Viewing Month: June 1978

Tabell’s Market Letter – June 02, 1978

Tabell’s Market Letter – June 02, 1978

Tabell's Market Letter - June 02, 1978
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.- TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VOAK STOCK EXCHANoe, INC MEMBER AMERICAN STOCK EXCHANGE – June 2, 1978 We tried in our letter of last week to suggest that our own reading of the available evidence i;-t tne — . attitude toward equity investment appeared to be warranted. We suggested, as we have been doing for some months now, that we thought the low in the Dow which occured on February 28 (or, at worst, some future double-bottom low which would be associated with it) would tum out, on an historical basis, to be of more than passing significance. We are perfectly aware that we are not supported in this view by large numbers of our colleagues, a great many of whom are focusing on the current behavior of interest rates as being inconsistent with a stock market bottom, and, of course, only time will tell for certain whether our own reading of the current technical portents is a correct one. In a way, however, both we and thos e forecasters who are looking for lower prices are guilty of the same sin, for undo emphasis on the present rally fails to focus on the larger and more important question. That question Is whether the bottom of the recent bear market — whether it was achieved on February 28 or will be achieved on some future date — presages a move of sufficient magnitude to end the super-cyclical stock price behavior which began in the middle 1960' s. That environment, as we have been pointing out in this space for some eight years no',' has involved a trading range which, on the Dow, has centered on 800-900 with occasional excursions to the vicinity of 1,000 on the upside and equally occasional bear-market bottoms around the 600-700 level. Within that environment, we have seen three major bear markets, three major bull markets, and possibly a fourth one now underway. The major question is not really the direction of the next 100 or even 200 points on the Dow, but the imminence of the end of this more-than-decade-old phenomenon. Our own current working forecast, which calls for a possible move to the 940-970 range, Is of.no since.uch a move -the sort of environment we have discussed. From a purely technicai po'int of view, we think, more evidence – would be needed before it would be appropriate to forecast a move above the 1,000 leveland, consequently, significantly higher prices rather than simply higher prices. Nonetheless, we think a few background facts are worthy of note. The first such fact is an extremely Simple one. Common stocks are cheap. Every time we utter that sentence we feel vulnerable to charges of naivete and lack of sophistication. We fortify ourselves against this criticism by recalling the naive and unsophisticated little boy in the fable The Emperor's New Clothes. The woods are full of sophisticates who can tell us, often at great length, why stocks should be cheap. There were, of course, equally convenient explanations readily available in 1949, the last time stocks were selling at approximately current levels and, we suppose, equally facile explanations just prior to World War I, the previous comparable cycl!callow. A major low is, almost by definition, a period when all the bad news is known. Indeed, bearish developments continue to emerge well after Important lows are made and the market begins to ignore th ose developments and move ahead anyway (Any resemblance in this description to the action of the past two months Is intended.). A new super-cyclical environment for stocks would, It seems to us, require the emergence of new sources of demand for equities and it seems logical to suggest that such a nevI source of demand might be found in the renaissance of the individual investor. The past two decades have seen net sales of stock on the part ofindlv1duals while the market came to be more and more dominated by institutional Intermediaries, and there seems to be some evidence that this era may be coming to a close. The secur- Ities Industry as a whole seems to be gearing itself toward an aggressive wooing of the ir,dlvidual Investor ,by., a ,relatively. small group of.powerful,and,sophlsticated organlzations JOURNAL noted this week that institutions both bank trust departments and mutual funds, were net sellers of equities during the first quarter of 1978. This, of course, was the quarter during which the Dow was bottoming prior to a 100-point upward move. The big question, then concerns not the next bull market but the next market era, and the evidence Is by no means complete. It will be our firm intention, however, to comment upon it as it becomes avail- able In the future. NOTE The writer plans to be absent over the next six weeks on an extended vacation. During that absence, our colleague, Mr. Robert J. Simpkins, Jr., will be preparing the remarks which appear in this space each week. DO'N-Jones Industrials (1200 p. m.) S &P Composite (1200 p. m.) Cumulative Index (6/l/78) 842.95 97.60 737.83 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expression of oplrllon or any Olher malter herCln conto,ed IS, or IS 10 be deemed to be, directly or Indlrl'!elly. on offer or the soliCitation of an offer to buy or sell any security referred to or mentioned The mailer 15 presented merely for Ihe convef'lJence of the subscriber While -He believe the sources of our Informa- lion 10 be reliable, we In no way represent or guoranlee Ihe accuracy thereof nor of Ihe statements mode herein Any action to be token by the subscriber should be based an hiS own Invesllga1ton and Informollon Janney Montgomery Scali, Inc, as a corporation and Its officers or emplovees, may now have, or may later take, or trades In respect to any securities mentiOned In thiS or any future Issue, and such pOSition may be different from any v,cs now or hereafter crpressed In Ihls or ony other Issue Janney Montgomery Scott, Inc, whICh ,s regIStered With the SEC as on Investment adVisor, may gl'…e adYlce 10 Its mvestment odvlsary and othel evstamers Independently of any statements made In th,s or ,n any ather ,ssue Further ,nformatlon on any secullly mentioned herein IS available on request

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Tabell’s Market Letter – June 09, 1978

Tabell’s Market Letter – June 09, 1978

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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE June 9, 1978 The stock market, since the February 28th low of 742.12 as measured by the Dow Jones Industiral AVerage in.D trading days is ,up 124.39 pOints or 16.76 without a significant correction to date. In , face of bank' trust ';'ere-net' sefiers first quarter of 1978. Where then is the recent strength in the stock market coming from Logically, the source of the buying panic can be attributed to institutional and foreign buyers reversing dramatic- ally their position of the previous quarter. Nonetheless, the institutional community is embarassed as their soon-to-be-released June 30th quarterly reports will no doubt show. Another source, however, that should be examined is the.1ndlvldual Investors. An excellent proxy to examine the potential buying power of the Individual investor is New York Stock Exchange margin debt. During April, margin customers Increased their indebtedness to New York Stock Exchange member organiza- tions by 340 million — the largest monthly Increase since' December, 1976. Stock margin debt totaled 10,260 million at the end of April. A new record I The number of margin accounts jumped from 900,000 to 915,000 at the end of April. Although margin debt Is at an all time high, it Is Interesting to note that the number of margin accounts is stHl, after almost ten yeaI!!,well below the level hit In 1968 when mar- gLn accounts numbered 945,000. In the following exhibit, we compare margin debt to margin accounts and show this as a ratio. We have then taken recent major highs and lows of margin debt and compared them to the corresponding sig- nificant highs and lows of the DJIA. EXHIBIT I Margin Debt (mil) Acc'ts. (thou) Ratio Total Mkt. Value Ratio Date Do….. – Jones June, 1968 High 6690 940 14.05 641037 1.043 12/3/68 985.21 July,1970 Low 3780 770 20.37 531077 .712 5/26/70 631.16 Dec.,1972 High 7900 , , 750 ,.. 9.49 872000 .9061/11/731051.70 .76512/6/74.,……5JJJiO'-…..– Aprll,1978 High 10260 915 11.21 821000 1.250 6/6 /78 -866.51 From 1965 to date the range of this ratio Is 20.37 high on July, 1970 and 9.49 low on December 1972. The ratio tends to be high at market bottoms (July, 1970 and December, 1974) and low at market tops (June, 1968 and December, 1972). The relative high ratio In June, 1968, a market high, can be attributable to the large amount of speculation in the market. Also, the ratio peaks before a market high and after a market low. Another way we are able to analyze the customer stock margin debt is to compare It to the total market value of equities listed on the NYSE. The observations seem to be the same. The higher the ratio of margin debt to market value, the higher the averages and, conversely, the lower the ratio, the lower the averages. But in both cases from the 1974 low to date the behavior of the mar- gin debt series has changed. The Dow Jones Industrial Average has moved from 577.60 in December, 1974 to 1004.65 in December, 1976 (73.9) to 742.12 in February, 1978 (-46.4) to the present Dow 866.51 (16.8). During this same period margin debt increased without correction from its 1974 low of 3,910 mlllion to 10,260 mlllion (160). Matters are quite different today than the days of the 5(1s and early 60's when average dally volume on the Big Board was fewer than 5 million shares and most trades were between Individuals. Margin debt is being used by the individual In different ways. In the last number of years, margin accounts have been used to purchase high-yielding securities rather than speculative issues, the cost of borrowing in some cases being less than the yield of the securities purchased. This in fact has created greater stability in the type of securities held in the Individual margin account. Another effect on the margin debt series has been the various uses of options. An obvious example Is the Individual ,writer' of'naked stock' g6es 'up .' This-is';-adassic- reversal of the historic effect of margin calls for declining stocks. Also, the use of options has provided greater liquidity to margined stocks. Finally margin debt Is used for non-purpose loans by individuals who find It easier and In some cases cheaper to borrow. These factors have had an effect on another statistical series that is positive for the stock market — the quality of security credit. Percentages of margin debts in accounts with equity under 40 fell to 1,550 million representing 15 of debt and 11 of the accounts. It should be remembered in August of 1974, this ratio reached a high of 23, a series record, and was thought to be a major contributor to the decline in late 1974. Therefore, these new influences in the margin debt series can be viewed constructively. However, the significance and the historical correlation of this awakening giant must be reexamined. ROBERT J. SIMPKINS, JR. DoW-Jones Industrials (1200 p.m.) 864.78 DELAFIELD, HARVEY, TABELL S&P CompOSite (1200 p.m.) 100.28 Cumulative Index (6/8/78) 758.02 RJSrak No statement or expression of opinion or any other molter herein contOlned 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 to or mentioned The motler IS presented merely for the conver'!ence of the subscriber. Wlule e believe the sources of our lI,!formo tlon to be relmble, we In no way represent or guarantee the accuracy thereof nor of the stotements mude herein Any action to be token by the subSCriber should be based on hiS own Investlgollon and information Janney Montgomery Scott, Inc, 0 a corporaflon, and lIs officers or employees, may now have, or may toler toke, poslhons or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such Posl\lon may be different 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, may give adVice to Its Investment advisory and other customers mdependently of any statements mode In thiS or In any other Issue Further Informotlon on any seCUrity mentioned herein IS ovolloble On request IT –, o '- LLI lLJ 0 Cfl – Z Z H L'l IY y- 'm- m– en-' m-' ISNOIllI81 1830 o mm m' m'' m''

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Tabell’s Market Letter – June 16, 1978

Tabell’s Market Letter – June 16, 1978

Tabell's Market Letter - June 16, 1978 page 1
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER New YOAK STOCI( EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE June 16, 1978 A regularly released series, appearing recently in the financial news, was the monthly mutual fund- Sales- CirtnutUaTfUiids;'-exCllldfngnfi)ney 'iriarket fiifids-; a-mounteeT-to 6-2-5 ' Aided by rising stock prices, total net assets of these funds climbed to 46.6 billion in April, Redemp- tions also increas ed in April to 580.2 million. The analysis of these mutual fund statistics is difficult without an explanation of the history of the series. For many years the Investment Company Institute has made available these statistics relating to the mutual fund industry. We have in tum been making available analytical measurements based on these statistics and have been maintaining the figures in our computer data bank. Since the beginning of the series in 1954, the raw figures, as released, worked well for this pur- pose. Until recently, most mutual funds were in fact common-stock oriented. This is no longer the case. Around 1974, money market funds began to gain popularity as an investment vehicle, and, for a while, statistics were distorted by the growth of these funds. The ICI recognized this and properly began separating money market fund figures from those of conventional mutual funds. More recently, however, new non-common stock vehicles have appeared 'on the scene. With growing investor interest in income and a wide spread between stock/bond yields, bond funds have gained increasing popularity and new sales of thos e funds have dramatically increased. Also, with the advent of new legislation, municipal bond funds have become an important factor. The activity of non-common stock funds, therefore, has become a major factor In this series. Unfortunately, through- out 1976 and early 1977, the necessary figures to isolate the activity were unavailable and, therefore, caused distortions. Quite correct ly, this situation has changed as the ICI has released separate statistics covering bond and muni cipal bond funds. An interesting fact to note in factoring out bond -de-Eyoenaars Statistics cipal bond funds thus covering common stock oriented funds only. Having outlined the background of the series, it must be kept in mind, in looking at mutual fund statistics, that we are looking at the behavior of two different groups of individuals. When we look at sales and redemptions, We are examining the behavior of the mutual fund investor. When we look at changes in the cash position of mutual fund assets, we are noting decisions made by the mutual fund manager. With this in mind, let us look at a few of these statistics. The historical tendencies of fund redemptions have been that it dries up sharply during bear markets, rebounds a bit after bot- toms, and then begins a new sharp rise as a bull market gets underway. Generally, the level of redemptions levels off fairly close, but in advance of the end of a bull market. The last redemption peak was in March, 1976. Since then, the series has dried up sharply, reaching a low in April, 1978, and, in fact, has increased considerably through April of this year suggesting the possible start of a new bull market. Historically, sales tend to dry up along with redemptions during bear markets. After rebounding a bit, they generally do little during the early stage of upswings and generally commence a sharp increase around the middle of a bull market cycle. Thus, the recent rise in sales must be considered an encouraging factor and would, If it were to continue, suggest a healthy market. Finally, an analy- sis of the amount of their portfolio that mutual fund managers have chosen to retain in cash, leads us to some interesting conclusions. Cash pOSition generally tends to reach a peak near major market lows, to decrease sharply as bull markets get underway, and, finally, to remain flat for a period of time, increasing again as bear markets begin. Thus, cash position reached an all time high of 13.5 40 a -month' before' the bottom ii1-1974 'ano declined to lowof'4'. 92in'September DoW—o- approached its high in the 1, 000 area. Since then, the cash position has increased, as the chart on the opposite page shows, and appears to be peaking around the 10 level suggesting a possible major market low. Also, it is interesting to observe a four-year cycle, from 1958 to date, appears to have developed as the mutual fund cash/ asset ratio peaks. Therefore, the most bullish configuration of mutual fund data in the coming months would consist of a continuing rise in sales accompanied by a like rise at a somewhat slower rate in redemptions. This should also, on an historical basis, be accompanied by a willingness of managers to invest the cash inflow and reserves. It will be interesting to see how this scenario unfolds. Dow-Jones Industrials (1200 p.m.) 842.17 ROBERT J. SIMPKINS, JR. S&P Composite (1200 p.m.) 97.98 DELAFIELD, HARVEY, TABELL Cumulative Indes (6/15/78) 751. 80 No statemenl or expression of opInion or any other motter herein contained IS, or IS 10 be deemed to be, dlreclly or Indirectly, on offer or the SOIICltolll)o of on offer to buy or sell any security referred to or mentioned The mOiler IS presented merely for the convefllencs of the subscnber While oNe believe the sources af our Informat.an to be relloble, we In na way represent or guarantee the occurocy thereof nor of the statements m..,de here.n Any OellOn to be taken by Ihe subSCriber should be based on hl own Investlgollon and Informal lon Janney Montgomery Scali, Inc, as a corporation, and Its offICers or employees, may now have, or may laler take, poslhons or hade!. In respect 10 any secUrilies mentlaned In thiS or ol'ly future Issue, and such POSition may be dlfferenl from any views naw or hereohet expressed In thIS or any other Issue Janney Montgomery Scott, Inc, which IS reglslered With Ihe SEC os on Investment adVisor, may give odvlce to Its Investment odvlsory and olhel customers mdependently of any sloleme1lls made In Ihls or In any olher 'we Further mformatlon on any security mentioned herem 15 aVOllable on request 1200 1100 1000 .00 800 700 -a 600 -, Q 500 00 300 I il '. 1 l200 ))00 1000 !IJ) BIlO 1111 son 000 30Il 13 12 II 5 11954. f(\ 1\ 1-1 11955 -r1956 11957 ' , , I. II ,I, 'I' 1 I I /' 1/\ , ;J1 Iv f\ \, \tA , III 1111111111 11958 11959 1960 1961 A Ir 1962 11963 I I I 1\ rfif Y\ I ! 1, III 111111111 )1964 1965 1966 1967 A Af\ lfY V 11968 11969 11970 13 12 I I ! Iv ! 11 r 10 8 j! 7 1 h IrJ \ jI II I5 MU' UAL FUN ') CAS MIAS ET 1111,1111' 1111111111 11111111111 1111111111 III 11971 1972 1973 ' 1974 1975 PAT I b ( 1IIIIIIIIIt T II ' iJ976 1977 1978

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Tabell’s Market Letter – June 23, 1978

Tabell’s Market Letter – June 23, 1978

Tabell's Market Letter - June 23, 1978
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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 – – –., Asth e, st,l,m1!\!'r , ;comm entsare beginningto em erge June 23, 1978 expectat1ons,ofcAhe-tra summer rally. Long time readers of this letter are aware, we have examined this phenomenon and in the past expressed a mild degree of skepticism about It. The following table updated through 1977, shows the number of advances and declines for the llme-and two-month periods ended each month of each year from 1926 through 1977 together with the average percentage change for the period. ' One-Month Periods (from 1926-1977) Two-Month Periods (from 1926-1977) Ending Month Advances Declines Average Chq. Advances Declines Averaqe Chq. January February March April May June July August September October November December TOTAL 33 19 28 24 1. 10 a.oo 28 24 -0.11 29 23 0.92 26 26 -0.85 26 26 0.95 33 l'll 1.81 33 19 1.38 22 30 -1.36 28 24 -0.30 30 22 0.42 11. 1.35 355 269 0.44 -….5.-,. – 34 18 2.45 29 23 1.10 25 27 -0.21 31 21 0.89 30 22 0.30 25 27 0.06 32 20 2.71 35 17 3.35 30 22 -0.03 25 27 -1.62 31 21 0.16 II 11 1.80 362 262 ll,9,1 A preliminary 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 .44, whereas the average performance in July is an advance of 1.81, almost four times as great. Likewise, the average advance of 3.35 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 clos er 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 declining 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, which Is why this letter has always emphasized the Importance of the year-end rally. Llkewlse, 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 whatsoever. Lastly, In looking for seasonal patterns, it is Wise to examine the most recent data to see If It seems to be deviating from the past, and, indeed, this is apparently the case. The twelve years between 1966 and 1977 have produced three rallies and nine declines In' July and five rallies and seven -declines.in August, and the two-month'perlod ended August has 'produced four rallies'ana elght-deellnes——-'' with an average percentage change of -1.96. Interestingly enough, a new seasonal ten,dency, not heretofore apparent, seems to be emerging — that of a decline In May-June. Every May. from 1965 through 1978, 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. To date, 1978 Uts this category. 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 factoiln what Is invariably a highly complex equation. Dow-Jones Industrials (1200 p.m.) S & P CompoSite (1200 p. m.) Cumulative Index (6/22/78) , RJSrak ROBERT J' SIMPKINS, JR. DELAFIELD, HARVEY, TABELL No stolement or e)(preSSton of opinion or cny other matter herein contolned IS, or IS to be deemed to be, directly or indirectly. an offer or Ihe soliCitation of on oHer to buy or sell any sec;urlly referred to or mentioned The motter IS presented merely for Ihe converlenCI; of Ihe subscnber While -Ne believe the sources of our Informo- han 10 be reliable we In no way represent or guarantee the ac,uracy thereof nor of the statements mode herein Any action to be token by The Substrlber should be based on hiS own 'lnvestlgotlon and Information Janney Montgomery Scott, Inc, as a corporation, and Its off.cers or employees, moy now have, or may loter POSitions or trades In respect to ony securtlles mentioned In thl or any future ISSue, and such pOSition may be different from ony views now or hereafter expressed In thiS or ony other Issue Janney Montgomery Scott, Inc, which IS registered With tne SEC as on Investment mo)' 9\\!C adVIce to ItS adYlsory and other customers Independently of any statements mode In thiS or In any 01 her Issue Further tnformotlon on any securrty mentioned nefeln IS ovorloble on request

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Tabell’s Market Letter – June 30, 1978

Tabell’s Market Letter – June 30, 1978

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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 june 30, 1978 – –r The measured by the Industrial Average appears to again be approaching anmterestiilg juncture' andIts worlliwa'tClllng 'cioselY;ToTe\fCew, 'slnce-the-Dj1Ahlgh of 1014.79 on September 21,1976, the market has corrected Itself 26.87 over 496 trading days, reaching a low on February 28, 1978, as the DjIA closed at 742.12. From the February low the 'Dow then rallied significantly to a high on june 6, 1978, of 866.51 or 16.76 In 84 trading days. 'Most recently the Dow has corrected from its high of 866.51 on june 6,1978, to a low on june 26,1978, of 812.28 or 6.26. What prompts this statistical exercise on the Dow Is to draw attention to the potential slgnlflcance of the rally from the February low. Utilizing a simple filter, listed below are selngs of greater than 25 down and 15 up on the Dow jones Industrial Average Since the post war. DATE DJIA CHANGE It OF DAYS 12/13/61 6/26/62 2/ 9/66 10/ 7/66 12/ 3/68 5/26/70 1/11/73 10/ 4/74. 9/21/76 2/28/78 6/ 6/78 734.91 535.76 995.15 744.32 985.21 631.16 1051. 70 584.56 1014.79 742.12 866.51 0.00 -27.10 85.75 -25.21 32.36 -35.94 66.63 -44.42 73.60 -26.87 16.76 0 134 913 167 518 367 665 437 496 362 68 years an average correction of 31.9 lasting in duration an average of 293 trading days. Prior to this date there had not been a 25 correction in the Dow for approximately twenty years. The other observation which can be noted Is the behavior of the DjIA after each of these corrections, excluding the most recent advance. By no means meant to be predictive, It is Interesting to ob- serve that the average percentage increase in the Dow and the average duration of the subsequent move following these declines are 64.6 and 648 days respectively, conSiderably above the most recent advance. The action of the Dow In relation to its computed trend channel, an attempt to quantify trend mathematically, can also be instructive. On this basis, two downtrend channels have recently contained the D)lA, the first starting In the December 31, 1976, high of 1004.65, and the second computed from the more recent November 11, 1977, high. These two downtrend channels are plotted on the chart on the back page. The most slgnlflcant channel. of course, Is the one covering all of 1977-78 signified by the solid lines on the chart. As the chart shows, the market has rallied to the top of this channel on five separate occasions. Likewise It has touched the bottom of the channel numerous times, and In each case, a significant rally has occurred. The same thing is essentially true of the shorter- term channel extending back to last November. As can been seen, at the end of February the Dow once again touched the bottom of the channel and from that point commenced a rally. For the first time In theprocess of that rally the Dow moved above both downtrend channels decisively, setting up conditions for a test of the IS-month old major downtrend. As the chart shows, the reversal unquestionably penetrated the upper limits of these channels. Indeed, we now have a new computed uptrend establlshed as shown on the right hand side of the chart. This trend rising for 1 84 .tradlng.-days …at…. approximately;cl -;90.,…polnts .. per ..day.. has …also, … been' penetrated. — What conclusions can be properly drawn from this action Simply, the distinct environment which has statistically characterized the market from january, 1977, through March, 1978, Is no longer in effect. The fifteen month long-term major downtrend has been arrested and new Invest- ment policies must evolve. St!ll the remaining question dividing the investment community is whether the rally since February Is merely a rally within a bear market and w!ll penetrate the old lows or Is in fact, as we believe, the start of a new bull market ultimately indicating higher levels. The most recent minor correction has placed the market in Its sharpest oversold position since August, 1975, as measured by our 10-day advance/decl!ne osc!llator. The behavior of the market as It recovers from this oversold condition may help answer the questionJat,.ed ..!',ndas stated..Ja.rller should be watched closely. ROBERT j. SIMPKINS, JR. Dow-jones Industrials (1200 p.m.) 819.99 Delafield, Harvey, Tabell S & P Composite (1200 p.m.) 95.37 Cumulative Index (6/29/78) 729.89 RjSrak – ,-, … -. ..- No statement or expression of opinion or any other malter herem contolned IS, or IS to be deemed to be, directly or indirectly. on offer or the oll(llollon of on offer to buy or sell any secuflly referred to or mentioned The motter IS presented merely for the of .he subSCrtber While we believe the sources of our mformo lion 10 be rellcble, we In no way represent or guarantee the accuracy theteof nor of the stotements mode herem Any action to be by the subSCriber should be based on hIS own mVestlgallOn and mformotlon Janney Montgomery Seoll, Inc, as a corporal,,m, and lIs officers or employees, may now have, or may later toke. POSitions or trades In respect to any securities menlloned In Ihls or any future Issue, and such position may be different from ony views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, In whlh IS registered With the SEC as on Investment adVisor, moy give adVice to ,Is Investment advisory and other customers Independently of any state'l1ent mode In Ihls or In any other Issue Further Informahon on any secullty mentioned herem IS available on request -' I -30 – 1962 \ 11963 11964 10 DRY NET DlFFERENCE OF RDV.-DEC. RS PERCENTRGE OF TOT. lSSUES TRRDED I I'! i I Ii I I\1 I I II I II 'I \ /1 Hn r I !II . \ I) I I ;! II 11965 11966 1967 P RY nrl n 000 10Arii 11968 1969 1970 197 1972 11973 1974 111975 1976 1977 1978

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