Viewing Month: October 1978

Tabell’s Market Letter – October 06, 1978

Tabell’s Market Letter – October 06, 1978

Tabell's Market Letter - October 06, 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 – October 6, 1978 -Readers, of financiaL theiLchoice. of.v.arioull, materigl.V'!ith whtch. to bore themselves. In the case of the bulk of stock market -he'-investor has hacCoi the opportunity to become bored with abstruse observations about such phenomena as the money sup- ply, the discount rate, the,Mid-East situation, foreign exchange markets and other such items that supposedly have some relevance for what the stock market might do. This being a technical market letter, we generally choose to lull our readers to sleep in another fashion, the recitation of boring series of numbers. It is our belief, of course, that these numbers have at least as much relevance to the equity markets as some of the factors discussed above. Herewith, in any case, some statistics. Last month, on September 7th, the Dow closed at 907.74. This was 22.3 above its prior major low which occurred on the last day of February this year. This places the current stock market in the company of six prior stock-market periods in the past 30 years, these periods being defined by the occurance of an advance of greater than '20 with no intervening drop of any significance. These occurances, it will be recalled, are known in the vernacular as bull markets. More recently, the Dow has moved off from its September 7th high having closed at 875.16 on September 20th, a drop of 5.57. This is the second drop of greater than 5 since the advance be- gan, the previous one having been a 7.01 decline between Tune 6th and Tuly 5th. We thus have, at the moment, a 20 advance which has been interrupted to date by two declines by 5 or greater. It, therefore, becomes relevant to ask how many declines of 5 or more occurred in the six previous upswings before the advances finally ran their course and gave way to major drops. The table below cites the statistics Jan. 1946-Jan. 1953 Sept.1953-Ju1y 1957 Oct. 1957-Dec. 1961 DOWNSWINGS 5 OR 'MORE 6 Oct. 1966-Dec.' 1968 8 May 1970-Jan. 1973 5 Dec. 1974-Dec. 1976 4 5 7 As can be seen, no previous advance has reached a bull-market high without being interrupted by at least four drops of 5 or greater, and there have, as in 1953-1957, been as many as eight. On an historical basis, therefore, the present interruption in the upswing would appear to be a perfectly normal phenomenon and could, indeed, continue further and deeper without eliciting any great concern. Looked at in another way, it is now 18 trading days since the Dow last posted a new high for the advance. How many times in the past have advances been interrupted by periods of similar magnitude, say 15 trading days or longer, during which time they failed to make new highs Presented below is a table of the count Jan. 1946-Jan. 1953 Sept.1953-Ju1y 1957 Oct. 1957-Dec. 1961 PERIODS Of LONGER THAN 15 DAYS WITHOUT BULL MARKE HIGH 11 Oct. , 966-Dec. , 968 ' 6 May 1970-Jan. 1973 14 Dec. 1974-Dec. 1976 7 8 7 In contrast to the above, it can be noted that the present interruption is only the third since the advances began in February. It is furthermore relatively short compared with the interruptions of past bull markets, the bulk of which have tended to be from 20-40 days long. Indeed, it is worth noting that, in all of the upswings defined above, there has been at least one interruption which .– lasted close ,- -,—,—,- – —,. The above statistics may have indeed been boring, and we apologize therefore. Some comfort may be found, however, in that they do not seem to suggest any reason to worry about the stock market based on September's action. – …. Dow-Tones Industrials (1200 p.m.) S&P Composite (1200 p.m.) Cumulative Index (10/5/78) 879.50 103.59 795.57 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expreulon of opinion or any other matler herein contolned is, or IS to be deemed 10 be, directly or ,ndlrectly, on offer or Ihe solicitation of on oHer to buy or sell any security referred 10 or mentioned The motter IS presented merely for the conver'lence of the subSCriber While .,e believe the sources of our Informa lion 10 be rellble, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein, Any action to be token by the subSCriber should be based on hrs own IIlveslrgolion and IIlformatlon Janney Montgomery Scott, Inc, as a corporatron, and rts offrcers 01 employees, may now have, or may later toke, posilions or trades III respect to any securrtles mcnhoned In thiS 01 any future Issue, and such posrlton may be drfferent from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery 011, Inc, which IS regl5lered With the SEC as on Iflvestmenl advrsor, may gIVe adVice to Its rnvestment adVISOry and othel customers mdependently of any statements made III thiS or In any other Issue Further Information on any security mentioned herein IS ovarlable on request

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Tabell’s Market Letter – October 13, 1978

Tabell’s Market Letter – October 13, 1978

Tabell's Market Letter - October 13, 1978
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-.- I TABELL'S I MARKET I LETTER 1 – – – – – – – – – 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, lNC MEMBER AMERICAN STOCI( eXCHANGE October 13, 1978 –, -It-has been-some time since-we-dlscussed in this-space -the Jones Industrial Average. We have not discussed it, in fact, since the February-September upswing –. — reached a magnitude of 22 and thus qualified as a major uptrend. It is thus perhaps worth reviewing the picture at this time, as depicted in the chart below. COMPUTED TREND – DJIA 1!t1&R 11. 1978 ''''' . 1m 19'78 ….. '978 ' '978 Ilt1 '98 ' rn As readers will recall, computed trend work mathematically fits trend channels to observed market swings, which can be classified as major, Intermediate and minor — denoted by their exceeding 20, 10 and 5 respectively. The advance from 742.12 on February 28th to 907.74 on September 8th now qualifies as a major trend and its channel is shown by the solid line on the chart projecting forward through the end of 1978. As may be seen, there have been two important tests of the bottom of this channel, the first, in late June and the second just recently, when the Dow actually spent a period of two weeks slightly outside the channel but by an insignificant amount. That penetration was never great enough to be considered Important, and It Is indeed interesting that the present rally occurred from around the exact lower limit of the channel. During the summer, an intermediate term uptrend had been established by the center dotted channel – on the chart. Had that trend remained in effect, the Dow today would be in roughly the 930-985 range. It was, however, decisively broken in mid-September, and the intermediate trend picture must now be conSidered unclear, just as did the rally last summer. Since the Dow last made its low ay 857.16 on September 20th, a new minor uptrend channel has been established, since the advance has now been extended to 5.16. That channel Is shown projected forward on the rlghthand side of the chart. It should be noted that this channel is probably too narrow to be long maintained, and It w1ll probably be broadened as it is recomputed. It Is also possible that it will be decisively penetrated, and a new minor uptrend will start from a different base. However, it is worth noting that, If carried forward as shown on the chart, it would reach the upper limit of the major channel around mid-December at a level of around 1000 on the Dow. DOW-Jones (12 00 p.m.) 896.92 ANTHONYW. TABELL S&P CompOSite (1200 p.m.) 104.80 DELAFIELD, HARVEY, TABELL Cumulative Index (10/12/78) 803.47 No stotement or expressIon of opInion Or any other matter herein IS, or IS 10 be deemed to be, directly or indirectly. on offer or the OIlCllollon of on offer to buy or sell any security referred to or menlfoned The matter IS presented merely for Ihe of the subScriber While we believe the wurf;eS of our Informo- han to be reliable, we In no way represent or guarantee the accuracy thereof nor 01 The statements m.lde herein Any action to be token by the subSCriber should be based on hiS own investigation and information Janney Montgomery Sea!!, Inc, 05 a corporation, and Its officers or employees, may now have, or may loter tOKe, positions or trade, In respect 10 any seCUfilies mentioned In thiS or any future Issue, ond such poslhon 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 Independently of any S\otemenn mode HI thiS or In any other Issue Further Information on any security mentioned herein 15 available all request

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Tabell’s Market Letter – October 20, 1978

Tabell’s Market Letter – October 20, 1978

Tabell's Market Letter - October 20, 1978
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VOAK STOCK EXCHANGe, tNC MEMBER AMERICAN STOCK EXCHANGE – .20 It has often been remarked that there exist multituainous reasons for the placement or erasers-on'- pencils, and anyone who has been in the business of issuing market commentary for more than a few years is aware of a number of them. We chose to occupy a good portion of this space last week with an attractive computer-drawn chart illustrating the fact that the short-term uptrend which began on September 20th took place from a pOint near the bottom of the major uptrend channel in effect since February. We also projected that short-term trend forward, suggesting that, if it remained in effect, the Dow could approach the 1000 level by year-end. We did, we will note in our own defense, draw attention to the possibility that the September-October uptrend channel could be violated and commence again from a lower base. We did not, however, expect that violation to take the form of one of the more dramatic weeks in 1978 thus far. As our readers are no doubt aware by this time, the Dow opened the week by dropping almost 22 pOints and continued to plunge more or less precipitously through early Friday trading, the midday level on that day being 840.44. With startling suddenness, the recent uptrend has been replaced by a plunge to new lows. Where, it may well be asked, does all this leave us at the moment In terms of trend analysis, the current violation of the major uptrend has not existed long enough to be considered decisive so that, however shaken, that trend must be considered, for the time being, to be intact. The original top on the Dow, formed late last summer, had a downside objective of 840, a figure which was never attained prior to the time the late rally set in. This figure has been attained, and it is thus possible to view the downswing, in conventional terms, as a second downward leg. It is also possible, if one considers the top to have broadened by the late rally, to visualize targets in . lmlstic .s imply.are.notI.ea da ble. ….,.. I As we tried to sUg;jest above, the most notable feature of the market drop has been Its suddenness. It is not an overly common occurance for a market uptrend, such as the one which was progressing nicely last Friday, to be replaced on the very next trading day by a precipitous decline. Perhaps even more startling was the breadth of the decline. On Tuesday, for example, 1546 stocks moved lower, a quantity constituting over 80 of all issues traded. This sort of number Is not totally without preced- ent,but it is generally associated with periods which we have come to call selling climaxes. This, of course, is all well and good, except for the fact that climaxes, for obvious reasons, tend to occur following a sharp market decline. For such action to take place almost immediately after a downs ide reversal, must be considered somewhat unusual. This sort of downside climax breadth (80 of all issues traded declining) has, in fact, occurred on only 145 trading days in the past 52 years. It has, as we noted, a fair probability of being associa- ted with market turns. On 61 of the 145 occasions, it was followed by a market upswing, defined as the S&P 500 being higher than the climax day three, six, and nine months later. In only 22 cases was the action followed by ongoing bear markets. The occurance of such action shortly after long upswings, as in the present case, is even rarer. Only 37 of the 145 occasions noted above took place in an environment where the market had been advancing for the prior six months. Only six of those occasions were followed by ongoing bear markets without an intervening rally, and it must be noted that all six of those cases took place during the 1930's, the most recent instance being 1939. There have been eight occasions since 1948 where action such as Tuesday's has taken place in an up market. In all of them, the market moved somewhat higher at somepoiht during-the next nine mofiths;and;-in some cases, it did'so bya-substantial'amount. It is not the intention of these remarks to slough off the implications of the market's actio,n since September, which, in many respects, has been, to say the least, less than satisfactory. We do not, however, think the accumulated chain of evidence put together to date, even Including the calamitous action of last week, Is sufficient for long-range bearish conclusions. The burden of proof may, by now, have shifted to the side of the bulls, but we do not think that proving that case is an'imposs- ible task. Dow-Jones Industrials (1200 p.m.) S&P Composite (1200 p.m.) Cumulative Index (10/19/78) 840.44 98.49 747.77 ANTHONY W. TABELL DELNIELD, HARVEY, TABELL No statement or expression of opinion or any olher maNer herein IS, or IS to be deemed to be, directly or mdtrectly, on offer or the of on offer to buy or sell any security referred to or mentIOned The matter IS presented merely for the converllence of the subscriber While we believe the saurO's of our mformo- hon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any achon to be by the subSCriber should be based on hiS own investigation and .nformot,on Janney Montgomery 5011, Inc, 0 a corporation, ond Its officers or employees, may now hove, or moy later take, POSitiOns or trades In respect to any securlhes menhaned In ttliS or any future Issue, and such postllon may be different from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery call, Inc, which IS registered With the SEC as on Investment adVisor, may 9've adVice to Its Investment adVisory and othel customers Independently of any statements mode In thiS or 11'1 any other Issue Further Information on any security mentioned herern IS available on request

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Tabell’s Market Letter – October 27, 1978

Tabell’s Market Letter – October 27, 1978

Tabell's Market Letter - October 27, 1978
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORI( STOCI( EXCHANGE, INC MEMBER AMERICAN STOCI( EXCHANGE October 27, 1978 Nobody likes declining markets, and sharply declining markets are especially distasteful. The natural — questlon,H3k-ed-by-most'irtVestors7therefore,–when -they -are confronted-by–a phenomenon such -as the price collapse of the past two weeks, is When will it all be over As is often the case in turbulent stock markets, it is the wrong question. The reason the question is wrong is that short-term cycles, however painful momentarily, do, ultimately, run their course. The question that should almost always be asked about short-term action should center around what it is telling us about the unfolding longer-term picture. The question we should now be ask- ing ourselves is whether or not the sharp price reversal of the past two weeks suggests termination of a cycle, or — in the present case — either one of two cycles, the four-year-old bull market which has existed in the broad range of individual securities and the barely-six-months-old bull market in the widely- followed stock market indicators. We think the answer in both cases is no — with a fair degree of proba- bility in the first instance and an even greater degree of probability in the second. That having been said, we can tum our attention momentarily to the more widely-asked question about whether the short-term downswing is likely to be over, and the answer here is probably not. Although the drop, except for Thursday's plunge, became less broad this week, and the rate of decline mitigated somewhat, we are unable, at this writing, to detect any convincing signs of reversal evidence. Predict- ably enough, with the Dow down about 9 at current levels, a short-term oversold condition has been reached, indeed an oversold condition that, on many indicators, approaches record proportions. What it is necessary to remind ourselves about short-term oversold conditions is that they can always become more oversold and that they can continue to exist for fairly lengthy periods of time. Although, as we noted here last week, climactic conditions existed at the sharpest stage of the decline a week ago, a drop as vicious as the current one often requires multiple climaxes prior to its ultimate reversal. We have at those Qaradoxical a tepid rally would be bearish. The most con- structive thing that the market could do currently would be- to complete the washout and allow us to get -', on with the more important business of assessing its significance. By the time a decline has gone as far as the present one, tops are complete and downside targets are available. Currently, existing distributional tops are fairly well defined. For the Dow-Jones Industrial Average downside objectives center around the 810-805 area. In the case of the Standard and Poors Composite the objective is approximately 95, and for the Standard and Poors Industrials the plausible target appears to be in the 105 area. Other indicators, notably indices of financial stocks and the DO-N-Jones Transportation Average, have already approached downside targets. The pOint is that there is very little in the technical patterns of these indicators or indeed in the existing patterns of individual stocks to suggest objectives Significantly lower than this. In order for such objectives to exist the distribution patterns would have to be broadened. Since most such patterns have already been penetrated on the downside, such a broadening would require a Significant rally. Such a rally is in tum unlikely to take place without completion of the current cycle and a base formation pro- cess which would take time. Much has been made of the sharpness of the decline in secondary stocks, and indeed this phenomenon reached the front page of the WALL STREET JOURNAL on Thursday. It has long been axiomatic that, once a piece of financial news reaches this lofty degree of prominence, it is too late to act on it. The sharp- ness of the decline among secondaries can, we think, be attributed to two factors, their already-sharp rise and the fact that they are more volatile than the general market in the first place. The American Stock Exchange Index, to select a convenient proxy for secondary issues, had at its recent high, risen 227 since late 1974. That it should now be subject to a correction of 19 , the amount it had actually declined at its low, is hardly we do not rule out the 'possibility of widening distributional..– –' patterns beginning to build in secondary issues, we do not think that, at the moment, these patterns are yet complete. In the case of higher-grade issues, all that the recent decline has done in most cases is to bring them back into what,we feel,will ultimately be regarded as long-term base formations. Within these base formations massive support exists, and in many instances the current weakness must be viewed as a buying opportunity. In summary, then, while the downswing that began on October 11th has probably not yet run its course, we do not regard it as a harbinger of more disruptions to come. We think in other words that the drop, rather than an ill omen, may well prove to be an attractive purchase opportunity. Dow-Jones Industrials (1200 p.m.) S&P Composite (1200 p.m.) Cumulative Index (10/26/78) 816.53 95.68 698.39 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL 0 5 alement or expression of opinion or any olher matter herem contomed Is, or IS to be deemed to be, directly or mdlrectly, on offer or the soliCitation of on offer to buy or sell any security referred to or mentioned The motter IS presented mt'rely for the converlencc of the subscriber While He believe the sources of our Informo- han to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mJde herein Any actIOn to be token by the subscnber should be based on hiS own Investlgohon and Informotlon Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, moy now have, or may later toke, poslhons or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such pOSition moy be different from OI1Y views 110W or hereafter expressed Ir1 thiS or any other ISsue Janney Montgomery Scott, Inc, which IS registered with the SEC os on Investment adVisor, moy give adVice to 11 Investment odvlsory and olhel customers Independently of any stotements made In thiS In ony other Issue FIJrther Informotlon on any security mentioned herein 15 ovotlable on request

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