Viewing Month: July 1978

Tabell’s Market Letter – July 07, 1978

Tabell’s Market Letter – July 07, 1978

Tabell's Market Letter - July 07, 1978 page 1
Tabell's Market Letter - July 07, 1978 page 2
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— TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VOAK STOCK EXCHANGE, INC MEM8ER AMERICAN STOCK EXCHANGE July 7,1978 – -last week's 'market-lettlrr;-the behaviOrOnhe 'stbck'ma-rket'Eis- it re-c6vewtro-m oversold condition can be instructive. The term oversold is used to describe the short-term behavior of the stock market, stating Simply that the market has been moving down with above-normal momentum and breadth. Identifing this condition is useful in two respects. First; it helps measure the short-term direction of the market, and; secondly, such measurements have implications for the longer-term direction, i.e., extreme oversold conditions possess bullish longer-range implications. In order to measure this short-term, overSold condition, we utilize a technique that cumulates the total of net difference of advances and declines on each of the previous 10 days, a procedure which tends to produce large negative values when the market has been down sharply. La-st Monday, June 26th, the total of declines over advances for 10 days was 4378. This figure by itself seems impreSSive, but is worthless for long-range historical comparisons. It is easy to put this basic figure into historical perspective by expressing it as a percentage of the total number of issues traded. This allows for the secular increase in the number of stocks listed on the NYSE. In this case, therefore, the percentage to total issues traded for the same 10 days is 23.1 – It is important to put this figure into proper context by noting the number of observations since May, 1940, the fall of France, in which the 10-day excess of declines over advances reached 20 or more of the total issues traded has occurred in excess of 500 times. (Listing of these dates available on request.) Obviously, this number or level by itself certainly does not suggest anything of a significant nature. igure-;-furthermore,is Lnotone-which . ha t–wi nt'hottom-s– '' The lowest point of the oversold condition at such bottoms has exceeded 30 of issues traded and in most cases it has managed to move above the 35 figure. This is illustrated on the chart on the back page which shows the DJIA since January, 1962, together with a 10-day total of daily advance minus declines expressed as a percentage of issues traded. DATE May 29, 1962 Aug. 29, 1966 May 26, 1970 Aug. 23, 1974 10-DAY A-D -5,013 -6,288 -6,259 -5,522 EXHIBIT 10-DAY A-D/ TOTAL ISSUES -038.7 -044.1 -039.3 -031. 8 DJIA 603.96 767.03 631. 16 686.80 DJIA IN 60 DAYS 616.00 796.82 723.99 624.92 DJIAIN 120 DAYS 626.21 847.88 768.00 726.92 The above exhibit shows the past four major bottoms in 1962, 1966, 1970 and 1974 together with the extent of the oversold condition and the behavior of the DJIA after the nadir of the oversold condition had been reached. This same behavior was true also at the important 1973 and 1975 intermediate-term bottoms. Another point which must be raised is that the present occasion represents only the third time in the -.past.12,months.thaCa comparable-oversold-condition .(20. O),has been.reached— the last one.belng-in -.–…;. January, 1978. As the chart on the back page shows, previous major bottoms have been characterized by multiple and separate occasions in which the 10-day advance/decline total dropped below the 20 figure. The conclusion of the above discussion is not meant to dictate an overly bearish position. In fact, the market's ability to begin todemonstrate a difference of opinion among investorlS by exhibiting wide swings in both directions is viewed as constructive. What the historical record would seem to us to suggest, therefore, is the continuation of such a sequence which appears to have started earlier this year. The recent short-term oversold condition does not signal an end to this process. Dow-Jones Industrials (1200 p. m.) S & P Composite (1200 p.m.) Cumulative Index (7/6/78) 810. 12 94.53 716.74 ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL No slolement or expression of opinion or Clny other motter herem contOlned IS, or IS to be deemed to be, directly or ,ndlrectly, on offer or the soliCitation of on offer to buy or sell any security referred to or menhoned The motter IS merely for the converlencc of the subSCriber While oNe belIeve the of our ,nforma- hon to be rei table, we In no way represent or guarantee the accuracy thereof nor of the statements mode herein Any octlon to be taken by the subSCriber should be based on hIS own investigatIon and informatIon Janney Montgomery Scott, Inc, as a corporatIon, and liS offIcers or employees, may now have, or may later take, poslltons or trades In respect to any mentioned In thiS or any future Issue, and such position may be different from any views now or hereaher expressed In thIS Of any other lSue Janney Montgomery Scott, Inc, which IS registered With the SEC as an Investment adVisor, may give adVIce TO Its Investment adVisory and other customers lndependently of any statements made m thiS or m any other Issue Further mformotlOn on any security mentIOned herein IS ovollable on request Air RATIO RATIO MMT Alrl OTC OTCI NYII AI, OTe a.DATI DJ!A INDIX DJIA COMPo OJIA IAiAOTH IRIADTH l.rADTH '8 197' 742.li III S I.I'S' 1II,a7 1.11'7 1,17 '.I! 7. MAR I 197. 74'.JI li'i71 1,1'51 111.a7 1.11.' 9'lfll 1111.11 , MAR 2 191' 14 4' 1.1.1. 1.1.4, LII,71 1.11 Iil' 1111.al Ille.I' MAA , 11 1a'.JI 1.11 111. 1.IJ1S 9jI1 1111.5' IIII.JI MAR 1.7' 74a. Iii.,. 1.11 111.14 .91.11 lell.'1 MAR 7 1.7. 7.1' 111.21 1.1'51 1 ,11 1.13', ',1' 1111 7 MAR I 1911 7'1.17 MAR 9 1.71 7SI.11 IIJ,'7 1.1'11 11 41 e.II.. 9'9,94 1111.18 1'11.1, ,i4.4' 1.1.59 112 , 1.1111 1101… 1111. 1111.'1 MAR II 197. 75 1.I.t. 111.41 1.li.1 lll.,14 1111.', 1111.12 MAA IS 1' '. MAR 14 1911 7.a.,. Iii ' 1.1.5' 113.11 1.12 1111.25 1111.1. 1111.1. 1.5.1T 1.1'49 I.' 1.19 Ilil.14 1112.13 1111. MAR IS 1971 I. MAR I. 19'1 1.a 5 ,MAR 11 1.1& 1.1.11 1' 1' 1.1 2 11'.'1 1.1. iel' , Illi.41 1111. li 7. 1.1' 114.11 e.II.. 1111.19 1111.1. li1.31 1.1.5. 114.94 1,IleS ill5.I, IBII.!1 21 1.1. ,13.12 1.13 115.3. 1.1381 il11.21 1113.14 1111.7J MAR '1 ,911 , a li7.S1 0.19 IIS.12 1.1111 IIIJ.II 1181. MAR 1.7. 7.,4 li7.3. 1.1'.1 leS,I' 1.1,.1 ill 11 111'.19 III i,MAR '5 51 121.11 1.1'91 115.19 1.13 ill!.', IIIJ.4, 1111.91 — I1AR.iI1I'7!l3.ill –IU.U – – MAR I.U 115.61 I.U', in un,74 IIln.2I MAA a9 1.71 1'1.7' lil.94 1.1. 1.'.11 1,IS9 1117.21 1111.9' Ile3.S. MAR JI 1'78 7'i 1.1.8. 1.1' 11'.11 1.1, ille. 1114.11 118J 7 MAR 31 ,978 1'7.J' fili9a 1.1712 1,11 1,1482 ill Ilia.,. 118 1' A'R J 1.7. 751.14 (i',41 0,1711 III. 1.1411 ill',14 1114.5' IIIJ 7 A'R 4 191. 75!.J1 118.', 0.1717 18',11 e.14 '181'.11 1114.14 IIIJ. A'R '1.7. ,, (i a, 1,1111 I,.' 1.141, '.11.12 IIIS.14 1114.41 A'R I'll 1'J.'S 111.8' 1.171J 111.47 1.141' Ili1,.. lei!.'. 1114. A'R 7 1911 7'9.1' A,R II 1.,' 773 5 (JI,al 1.171' ,III,i 1.14e. ill 41 IIB5.11 111'.11 112.a1 '.1711 118. 1.141J ill 18 111'.11 1111.2. APR II 1.,1 171.1' i'2.1' 1.1711 1II,a4 1.1418 1118.11 101 19 111'.1' A'R II 1.,1 7 29 (Ji.54 1.1711 118.17 1.14il 111 4. 1015.47 A'R IJ 1.71 115 IIJ.'8 e.11i4 11'.99 '.1419 lel1,II 111 el A'R 14 1971 795.1' 14. e.I.9' 111.'9 1.141e ili 89 1111,41 111 41 A'R 11 1911 111.12 IJ5.11 1.1.,. 111.'1 e,Il81 l1i4.41 1117.14 111'.5' APR II i971 813.21 114 , e.I.1. 111.4J 1.1'11 Ill 1 1117.51 III J. APR ,. 191. ., e4 1.1' 111.&a ,1.1'8. i0il.11 1117,'1 111'.10 APR II 1.11 114.54 APR II 1971 '12.11 IJ'.ll 1.11 IIi… 1.11.. 1114 1 1117.9, Ile7.1' 111.4, e.I' II'. ,ei119. lila… 1111.1' IIe7. A'R 24 1971 1 1& 11 44 1.1.51 111 e e.131' le.11 le' 44 II A'R II 1.,1 11'.59 APR -a. 197. 11'.'1 II…. 1.1'41 114.11 1.1111 iei1,II 1111 1 Illa.4. II, 1.I'lJ 114.11 1.1111 1111.11 111 7' 11'1,1' A'R 17 1'1' 11 91 IJS.I' e.I' 114,'9 I.IS.& 11i,.TS III'. II8a.1' A'R II 1911 137.11 11'.3. 1.1… 111.18 1.IJ1' iei 1119 7 111'.1' MAY MAY , ca I 1911 MAY , 197. I'MAY 4 1'7' MAY ! ,U4.n '.11 .,1 114,41 al e' 7.14 -I,IU',-1l5 …-I.UU117.1. a.I.J. 11'.11 1.11'1 ,11.07 e.I' 11 11 1.141. 111 81 il'.1' 1.1'8' 11 41 e.141J ill'4 13'.1' 1.1' 111 7 1,1414 III' 1111.1, 1111.'. 1111.1, 4.11, Ile9.41 II' 1111.1. MAY I 1911 .24.,8 141.14 1.1&91 111.14 1.1411 ili1. 11,'4 1111,'8 MAY 9 191. 11'.11 141.1. 1.1715 111.1' 1.1414 1111,11 1111.14 MAY II 11 .22.1& MAY II 1.7' ala.ae MAY 12 1.18 .41.11 141 1 0.1711 117.5' 1.14J' 1111.1. 1111.41 1111.'4 141.5. 1.1.91 11'.21 1.1418 ili 19 1111.87 1111.11 141.51 1,1'9' 119.41 0.1411 Ilil.J9 1111.11 IIII.!I MAY 15 1'7a 84'.7& 142 2 0.1 119,11 Ilil,11 1112.51 1111. MAY I, 197. 1'4.,1 14J,.1 e,I4 111.11 1,1414 Ilil 5 111 11 IIII.IS MAY 11 1911 851.31 MAY I. 1971 151.92 MAY 19 1.7. .4 85 4.11444.&7 1.1'.' 1.1' 1.1.14 121… 1.141' 0.1411 ilii.11 1113.11 1111.11 1111.'1 Ilt'. 144… 1.17'1 111.11 1.143. 1111.41 1113.JI 1112.15 MAY II 1911 15!.34 145.'S e.17'! 111.9' 1.14a. 1111.57 1111. MAY', 1.71 14s.a9 MAY 14 197. IJ1.'. MAY 15 1.71 ,IS.41 1'1 , 1.1411 Ilal.IJ 111'.71 1111 14'.9. 0.1711 119.11 1.1410 IIIJ.41 Illa 9 14J.91 1.1121 11'.11 1.1414 1111 4 III'. 1111.4, MAY I. 1971 8'1.,9 144.JI 1,173' 119. e.1441 (lit.11 111'.9' 1111. AY J.-1.7. 4.11 JMUAYN JJUUNNN II 197. I 1' Z 197. -I,-1- '1 84e.'1 11 .47. 1.1' – — – 144.1' 1144.4,..1a1 141 , 14…. 1.1731 1.112J lil1il 1.1111 1 . 1-' , . 11 11 1.14', '1,7.1' 1ll4,It 1111 1 1 i4 1.1411 l'ia.I' 1114.1, 1111 ' 111,14 1.14'1 11'1.11 1014.4. 1111.'1 1'1,1' 1.14 illl, 1114.11 IIIJ.3' 111-l1e1-11.1-441J- '-I,ile- l-l .-ITllns.I' U I' I. JJUUNN I I' ' a.I' '1'11 8.11 JU JU N N II IJ I'll 1.78 1.91 JU N 14 I'll .,…. JUN 15 1911 '84.a, &,JUN I. 1971 .11 JUN I. 1911 2 JUN II 1. 131.14 JUN '1 197. 114.9' JU JU N N II IJ 191. 1'1. .27.11 113.11 JUN I. 1.11 '11. JUN '7 I'll 117.'1 JUN 197' '19.'1 JUN 1.7. 811 4 JUN '1 I'll all. J 197 1 1'7. 1.7' 1 I.'ill 1.17JI 14'.1. '1.11 149.JI 1.114' ISI.4' 1.1. 151.7. 1.17 Ise.I' e.11'4 14'.57 1.1114 14 21 1.111' 14 11 1.117' 14'.1' 1.1111 147 7 1.17.. 145. 1.17'. 144,77 1.1111 14'.'1 '.17 141 ' ,1.177J 144.11 I.17.S 14',54 ,119' 1'4,'1 '1.17.8 la3.'9 114,41 114.i9 .,4 II….114.1' IIZ.9. 111.1. I.I J 111.'8 111.14 11'.54 11'.1' 119,S' 119. I'I,JI 1.1.1' 11',il 1.1411 1.14', 1.14'1 1… 1.1471 1.1411 1.14 1.1411 1.14tl 1.1411 1.14.1 1.141. '.1451 1.lall 1.11 1.1' 1.147. '.1.18 ilil.91 Ilii.4, 1111.1. lll 33 1111. 1111.51 1117,25 lliJ.4, i11J.11 1111.'1 illl.11 illl.l. (111,1, illl ' ilile 1111,., ill 10 I .' 111 4. 111 4 1111.1, 1111 1 1111.a. 1111.14 1111.1. 1117.11 IIIt,71 III',.J 1111.'1 1017 7 III , 1111.'7 1111.1' 1111.11 1111.1' 1114.14 1110.11 Illa.7S 1114.1' 1110.11 1115.11 1114.17 1114. 1114.41 111'.'4 1114.11 1114.18 IIIJ. III'. 1111. 1114.lt 1114.'1 1114.1.

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Tabell’s Market Letter – July 14, 1978

Tabell’s Market Letter – July 14, 1978

Tabell's Market Letter - July 14, 1978
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TABELL'S MARKET LETTER '–c 1 I J 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMeER New YORK STOCK eXCHANGE, INC MEM8ER AMERICAN STOCK eXCHANGE July 14, 1978 recent … ,- ,-.- 742.12 on the Dow Jones Industrial Average. To review once again, the Dow Jones Industrial Average has advanced from that low to a high of 866.51 on June 6th, a rise of 16.76 over a period of 68 trad- ing days. It must be mentioned In the post-World-War-II era, there has neverbeen a bear market rally achieving a magnitude of 16.76. History has shown us the stock market offers exceptions to everything. However, we feel the action of the stock market since the February low Is of meaningful significance and not a so-called bear market rally. Let us look at this 124.39 point advance of the Dew Jones Industrial Average. Since the Feb- ruary low, we feel the stock market climate has changed. This week we conducted an Investigation to see whether this change has extended to the American Stock Exchange and the Over-The-Counter market. We find, as a general conclusion, It has. In fact, the strength In the Dew Jones Industrial Average has underperformed the American Stock Exchange and Over-The-Counter averages. Breadth Indices, reflecting the above average performance of a broad range of stocks, were also pOSitive for the New York Stock Exchange, American Stock Exchange and Over-The-Counter markets. The table on the opposite page shows some relevant market statistics 'dally from the February 28th low to the June 6th high (16.76) and subsequent correction to the July 5th low (-7.01). The first column shows the Dow Jones Industrial Average; the second, the American Stock Exchange Market Value Index; and the third, the ratio of the latter to the former. Obviously, when the ratio Is rising, It means the Amex index Is outperforming the Dew and vice versa. The next two columns list the Over-The-Counter Composite Index and Its ratio to the Dow. The last three columns are breadth indices for the New York Stock Exchange, the American Stock Exchange, and the Over-The-Counter market starting from an identical base of 1,000. The breadth figure Is computed by cumulating daily aavances minus declines divided Coy unclianged Issues tradea–TheJilghs' fOrthevarlous 'averages artcr'–'-'-!– breadth Indices are Indicated by an asterick on the opposite page. Inspecting the data reveals some Interesting facts. The American Stock Exchange(22.38) and Over-The-Counter (23.33) averages outperformed the Dow during the market advance under study, as shown by their Increasing ratios to the Dew from February 28th to June 6th. This indicates, we feel, the continued strength In secondary and tertiary stocks. As readers of this letter are aware, this strength was apparent to us before the Dew Jones Industrial Average reached Its low In February. Also, It Is worth noting that the American Stock Exchange and the Over-The-Counter markets continued to outperform the Dew Jones Industrial Average during the short-term decline from June 6th to July 5th. To date, neither average has corrected Itself five percent. During the market rise from the February low,New York Stock Exchange breadth posted new highs reflecting broad partiCipation In the market. Breadth on the American Stock Exchange and Over-The- Counter market also increased during this period but at a slightly slower rate. As the table shows, we can see a series of successive highs on the Dew Jones Industrial Average, American Stock Exchange, and Over-The-Counter accompanied by new highs on the three respective breadth Indices. This be- havior continued until June 8th when some IntereSting changes start to take place. New York Stock Exchange breadth reached a high two days after the high reached in the Dow Jones Industrial Average. Since then, during the short-term decline, New York Stock Exchange breadth has,together with the Dew Jones Industrial Average,declined noticeably, reflecting an oversold condition which was dis- cussed last week. What Is Interesting, however, Is the strength of the American Stock Exchange and Over-The-Counter averages and breadth. For example, throughout the minor correction since the June.6th.,high American contl'1uedto P9.s.1 new highs.. ….. ,, Having Inspected this 17.76 Increase In the Dew since February 28th followed by the 7.01 correction from the June 6th high, what benchmarks have been established Clearly, the ability of the Dow to penetrate Its recent high of 866.51 accompanied by breadth posting a high above the June 8th figure of 1022.96 would reconfirm the advance and be viewed as constructive. If this happens, the American Stock Exchange and the Over-The-Counter markets which have recently performed rela- tively better than the Dow, would appear to be positioned to also reach new highs. The ability of thes e various averages to reach new highs coupled with the non-confirmation of new highs in their respective breadth Indices would signal a change In leadership and loss of momentum to the heretofore strong secondary and tertiary stocks. ' Dew-Jones Industrials (12.00 p.m.) 828.92 ROBERT J. SIMPKINS, JR. S & P CompOSite (1200 p. m.) 96.78 DELAFIELD, HARVEY, TABELL Cumulative Index (6/22/78) 72B.86 RJSrak No statement or expression of opmlon or cny other maHer herein contaIned IS, or 15 to be deemed to be, directly or indirectly, on offer or the sol,c,tot,on of on offer to buy or sell any SeC1Jnty referred to or menhonad The mattar IS presented merely for the convef'leno;e of Ihe subscriber While we believe the sources of our Informa- han to be reliable, we In no way represent or gUlronlee the accuracy Ihareof nor of the statements mude herein Any actlO'1 to be token by the subSCriber should be based on hiS own Inveshgotlon and 'nformatlon Janney Montgomery Scott, Inc, as a corporot,on, and Its officers or employees, may now have, or may later take, pos,tlons or trades m respect to any securlt'es mentioned In Ihls or any future lSue, and such pNltlon may be different from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered w,th the SEC oS an Investment adVisor, may give adVice to Its 'nvestment adVisory and olhel customers mdependently of any statements made In thiS or In any other Issue FlJrther mformatlon on any security menlloned herein IS on request

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Tabell’s Market Letter – July 21, 1978

Tabell’s Market Letter – July 21, 1978

Tabell's Market Letter - July 21, 1978
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TABELL-S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIYISION OF MEMBER NEW YORK STOCK eXCHANOE, INC MEMBER AMERICAN STOCK eXCHANGE July 21, 1978 -.,j'O– ….. …. ——-, a A few impressions. They will be impressions only, since ticKer tapes and WALL .,.. '—.. – JOURNALS are in scarce suppy in East Africa, where we have spent the bulk of the past six weeks. Our feelings about the stock market over that period, therefore, come solely from a couple of days of poring over charts. This is a new experience. We are accustomed to watching the market unfold from day to day more or less like a moving picture. Our present feeling is gained solely from look- ing at a Single frame, and it is very hard to say just how accurate this perspective will be. It is necessary, nonetheless, to make the attempt. Vacations have a number of salutary effects. In the present instance, one of these effects is a lesson in humility. Had anyone attempted to pin us down in early June as to where the market would be on our return, we would, quite honestly, have mentioned a figure 100 points or so higher. Three days after we left, the Dow reached an intra-day peak of 879.33 on June 6th, and immediately proceeded to head due southeast. Since then, a reasonably vigorous recovery has brought the aver- age to about the same level it was on our departure, but the pattern is, to say the least, not the one we expected to find on our return. What, if anything, went wrong Not really all that much. The market's apparent state at the end of May was that the downtrend from the highs of seventeen months before had been decisively broken and that base formations, in many cases had broadened to impressive proportions. With the rally from last spring's lows, large numbers of issues seemed poised to break out of these base formations, and these issues appeared to exist in sufficient numbers to offer the possibility of immediately higher prices. With early June's loss of momentum, the breakouts, of course, never took place, and the bulk of issues seem to rosy prospects of six weeks ago now appear, at least, to have been postponed. The word, postponed, is used advisedly, however. We do not see anything that has happened in the past month and a half to alter our original basic assessment. The penetration of last year's downtrend is now all the more firmly established, and we think it remains highly probable that the market has entered upon a new phase replacing the dreary atmosphere of early 1977-1978. It is the probable shape of that new phase which has been altered by the market's failure to follow through over the past few weeks. What now seems to be the most likely action is further broadening and extension of the base formation. As mentioned above, the market declined throughout the better part of June, and, since then, over the past two weeks, has rallied to a point just under the early-June highs. The question of whether the rally will carry through or, indeed, whether the mid-June low will be able to hold, seems to us, given the market's loss of momentum, a debatable one. However, we must confess that we don't think it really makes much difference. We see nothing in the picture to alter the assessment made in May that the current market phase consists essentially of a basing process which will be the ultimate precursor of higher prices. The discussion above has, of course, been couched in terms of the averages and is less appli- cable to the secondary and tertiary stocks which, as our colleague Robert Simpkins demonstrated last week, have continued in their own private bull market. This is one facet of the market's action that has remained unchanged over the P3St six weeks and we must confess that technical work at the moment shows no apparent prospect of its diminution. We have continued with a vengence in the —directibncof whaf-F0RTUNE magazine 'caBed -this'mofith -the' one-tier-market;c'-a'ma rket in-which- the'- price disparity between primary and secondary stocks has narrowed to a degree unprec1dented in recent years. It is interesting to note, however, that, after a year and a half of this process, sec- ondary issues do not appear overexploited on either a technical or fundamental basis. Like all stock market processes, this one will eventually unwind itself, but we do not think that unwinding will take the form of a sharp decline in secondary issues. It should rather, eventually, involve the higher grade issues developing a more normal premium while secondary stocks continue to move ahead. This process should, in tum, produce the sort of higher levels for the major averages which the current base formation process would tend to suggest are ultimately probable. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (7/20/78) 837.75 97.99 742.55 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expression of opinion or any other matter here'n contained IS, or IS 10 be deemed to be, dtrec1ly or Indirectly, on offer or the sollcllollon of on offer to buy or sell (Jny secunty referred 10 or mentioned The motter IS presented merely for the conver!!nc!! of the While oNe believe the sources of our mforma- tlon to be relloble, we In no way represent or guarantee ihe accuracy thereof nor of the statements mude herein Any action 10 be token by the subSCriber should be based on hIS own investigation and information Janney Montgomery Scali, Inc, as a corporation, and ,ts officers or employees, may now have, or may loter lake, posItions or trades In respect to ony seCUrities mentioned In thl or any future Issue, ond such position may be different from any views now or hereafter expressed In thIS or ony other lSue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, moy give adVICe to lIs Investment adVISOry and other C1Jslomers Independently of any stalements made In th,s or In any other ,ssue Further mformatlOn on any security mentioned herein IS ovallable on request

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Tabell’s Market Letter – July 28, 1978

Tabell’s Market Letter – July 28, 1978

Tabell's Market Letter - July 28, 1978
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIYISION OF MEMBER NEW VORK STOCk eXCHANGE. INC MEMBER AMERICAN STOCK EXCHANGe It is perhaps appropriate at this time to take another look at the Vestal Virgins. These, it will be recalled, are a group of some dozen stocks selected originally in this letter in March, 1973. The selection was made in an attempt to produce a representative list of favorite institutional stocks widely recognized at the time of selection as growth issues. The object of the exercise, at that point, was to suggest that the then-current prices of those issues might be discounting, in the well-known phrase, not only the future but the hereafter. The following table presents some relevant statistics regarding those 12 growth stocks at each year-end from 1966 through 1977. The first column is a geometric average of the year's closing prices of each of the 12 issues, and the second is the similar average of their per-share earnings. The third column is a price/earnings ratio for the growth stocks, followed by the comparable pie for the Standard and Poor's 500. The final column is a ratio of the two price-earnings ratios. YEI\P T900 1967 1968 1969 1970 1971 1972 1973 J 97 II 1975 1976 1977 AVEP,1'\G8 5Q-gs- 47.28 54.78 63.18 58.46 84.27 117.64 82.94 4-4 .1..7 62.08 65.49 55.47 EAPNTNGS 1. 04 1. 16 1. 33 1. 54 1. 75 1. 96 2. 25 2.68 0 3.09 3.64 4.14 P-E —zg–g 40.9 41. 1 41. 1 33.4 43.0 52.2 31.0 1-7.-0 20. 1 18.0 13.4 S&P P-E J4. 5 18.1 18.0 15.9 18,0 17. 9 18.4 12.0 'J-;-/ 11.6 10. 8 8. 7 R.lITTO T.lJ06 2.257 2.278 2.579 1. 859 2.404 2.838 2.592 2-,-205 1,'738 1 . 661 1. 539 We have a few comments on the above numbers, and they will reflect our own bias as a 'market technician. The typical price action of this sort of issue, as exemplified by the first column, is all too well known. Between 1966 and 1972, they advanced almost 300, and in the two subsequent years, lost almost 2/3 of their 1972 value. The recovery since that time has been miniscule and in- ferior to that of thf' general market. There exists no explanation for this action in the earnings history, which has demonstrated, over the period under study, a rather steady growth in excess of 12 compounded annually. The fin- ancial community devotes a great deal of time, effort and money to forecasting earnings growth — an ironic effort since the task is relatively easy and often irrelevant. Its ease is demonstrated by our own selection of these issues five years ago on the rather simple-minded basis that their growth prospects were common knowledge, and its lack of relevance is suggested by the fact that the earnings did indeed grow while the price collapsed. The major determinant of price action has been the fact that investors were willing to pay 52 times earnings for this particular group of growth stocks at the end of 1972 and only 13 times the vastly-improved earnings at the end of last year. This has been partially, but not totally. a general-market phenomenon. The multiple being paid in 1972 was 2.8 times that of the S & P, and, by 1977, this had been reduced to 1.5 times a much reduced market multiple. 20/20 hindsight, of course, tells that 2.8 times was too high. The basic question centers around how looN is low. Is 1. 5 times the general market multiple an appropriate – p r i c e Tfor and is the -muItlple. . . 1n- today's environment The answer to these questions will have at least equal relevance with earnings forecasts insofar as determining price action is concerned. Herewith bias. The only way we know of to determine future levels of investor confidence is by an analysis of technical price action. For this reason, we think that analysis of the technical p3tterns of major high-capitallzation growth issues is of Significance today. It is our intent to present such an analysis in future issues of this letter. — NOTE The 12 stocks in the average above are Avon Products, Burroughs, Coca-Cola, Disney, Eastman Kodak, IBM, Johnson & Johnson, McDonalds Corp., Polaroid, Proctor & Gamble, Sears-Roebuck, and Zerox. Comments are based on technical factors only. DOW-Jones Industrials (1200 p.m.) 849.36 ANTHONY W TABELL S & P Composite (1200 p.m.) 99.45 DELAFIELD, HARVEY, TABELL Cumulative Index (7/27/78) 752.38 No statement or eKpreSSlon of opinion or any other matter herein conlOined IS, or 1 10 be deemed to be, directly or indirectly, on offer or the soliCitation of on offer to buy or sell any secunty referred to or mentioned The matter IS presented merely for the conVef'lenC6 of the subscriber While oNe believe the sources of our mformatlon to be reliable, we 10 no way represent or guarontee the accuracy thereof nor of the statements mude hereIO Any action to be taken by the subSCriber should be based on hiS own mvest,gat,on and information Janney Montgomery Scott, Inc, as a corporation, cnd Its officers or employees, moy now have, or may later toke, posillons or trades In respect to any securities mentioned In thiS o any future Issue, and such pOSition may be different from any views now or hereafter eKpressed m thiS or any other luue Janney Montgomery Sc01l, Inc, which IS reglsered With the SEC as on Investment adVisor, moy give adVice to liS Investment adVISOry and othel customers Independenlly of any statements mode In thiS or In any other Issue Further ,nformot,on on any secur,ty mentioned herelr IS aVailable on request

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