Viewing Month: September 1978

Tabell’s Market Letter – September 01, 1978

Tabell’s Market Letter – September 01, 1978

Tabell's Market Letter - September 01, 1978
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK EXCHA.NGE, INC MEMBER AMERICAN STOCK eXCHANGE – – September I, 1978 the-steck-market, at least in so far as -it is measured by the popular averages, lose some of the momentum which characterized it during the late July move to new bull-market peaks. It is only necessary to look at the sort of market chart which appears re- gularly in the daily newspaper to realize that the area around 900 has, during the month of August, been an apparent area of supply sufficient to halt, andin the past week, throw back what had, until recently, been a fairly dynamic adVance. There is, naturally, some cause for concern as to how serious the recent reversal might ultimately prove to be. Our own reading of the available technical indicators suggests quite clearly that, based on market action to date, there appears to be little prospect of anything more than a min!)r correction, perhaps of the magnitude of the approximately 7 downswing which took place during early June and July. As far as the individual market indices are concerned, the DJIA spent most of August locked in a trading range between approximately 906 on the upside and 882 on the downside. That trading range was penetrated in this week's action, and the top formed is rather clear cut. The most pessimistic readable downside objective is the 860-850 downside range, an area which COincides with extremely strong support. The patterns for other major market indicators vary. The Dow Jones Transportation Average has a top not dissimilar to that of the Industrials, with a downside target somewhere around 236 versus its current level 248. This, again, is a figure of hardly astonishing magnitude. The pattern for the Utility Average is somewhat different. Utilities, by and large, have been in a correc- tlonary phase since the middle part of 1977, having reacted from a high of around 118 to a low of 103 — – earller-this-yeaY-. 03;1'0 8'range-Thisiormation'–..J has all the earmarks of an attempt at a bas e which could ultimately lead to another attempt to post new highs. It could be destroyed, of course, by a move below 103but this is a prospect which does not appear immediately imminent. It is when we Inspect the pattern on individual issues, however, that it becomes apparent, in our opinion, that there is little reason to view the mild weakness with any sort of trepddation. The recent move to new peaks was confirmed by new highs in both our daily and weekly breadth indices, and the market displays little sign of anything more than a short term loss in breadth and momentum. Even during the drab trading pattern which has characterized August so far, new 52-week highs have continued to exceed lows by considerable margins. This is not the sort of trading activity out of which major declines arise. Were the market in serious technical difficulty, one would expect new individual stock peaks to be dropping off sharply or breadth to be lagging the market on advances. Neither of these two phenomena is taking place at the moment. Inspection of individual chart patterns reveals a few widely scattered minor tops in issues which have been leaders of the advance to date but practically none of any magnitude greater than shown by the averages. The general market, as measu'red by broad-based indices, has been advancing since 1974, and it would not be surprising, given this strength, to find a number of issues appearing fully extended. Such indeed is the case. There is, however, a major difference between a market which shows a pattern of sharp advances and one where these advances have been followed by Significant distribution. Such distribution appears to be largely absent. Meanwhile, leadership continues to shift satisfactorily. Secondary issues continue to be market – '-leaders;-1md;'as-ifidividualStocKs' 'readh-theiro15 ectti/ell; ne.n;oneHfapP'eano l5e'comji'teting base formations and preparing to take their place as upside bellweathers. At the same time that all of this is going on , satisfactory basing action appears to be continuing in some of the higher-quality institutional growth stocks of the type we have been discussing in this space for the past few weeks. It is very difficult, in other words, to inspect Individual stock patterns and find signs of any serious vulnerability There is, in summary, very little reason to be worrie! about the general market climate despite the stalling of the advance which has taken place during the past month. The major challange facing the Investor at the moment is pinpOinting of those areas new leadership which w11l put his port- folio in a pOSition to participate on the upside. Dow-Jones Industrials (1200 p.m.) 878.64 S&P CompOSite (1200 p.m.) 103.41 Cumulative index (8/31/78) 804.47 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statemenT or expression of opinion or any olher motter herem contOlned IS, or 1 10 be deemed to be, d.rectly or mdHectly, on offer or the sollcltoloon of on offer to buy or sell any seclUity referred to or mentioned The mOiler IS presented merely for the converlena of the subscnber While Ne believe the Ources of our Informa tlon to be reliable, we In no way represent or guarantee the aCCuracy thereof nor of the staemen!s mude herem Any action to be token by the subSCriber shOUld be based on hiS own Invesllgatlon and Information Janney Montgomery Seo!t, Inc, as a corporatIOn, and Its officers or employees, may now have, or may loter loke, POSitiOns or trodes In respect to any seCUrities mentioned In thiS or ony future Issue, and such pOSitIOn moy be different from any views now or hereafter expressed In Ihls or ony other Issue Janney Montgomery Scoll, tnc, which IS registered With the SEC as an Investment adVisor, may give adVice to lIS Investment odvisory ond othel customers Independently of any stalements mode In thiS or In ony o'her Issue Further informatIOn on cny security mentioned herein IS aVailable on request

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Tabell’s Market Letter – September 08, 1978

Tabell’s Market Letter – September 08, 1978

Tabell's Market Letter - September 08, 1978
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— TABELL'S MARKET ,I , .. — LETTER — — , . 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – '…. i …… ….. 4; It is possible that our readership might find interesting a brief'desciiptl6n —-' takes place in our office each Thursday and which occupies the better part of the day's work by a majority of our staff. We are proud of this process as it has evolved over the years, and it constitutes one of our major efforts to watch the stock market. It combines, we think, the greatest strength of both the human analyst and the computer, and we have been engaged in this sort of surveillence in one form or another for over a decade. To begin with, in a back room here in our office, there resides a fairly large and powerful digital computer. We are perhaps unique, in that we do not burden this device with such tasks as the payroll, accounting, etc. The sole function of this piece of machinery is to aid in tech- nical analysis of the stock market. Part of the data maintained in its electronic maw.is a series of condenrsed technical opinions on some 1400 listed issues. We maintain, on line, for these stocks, such information as upside objectives, breakout points, direction of trend, etc., etc. It is in the process of updating these 1400 opinions with which we are here concerned. The process starts by utilizing the computer's high-speed data processing capabilities. Each Thursday the machine matches the stored opinions against a summary of the week's trading in each issue. Such information as breakouts taking place, objectives being reached, unusual volume activity, and large price fluctuations are examined for and printed out in a rather lengthy report circulated within the office each Thursday morning. This report, based entirely on a pre- 1,–. ….,liminary maY.listsome 200-50L,stocks as having undergone some noteworthy activity during the week. . -, – ',- Beyond this point, we frankly do not trust the computer. We think there is essentially no substitute in technical work for the examination of price action by an experienced analyst. Therefore, at this stage-.our own staff takes over. The chart of each issue flagged in the pre- liminary screen is examined in detail by one of our staff members, and, as necessary, our opinion and data on this issue are updated. By the end of the day, our data bank is up-to-date with valid opinions based on trading through the close of that day's market. Now the purpose of this procedure is that it enables our clients to receive, on a weekly basis, updated technical opinions on all of the issues in which they have an interest. In the process, ihowever, it tends to spin off some rather useful information, information which can often be useful in the formulation of a stock market opinion. For example, we have available late each Thursday afternoon a complete list of all stocks which posted major and minor upside or downside breakouts during the past week's trading. The recent tenor of these lists may be of some interest in the light of recent behavior of the popular stock market indices. As we all know, the Dow has spent a goodly part of the last few weeks flirting with the 900 level and has,to date at least,been repeatedly turned back. A perfectly valid question centers on whether this action constitutes accumulation or distribution. An answer may well be found in the direction of the breakouts which have been taking place while the averages have been moving sideways. During the four .market weeks of A!lgus!..iherewere a grand total of 146 – –m-a7jo'rorminorbaSis, on a .. Forth'e same – period there were exactly eight downside breakouts. For the week ended yesterday, September 7, 18 upside breakouts took place, versus two breakouts on the downside. This sort of action suggests, we think, rather obviously, that the bulk of listed issues continue to act better than the general market averages. It may well also suggest the direction of the next major move in those averages. Dow-Jones Industrials (1200 P. m.) S&P Composite (1200 p. m.) Cumulative Index /7/78) 902.63 106.34 819.12 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL – No statement or expression of opinion or any other matfer herein tontolned IS, or IS to be deemed to be, directly or ,ndirectly, an oHer or the soliCitation of on oHer to buy or sell any security referred to or mentioned The matter 1 presented merely for the convellence of the subscriber While He believe the sources of our informa- tion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements m…,de herem Any (lctlon to be token by the subscriber should be based on hiS own mveshgal10n and Information Janney Montgomery Scott, !nc, as a corporation, ond Its officers or employees, may now have, or may later toke, pOSitiOns or trades In respect to any securities mentioned It) thiS or any future Issue, and such pOSition may be different from any views now or hereafter In thiS or any other Issue Janney Montgomery Scott, Inc, wh,ch IS regisTered With ,the SEC as on Investment adVisor, may give adVice to ItS Investment adVisory and athel customers Independently of any statements mode If\ thiS or If\ any other Issue Further ,nformatlan on any security menhoned herein IS available on request

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Tabell’s Market Letter – September 15, 1978

Tabell’s Market Letter – September 15, 1978

Tabell's Market Letter - September 15, 1978
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TABELL'S MARKET LETTER —————1 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC. MEMSER AMERLCAN STOCK eXCHANGE — –c Time J' September 15, 1978 common buzz phrase — the two-tier market. This description was originally coined back In the early 1970's, when Institutional growth Issues and the rest of the stock market began to wander off In opposite directions. It retained Its currency right through last year although It gradually came to be used to describe two precisely opposite phenomena. Whereas, In Its original form, It had meant that the growth stocks were moving ahead while the rest of the market did nothing, It came, In 1975-1976, to symbolize the fact that secondary issues were doing well while the major averages were In a bear market of their own. Phrasemakers love paradox and IB ve recently coined the appella- tion, one-tier market, to refer to the fact that recent strength on the part of secondaries has now tended to remove a large part of the valuation spread which normally exists between high grade and low grade Issues. In any case, with the market as a whole having moved broadly ahead since this spring, the two-tier description has generally tended to disappear from circulation. About 1976, when the popular market averages were headed south and secondary Issues, as re- presented by our Cumulative Index,were generally holding firm, we pointed out, on a number of occasions, some of the difficulties that this diverse action was causing for conventional technical analysis. We observed on the one hand, that large-capitalization stocks and the averages which reflected the behavior of those stocks were undergoing perfectly normal bear-market behavior, while secondary Issues remained in bull cycles of their own or, at worst, in consolidation phases. This presented a number of problems as the averages attempted to bottom late last year and early this year. Since many stocks had never been, in fact, in bear markets, it was unrealistic to expect them to normallywould at a major reversal. They did not, indeed, do so. . As the advance- since February has become more broad and-the -;r;ielnthe;l3O;;;-has exceeded 20- the discrepancy in price action has been less pronounced. The aftereffects of our old friend, the two-tier market, are still with us, however, and are still posing problems for the stock market technician. If we look only at the Dow or theS&P over the past few years, it becomes fairly easy to fit the market's behaVior into conventional cycle theory. We have noted in this space that the average length of stock market cycles from trough to trough In this century has been some 42 months. A major bottom in February, 1978, therefore, was reasonably consistent with that sort of experience. This was 38 months from the December, 1974, low on the Dow and 40 months from the October, 1974 low on the S&P 500. This timing produced a market cycle shorter that the average for this century but not at all out of the range of historical experience. We have, furthermore, been accustomed to use a 2'0 move as a threshold for recognition of major bull and bear markets. The advance in the Dow from Its lows of earlier this year is, as noted above, now in excess of 20. Thus, in terms of the major averages, it seems perfectly possible to place us at the present time in a rather young bull market, now only seven months old. That bull market has, furthermore, advanced just over 20, well below the average for past advances. In this sense, it would seem the outlook is bullish indeed. This, however, is where the ghost of the two-tier market returns to haunt us, for secondary stocks never underwent the sort of correction which took place in the Dow. They thus find themselves, at this stage, in an up cycle which goes all the way back to 1974, and, actually, constitutes the second -longest, .since,1-900 , .by – American Stock Exchange Index is up over 200 from its 1974 low — achieved what could be called a normal bull-market move. Thus, even as was the case a couple of years ago we find ourselves with two groups of stocks shOWing totally divergent cyclic action to analyze. It may well be, of course, that the best solution to this dllema is to Ignore it, just as the solution In 1975-1976 was to forget the Dow and buy secondaries. We think, however, the diver- gence must generally be kept in mind In any attempt to understand the somewhat un!!,recedented behavior of the stock market in the late 1970's. ….' – AWTrak Dow-Tones Industrials (1200 p.m.) S&P Composite (1200 p.m.) Cumulative Index (9/14/78) 881.24 104.54 814.24 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expreSSIOn of OpinIOn or any other matter herein contained 15, or 10 be deemed 10 be, directly or indirectly, an offer or the soliCitation of an offer to buy or sell any tecunty referred to or mentioned The mOiler IS presented merely for the convenlenC5 of the subscriber While we believe the sources of our Informa- hon to be relloble, we In no way represent or guarantee Ihe accuracy thereof nor of Ihe statements mude herein Any action to be token by the subSCriber should be bosed on !IIS own inVestigation and Information Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, may now have, or may later take, POIIlonS or trades In resped 10 any seCIJntles men'umed In thiS or ony future Issue, and such position may be different from any views now or hereafter expressed III Ihls or any other Issue Janney Montgomery SCOII. Inc, which IS registered With Ihe SEC os on Investment adVisor, may give adVice to lIs Investment adVisory and othel CUSTomers IIldependently of any statements mode In Ih!s or In any other Issue furlher IIlformatlon on any seuJflty mentioned herein IS avalloble on request

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Tabell’s Market Letter – September 22, 1978

Tabell’s Market Letter – September 22, 1978

Tabell's Market Letter - September 22, 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 September 22, 1978 – – -We- have-begun this letter–in–the past with have we h5re''!.What ..- we have, first of all, is a short term dovJntrend, the Dow having closed just ten trading days ago on —. — September 8th, at 907.74 and having finished Wednesday at 857.16, a drop of better than 5 1/2 percent. What we have, in addition, are fairly pronounced distributional tops in the major averages — a fact which does not require expostulation by a professional technician, since it should be obvious to anyone who believes in such things as distributional tops and takes the trouble to look at the chart on the back page of the WALL STREET JOURNAL. Where some perspective is necessary, perhaps, is in the interpretation of these two facts. It is, frankly, difficult to become undulyllXercised .about the top referred to above. Its downside objective is, roughly, 850-840 in terms of the Dow — an area that coincides with relatively strong support. Noe does it appear appropriate, on an historical basis, to become deeply worried about the extent of the decline. Drops of 7-8 percent, which is what this one would tum out to be if the afore- mentioned downside objective were reached, are not uncommon in the context of major up swings, although they have tended to occur late in advances rather than in the early stages. What we are saying in other words, is that nothing has occurred in the past two weeks to shatter the rather positive expectations we had retained concerning the stock market. It is perhaps worth recalling the process by which major tops tend to form. That process tends to involve one form or another of loss of momentum, such as, for example, decidedly inferior action on the part of market breadth measurements. These measurements have dropped off sharply in the past fortnight along with the rest of the market, but just two weeks ago they were uniformly achieving new highs. It is, of course, entirely possible that a peak in breadth was seen early this month, but that peak,it should be recalled, is supposed to lead major downswings by a fairly considerable time peltod. What we have seen over the pa-st couple of weeks coulll, of course, be-an ea-rlyinaicaUon of' — a dangerous loss of momentum. The current eVidence, in our view, does not admit of more than that. This first instance of noticable market decline has been seized upon with almost lascivious glee in some quarters, especially those who have remained skeptical of the entire advance since February. Along these lines, one of the favorite topics of market Cassandras has been the existance of speculative activity, and, indeed, some of the comments on the subject seem to suggest that we are at the moment witnessing a combination of the worst features of tIe Holland Tulip Bulb mania, the South Sea Bubble and the 1929 crash. Most recently, of course, such commentators have been able to point to the whle moves, first up and more recently down, In gambling Issues. It cannot be denied that such moves have, indeed, taken place, but it should also be kept In mind that this action Is restricted to some 1/2 dozen Issues constituting a miniscule portion of the total list. Mor e fundamental evidence of speculative activity exists, we think, elsewhere. The number of mar- gin accounts, for example, has continued its fairly steady rise from the 1974 lows and has now exceeded its 1968 peak. The outperformance of higher grade Issues by secondary stocks Is a not-at-all-new phenomenon that has recently continued unabated by most measurements. In this connection, however, it should be pointed out that these issues began their recent sharp rise from a point where they were fundamentally undervalued In relation to the rest of the market, and it Is arguable, at least, that all that has taken place In the past year or two Is a return, on the part of these stocks, to their normal niche in the overall market picture. Finally, it must be recalled that speculative activity, like some of the Indicators referred to above, generally tends to be an Indicator of market momentLrn rather than market level. Thus, at least in one sense the upside current that has carried the market along through early.this,month.continues.to flow– … – -…. It is not our intent, In this analysis, to ignore or to gloss over less-than-favorable portents. Like most people we would prefer to see the market consistently move ahead to new highs without any correctionary interuptions. Such markets, of course, present little difficulty for the technician. They are, however, rare, as the present instance tends to suggest. As we have tried to indicate above, sigrs of market deterioration do not tend to present themselves In blinding flashes but in accumulating chains of evidence. If such evidence continues Its buildup, we will comment thereon and suggest appropriate action. It Is premature at this stage, we think, to become unreasonably pessimistic based on the downswing of the past few days. Dow-Jones Industrials (1200 p. m.) S&P CompOSite (1200 p.m.) Cumulative Index (9/21/78) 858.45 101. 71 779.59 ANTHONY W TABELL DELAFIELD, HARVEY, TABELL No statement or expression of opInion or any other molter herein contOlned IS, or 15 to be deemed 10 be, directly or indirectly, on offer or the Ollcltollon of on offer to buy or sell any security referred to or mentioned The matter IS presented merely for the converlence of the subSCriber While e believe the sources of our Informo' !lon to be reliable, we m no way represent or guarantee the thereof nor of the stolements mude herem Any action to be token by the subSCriber should be bosed on hiS own Investigation ond Information Janney Montgomery Scoff, , oS 0 corporation, ond ItS officers or employees, may now hove, or may loler toie, pOSitions or trades In respect to ony securlltes mentioned In Ihls or ony future Issue, and such poslilon may be different from any Views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scoit, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to lis IIlvestment adVisory ond othel customers mdependenily of ony slatements mode In thiS or III ony other Issue further Information on any securtty menhoned herem IS available on request

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Tabell’s Market Letter – September 29, 1978

Tabell’s Market Letter – September 29, 1978

Tabell's Market Letter - September 29, 1978
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TABELL'S MARKET LETTER — — –.— 909 STATE ROAD, PRINCETON, NEW DIVISION OF 08540 MeMBER NEW YORK STOCK eXCHANOE, INC MEMBER AMERICAN STOCK eXCHANGE .. '!…. '- !rno!, In commenting last week on the pessimism which seemed to abound In certain quarters we – suggested, It is perhaps worth recalling the process by which major tops tend to form. That process tends to Involve one form or another of loss of momentum, such as, for example, decidedly Inferior action on the part of market breadth measurements.. On the one-picture-I, OOO-words theory, we are showing below what that loss of momentum looked like in the last four previous major stock mar- ket tops, contrasted with the picture at the moment. In all five of the charts below, the solid line represents the Dow Jones Industrial Average,and the line with asterisks represents a dally breadth Index. 1961 – MAR 1962 1965 – FEB 966 SEP ISS7 – FEB ISSS – JUN 1977 – SEP 1978 In 1961-1962, three successive peaks in the Dow,in May, 1961, August 1961, and December, 1961, were followed by successively lower peaks In market breadth. In 1965, the sharp breadth drop from the mid-summer-1965 high was never recovered on the 1965-1966 rally, despite the fact that the Dow moved up some 150 pOints, with explosive advances in secondary issues. In 1967-1968, breadth remained generally in a downtrend, despite the explosion In the Dow to a new peak close to 1,000, and a strong DJIA rally in early 1969 Showed almost no breadth improvement. The top formation pro- – cess and the first bear-market rally in 1972-1973 encompassed a continuous downtrend in the breadth …- …. …… ….. – – . As'against thls'hlstory. if is-worth looking at breadth action at present as shown in the lower right-hand comer. The downtrend at the end of last year actually featured flat-to-improvlng breadth action, and breadth falled to exceed Its November low when the Dow bottomed early this February. Every single new high since February has been confirmed by a new breadth peak. Indeed, breadth has been in an unrelieved uptrend Since 1974. As we noted last week, the recent breadth decline has been sharp, but, as comparison with the other charts will show, if this constitutes deterioration, it is only the beginning of the process. Market momentum, in other words, continued right through early this month, and it is far too early to speculate about that momentum being lost. Dow-Jones Industrials (1200 p.m.) 862.79 ANTHONY W TABELL SSP Composite (1200 p.m.) 102.20 DELAFIELD, HARVEY, TABELL Cumulative Index (9/28/78) 787.99 No statement or expreSlon of opinion or ony other motter herein conlollled 15, or .510 be deemed to be, directly or Indirectly, em offer or the 5011(1101101'1 of on offer to buy or sell any securlly referred 10 or mentioned The matter IS presented merely for the convel'lenaJ 01 the subSCriber While we believe the OUIteS of OUI tlon to be rei roble, we m no way represent or guarantee the accuracy theleQf nor of the statements mude herein Any action to be taken by Ihe subscriber should be based on hiS own Investigation and Information Janney Montgomery Scali, Inc, as a corporation, and Its officers or employees, moy now have, or may later take, pOSitions or trades In respect 10 any seCUrities menlloned In thiS or any fvlure Issue, and such posItion may be different from any views now or hereafter expressed to thiS or any other Issue Janney Montgomery SeoIT. Inc, which IS registered With the SEC as on Investment odvlsor, moy give adVice to Its Investmenl adVisory ond othel customers Independently of any tOlements mode In Ihls or In any other iSsve Funher information on any secullty mentioned herein is available on request

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