiigs, It Is -necessa.yto -ask- ourselves just how vulnerable the market remains, considering Its already-depressed level. To do this, we must look at three separate areas, the Dow, a proxy for basiC-industry stocks, the Standard & Poor's 500, representing the broad range of large-capitalization companies, and an unwelghted Index, such as our Cumulative Index, which measures the action of all NYSE issues regardless of capitalization. Over the past 16 months, the Dow has been by far the weakest performer of the three, having moved down more than 23 from its late-1976 high. The S&P has declined but by a lesser amount — around 18. Meanwhile, the average stock has been defyIng the decline in the major indices all year. The Cumulative Index currently stands less than 3 below Its 1976 close. The Dow, we think, having already moved down a great deal more sharply than the other indicators, may perhaps be the closest to its ultimate low. Many baSiC-industry Issues had reached downside objectives by the latter part of last year, and since that time, despite the market weakness, they have held their lows satisfactorily. Our downs ide target for the Dow centers around the 750 level, a figure not that distreSSingly far from Its current price. By contrast, the S&P appears to possess a good deal more vulnerabllity. Its Thurs- day close was 89.82 and there exist possible downside targets In the high 70s. This would be a fairly sharp percentage decline but, it should be noted, were It to take place, the Indicator's total decline from high to low would wind up being not much greater than the total decline for the Dow. There appears — ——- – –Indices could catch to be some possibllity, at least, that up with the Dow on- the,,,.downside…..,….. the -,.-S&P — a -, n – d- o t h e r c a p i tal-w …-.— e i g – h.ted- – Many writers have suggested that secondary Issues, having outperformed the market all year, are In for a similar comeuppance. Our technical work does not suggest this. The most pesslmlsllc objective that can currently be read for the Cumulative Index is 590 versus a current level of 640. This Is not a serious decline, considering the relatively higher volatlhty of the components, and the basic uptrend for the index remains intact. We do not think, 1n other words I that the superior performance by secondary stocks, which characterized the market last year. Is a transitory phenomenon, and we believe it will continue, once a firm bottom is established for 1978. DOW-Jones Industrials (1130a.m.) 779.19 ANTHONY W. TABELL S & P CompOSite (1100 a.m.) 99.02 DELAFIELD, HARVEY, TABELL Cumulative Index (1/12/78) 640.82 AWT/jb No statement or cprl!slon of opinion or any other matter herein tonlalned IS, or IS 10 be deemed to be, directly or indirectly, on offer or the soliCitation of an offer to buy or sell onr. security referred to or menhoned The matter IS presented merely for the convellence of the subscriber While we believe the sources of our nfmb' lion 10 be rellab e we In no way represent or guarantee the ouracy thereof nor of the statements mlde herein Any action to be talen by the subscrtber s au e based on hiS awn'lnvestlgatlon and Infarmahon. Janney Montgomery Scott, Inc, as 0 corporation, and Its officers or employees, may now have, or may taler taki positions or trade! In respect to any secUrities mentioned m thiS or any future luue, ond such POSition may be different from any views now or hereaJter expretedh Ih.s or any ather Issue Janney Montgomery Scali, tnc, which 1 registered With the SEC oS an Investment adnsor, may give odvlCe to Its Investment a vlSoryon at er ('IJstomers independenTly of any stolements made In thiS or m ony other Issue further mfarmalton on any secvnty mentioned herem 15 available On request

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Tabell’s Market Letter – January 20, 1978

Tabell’s Market Letter – January 20, 1978

Tabell's Market Letter - January 20, 1978
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORI( STOCK eXCHANGE, INC MEMBER AMERICAN STOCK. eXCHANGE January 20, 1978 The following will, of necessity, be a hastily-prepared market comment. Indeed, as we write these words, we arenot totally sure when or how they will reach print. The epic snowstorm, which has stalled the-entiremetropolitan area, has lft its imprint on Princeton, New Jersey, and, at the moment, we are alone in the office—being here ourselves only through the aegis of a four-wheel-drive vehicle. In any case, a few observations. In a number of ways, the stock market, at the present time appears to be as snarld and confused as the snow-buried regional transportation system. Tuesday and Wednesday of this week saw fairly powerful rallies in most stockmarket indicators, with the Dow being up on the two days by identical margins of 7.28 points. These advances interrupted a ten-day string inagurating 1978 in which the DJIA declined on nine days and, in the process, reached another new bear-market low, its lowest figure since March, 1975. By midweek, most shortterm indicators had reached what could be termed a normally oversold condition, so that the rally attempt hardly came as a total surprise from a technical point of view. The problem is, of course, that the attianment of a normally oversold condition and a subsequent rally from that status is not an achievement calculated to solve the market's current technical malaise. We noted here on October 28th that the rally which had then gotten underway failed, by a narrow margin, to meet the criteria which we had historicallY come to assciate with major stock market bottoms. The present state of the market fails to meet those criteria by an even wider margin. '-Thev iew- h-as-beenexpre-ssed -th-at ,- the present decline-in manyways- being – a somewhat unique beast, the ultimate reversal process will assume a shape different from other major market turning points. Our own suspicion is that this view reflects hope rather than analysis. At least some of the characteristics of the market of the past year and a half have been present in prior downward envirionments. Almost uniformly, those envirionments finally came to an end with at least a few of the characteristics of a washout. No records for deep oversold symptoms were set in the process, and we should expect no such records to be set this time. However, the record suggests that bear markets do not tend to die quietly, and we do not expect the present one to do so. -, Nonetheless, it would be folly not to recognize some of the unique attributes of the present market scene. We, along with just about everyone else whose business it is to comment on the investment picture,have repeatedly noted its two-tier aspect—the almost-uncanny outperformance of the major market averages by an army of secondary and tertiary stocks. This outperformance has given rise to another piece of conventional wisdom—the doctrine that the weakness which has affected the leading companies which comprise the averages will eventually spread to those junior issues which have been sailing along oblivious of a 17-month bear market. As we noted last week, we suspect this argument is just a bit facile also. A reading of techncial patterns areveals some deteriration in the action of smaller issues, but not, to be hon- est all that much.- Meanwhil'e', rallier interesting rota'tionof-leadership – – among the secondaries continues to be a feature. Even in the present dreary climate, new base patterns are being formed, and new upside breakouts are taking place. We do not, in sum, expect any rally which may occur from current levels to exhibit any degree of permanance. We continue to feel, however, that the accelerating gloom which a falling stock market normally engenders may, at this stage, be misplaced. ANTHONY W. TABELL DELAFIELD,HARVEY,TABELL Dow-Jones Industrials(1/19/78) 778.67 5 & P Composite (1/19/78) 90.09 Cumulative Index (1/18/78) 647.10 —————————————————————No stotemenl Of ftxpresslon of oplmon or any other motter herein contolned 15, or IS to be deemed 10 be, directly or mdlrectly, an offer or the soliCitation of on offer to buy or sell any security referred 10 or mentIOned The moiler 1 presented merely for the converlence of the subSCriber. While we 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 Token by the ubscrlber should be based on hiS own mvestlgotlon and Information Janney MonTgomery Scott, in, , as a corporation, and III officers or employees, may now have, or may loter loke, positions or trades In respect To ony securltles mentioned In th.s or any future Issue, ond such position moy be d.fferent from any views now or hereafter exprl'lned In thiS or any other Issue Janney Monlgomery Scott, Inc, wh.ch .s reglSered With the SEC as an 'nvestment adVisor, may g.ve adVice 10 11 mvestment adVisory and Olhe, customers mdependently of any statements mode ,n thiS or In any other Issue Further mformallon on any security mentioned herein IS available on request

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Tabell’s Market Letter – January 27, 1978

Tabell’s Market Letter – January 27, 1978

Tabell's Market Letter - January 27, 1978
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08!!i40 DIVISION OF MEMBER NEW VORK STOCK eXCHANGE. INC MEMBER AMERICAN STOCK eXCHANGE January 27, 1978 More of the same. The Dow-Jones Industrial Average plunged to another new closing 10, onEine-point decline in Thursdays traCiing, and inspectionof,standard stock market indi- cators shows little eVidence to support other than a short-term reversalof the downtrend-which – has confined the major averages for the past thirteen months. Yet, amid the chaos which sur- rounds the widely-followed market indices, pockets of strength persist and, as has been the case throughout the decline, a fair number of stocks, obliVious to the action of the averages, demon- strate satisfactory technical action on the upside. This phenomenon — it may be called the new two-tier market — has not gone unremarked in this space or in the writings of other finan- cial commentators. Yet, many of us, engaged in close inspection of the trees, fail to appreciate the rather weird and wonderful nature of the present stock-market forest. For it is not supposed to happen this way, and, in many ways, the pres ent market climate constitutes a phenomenon en tirely outside the experience of most people currently engaged in the securities business. There can be little doubt in anyone's mind that the market of the past year will qual- ify, by any standard one chooses to apply, as a bear market. All past market experience tells us that during bear markets certain things tend to happen. One of these things is that secondary stocks, inherently possessing greater market volatility than major companies, exaggerate the market's action by going down faster and further than their supposedly-more-stable, senior counterparts. The cornerstone of modem portfolio theory is the beta coefficient,whose under- lying rationale states that diversified portfolios selected from common stocks of historically- high volatility, should,during a sharp market downturn, inevitably move down more than the aver- ages. .Yet,over the past year,precis.ely.the opposite,has.taken.place .-There,J.samplydoc- umented record of high-volatility portfolios that have, indeed, advanced in value during a period during which the Dow is down in excess of 20. At the birth of the United States, the British band, surrendering at Yorktown, played The World Turned Upside Down. lt is an appropriate theme for today's stock market. lt seems, therefore, appropriate to devote some thought as to why this should be. lt is a question to which there are no hard answers. Yet, there are a number of factors which, on the surface at least, seem to support a plausible explanation. It is a tautology to state that the past two decades of stock market history have featured growing institutional dominance of the stock market scene, to the extent that institu- tional activity is now said to account for 80 of all trading. That institutional trading, moreover, has come of necessity to be dominated more and more by la.-ge money managers, those responsi- ble for the deployment of amounts measured in the billions of dollars. By definition, it seems fair to say, the activity of such money managers is constrained and is, by and large, limited to a rather small number of stocks with a large floating supply. By definition, also, such institu- tions are aware of alternate forms of investment and of the current attractiveness of fixed-income securities. The fact that they have been unwilling buyers of equities at best, is documented by the downward movement of the averages. Meanwhile, however, the individual investor, in admittedly greatly-reduced numbers, is still out there. He operates in a market largely ignored by professional managers and, essentially,.thus unaffected by-the 'macroeconomic power of institutions Today'ssurvivorin that- – hardy breed may, indeed, by the simple process of natural selection, be, on the average, more sophisticated than his counterpart of some years ago, and, indeed, on the record, he has been achieving, in recent months, some rather spectacular and unusual results. The emergence of the new two-tier market is, we think, one of the more fascinating developments of our own experience in analyzing the behavior of equity prices. We intend to comment on it further in this space. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p. m.) 765.51 88.63 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL Cumulative Index (1/26/78) 643.59 AWT/jb No statement or expression of opinion or any olher matter herem contolned IS, or IS to be deemed 10 be, directly or indirectly, an offer or the 501lclloilon of on offer to buy or sell any security referred 10 or mentioned The matter IS presented merely for the converlenCI! of the subSCriber While I! believe the sources of our ,forma lion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action to be token by Ihe subSCriber should be based on hiS own investigation and information Janney Montgomery Scol!, Inc, as a corporation, and Its officers or employees, may now have, or may later toke, pOSitions or trades In respect to any seCUrities menlloned In thiS or any future Issue, and such posllion may be different from any views now or hereafter expressed 11'1 Ihls or any other Inue Janney Montgomery Sc.ott, Inc., which IS registered with the SEC 0 on mvestment adVisor, may give adVICe to lIs Investment adVISOry and othel customers Independently of any statements mode In thl or In any oiher Issue fuher II'Iformatlon on any security mentioned herein IS available on request

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