Viewing Month: January 1979

Tabell’s Market Letter – January 05, 1979

Tabell’s Market Letter – January 05, 1979

Tabell's Market Letter - January 05, 1979
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r– TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCk eXCHANGE January 5, 1979 the in, 1979, to the stock-market scene. That rally, properly defined, as we have regularly -noted-In,the 'pa-st71s' not strictly a December phenomenon, but extends into the new year. We noted last week, in our ex- haslve -Illscussion of the subject, such an extension had occurred In every year since 1897, up until two years ago. As we also noted, it Is the vigor and breadth of this January extension that often provides an Important clue as to the market's direction for the year. — The base from which the year-end rally is measured is generally the December low, and, in the present instance, that low assumes special importance. The December low last month was scored on December 18th at 787.51 on the DOw, and it is neces sary only to glance at the WALL STREET JOURNAL chart of the market averages to appreciate the fact that, for 1978-1979 at least, this particular number is of more than simply seasonal significance. Last October's sudden decline, which wOUld up erasing most or all of the 1978 gains by the popular averages, made its initial bottom on Halloween at a closing low of 792.45. This low was modestly exceeded on November 15th with a 785.06 close, and the subsequent rally attempt was aborted in early December by the decline to the low of December 18th. The rally from that bottom faltered in the last week of 1978, but 1979 brought renewed strength, and Thursday's close brought the Dow to the highest level attained since October. We parade all these numbers before our readers simply because there. Is an obvious, albeit – —simpl-e-minded,interpretation- –As-we -noted-above ,.,.it the WALL STREET JOURNAL chart to observe an apparent textbook case of a base formation of the triple-bottom configuration followed by an upside breakout. If this admittedly apparent formation is truly a harbinger, it could provide an interesting market indeed. We have often warned in this space of the perils of over-sophistication, and we do not suggest dismissing out of hand the base formation Simply because it glares out of the financial page for all to see. We do, however, think tha't further confirmation is probably required in a couple of areas. It should be noted, first of all, that despite Thursday's excellent breadth action (over 1200 advancing issues), daily breadth indicators fell just short of confirming the new high. This is, in itself, perfectly normal, but it would be desirable to see recent action followed by further short-term breadth strength. The rally, moreover, brought the Dow back to Just about the level of its 200-day moving average, which level it had decisively penetrated in November. It would likewise be desirable to see the average move noticeably away from this figure. Our own suspicion, we will confess freely, Is that all this will take place and that the conventional interpretation of October-oecember action as a triple-bottom base will prove to be the correct one. If this is the case, the upside potential is impressive, with an objective, for the Dow at least, around the 900 level. This objective could indeed be attained fairly quickly. A number of observers have pointed out the fact that probable levels of institutional cash are substantial. It would need only confirmation of market strength to produce the sort of upside explosion wli1ch haftbecomii'Coillmon-ln recent years of institutional market domination. We have been suggesting in this space for some weeks that the market seemed to be dOing a pas sable job of regaining Its technical health following the debacle of October. It may shortly have the opportunity to demonstrate not only that the patient ha s been cured but that Its vigor of last summer has been regained. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p. m.) Cumulative Index (1/4/79) 827.62 98.85 697.47 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTrak No statement or expression of opinion or ony other molter here'n contolned IS, or IS 10 be deemed 10 be, dIrectly or indirectly, on offer or the soitcllotlon of an oHer to buy or sell any security referred 10 or mentioned The malter IS presented merely for the convenience of Ihe subscriber While we believe the sources of our Informa- tion 10 be relloble, we In no woy represent or guoronlee the occurocy thereof nor of the stotements mude herem Any actIOn to be token by the subSCriber should be based on hiS own Invesllgahon and information Janney Montgomery Scott, , as 0 corpora'Ion, and lIs offICers or employees, may now hove, or may 10ler toke, positions or trodes In respect 10 any securities mentioned In thiS or ony future Issue, cnd such POSITiOn may be different from any views now Or hereofter expressed In Ihls or ony other Issue Janney Montgomery ScoT!, Inc, which IS registered With the SEC os on Ifwestment adVisor, may give odl/lce to Its ,vestment adVisory ond other C\Jslomers Independently of ony stotemenTS mode In Ihls or In any other Issue Further mformallon on ony secunty menlloned herein IS ovolloble on request

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Tabell’s Market Letter – January 12, 1979

Tabell’s Market Letter – January 12, 1979

Tabell's Market Letter - January 12, 1979
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! TABELL'S MARKET LETTER JL – – 909 STATE ROAD, PRINCETON. NEW JERSEY 081540 DIVISION OF MEMBER New VORl STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE .'' – January 12, 1979 We expressed last week a reasonably optimistic view of the near-term outlook for equity prices, sug- gesting that the cont-inuance of a Jhe general area of 900 in terms of the Dow. Just how worked up one can become over such a prospect may in fact be – a function of how long the observer has spent looking at the stock market. To one whose market experience is confined to the past 10 years, a market which appears poised to move ahead some 10 may indeed occasion optimism. (It is even arguable, in the light of the last decade, that any market which does something other than fall through the floor consitutes cause for jubilatlon,-) There are, on the other hand, those of us ancient enough to remember that there once existed stock marKets in which 10 rallies were commonplace occurances, usually taking place as a part of bull markets in which the averages advanced 100 or more and indiVidual stocks by the droves chalked up moves which were multiples of that figure. What we are saying, of course, is that it is necessary once more to raise the basic question of whether the recent strength is simply another move toward the top part of the trading range that has contained the market averages since the middle 1960's or whether it is the initial thrust in an upswing that will eventu- ally move equity prices out of their dacde-long trading area and on to substantive new highs. Unfortun- ately, it is difficult at the moment to take the view that the latter, more optimistic, outlook is the correct one. Present technical indications, in other words, do not allow us to look beyond the prospect of a moderate improvement in price levels. This is not to say that the potential technical underpinnings which might support a major bull market are not more formidable today than they were, say, five years ago. In order to support a move by the averages to new and higher levels 'c it is obviously necessary that those stocks contained in the averages should be in a pOSition to assume market leadership. It is necessary to recall that the demand for such stocks is largely institutional and that it will require a resurgence of institutional demand to produce any move of major.1lignificance in 1he, broad range of high-capitalization issues. theAs we have been pointing out in this s'pace for ;orrie time-,- -pastfive years'-of In-stlfutlonal equity' ' market activity quite clearly show a dramatically reduced level of purchases, not 'ithout good and plausible reasons. The past half-decade has been beset with economic uncertainties entirely unpreced- ented in recent financial history. Along with these uncertainties, there has existed the availability of record-high rates of return on fixed-income instruments, raising the real question of whether the fiduciary investor was justified in assuming the substantial risks involved in the stock market. To a large extent the answer to this question on the part of the institutional money manager has been a negative one. It is possible to wonder, however, whether or not the wheel has come full circle. A decade ago the pro- spects of earnings growth for institutional-quality equities caused money managers to be willing to pay astronomical multiples of earnings for these stocks. The ironic fact is that the assessment of the growth prospects at that time wa s correct. By and large, earnings from established growth companies have spent the last decade expanding in exactly the fashion foreseen by prognasticators of the late 1960's. What has taken place is a diminution in the price paid for those expanding earning to the extent that stocks which may have sold for 50 times earnings ten years ago are available today at multiples in the viCinity of ten or less. Technically, this sort of action has produced uniform patterns. Almost without exception the high- grade growth stocks of a dozen years ago have formed huge potential accumulation bases as they have moved essentially sideways during a period of continued earnings expansion. These bases have become progressively larger and larger. QUite obviously at some time in the future, some intermediate-term upside move will begin to include large numbers of these stoCks. Observation of the market's technical action will reveal major upside c breakouts from these accuniulation taking place. It may well be that such process will not becom apparent until it is well under way, in other words, until a minor upswing features perceptibly improved technical action on the part of high-grade growth issues. It is even conceivable, we suppose, that such improving action could take place during the course of the price rebound we currently anticipate. It is, unfortunately, as we noted above, difficult to foresee more than the beginnings of such a change in market leadership. It is well, however, to keep in mind the technical potential which continues in- exorably to build. That potential suggests that the next important move in stock prices — important as contrasted with the swings of the past ten years — will be in a upward direction. Dow-Jones Industrials (1200 p. m.) S & P Composite (1200 p.m.) Cumulative Index (1/11/79) 836.63 100.06 708.72 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL I .. ..-o-,-'h-,-.o-'-,,,—,,-o-'-,-,-0-11.-,- to buy or lell ony securlly referred to Of menhoned The motter is presented merely for the of Ihe subscriber While we believe Ihe sovrces of our Infermo- tlon 10 be reliable, we In no way represent Of guarontee Ihe accuracy thereof nor of the statements mude herein Any action to be token by the subscriber should be based on hiS own Investigation and Information Janney Montgomery Scali, Inc, as a corporation, ond Its officers or employees, may now have, or may later positions or trades In respect to any seUfltles mentioned In Ih15 or any fuTure Issue, and such position may be differenT from any views now or hereafter expressed In thIS or any other lS'ue Janney Montgomery ScOtl, tnc. which IS registered With the SEC as on Investment adVisor, may give adVice to Its Investment adVisory and othel customers Independently of Clny statements mode In thiS or In any other Issue Further Information on any security mentioned herein IS ovallable on request

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Tabell’s Market Letter – January 19, 1979

Tabell’s Market Letter – January 19, 1979

Tabell's Market Letter - January 19, 1979
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVI810N OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – January 19, 1979 Market analysis can be said, in a sense, to consist of two parts. The first part consists of trying to draw inferences from those events which have already taken place — the analysis, in other words, of that which has already happened. The second part involves setting up guidelines for events still in the future, the process of defining possible scenarios which would create or reinforce a given forecast. We have tried to outline, in recent issues, our own interpretation of what has been happening in recenttrading, and it is perhaps appropriate to restate those conclusions. We think it axiomatic, for example, that an uptrend of short/intermediate-term significance has been established. This establishment arises from the fact that the upper part of recent trading patterns for most averages had been defined by highs made in early November and mid-December. In terms of the bulk of widely-used market measurements, those highs were decisively penetrated in the market strength which prevailed through the middle of this week. (It should be noted, for the benefit of Dow-Theory purists, that the notable exception to this statement is the Dow Transportation Average which has, to date, failed to better its December high, thus creating the familiar and enigmatic non-confirmation. The average, however, is close enough to such a high so that this remains only a potentially disquieting development.) In light of the aforementioned intermediate uptrend, it is perhaps necessary to remind ourselves that one plausible interpretation — indeed, perhaps the most plausible interpretation — action is that we remain' in a major-bull-market; be recalled, advanced from 742.12 on February 28,1978, to 907.74 on September 8, 1978,an advance of 22. An upswing of this size qualifies, on an historical basis, as being of major proportion. Between September and November of last year, the bulk (some 74), but by no means all, of that advance was retraced. With an upward direction having been resumed, it remains at the very least conceivable that a major advance which began last February is still in force. This interpretation would be confirmed, of course, by ability on the part of the Dow, S & P 500, etc., to post new highs above those attained last fall, thus, by definition, reestablishing a major up-swing. The problem here, as we have noted, is the current position of more broadly based indices. Our Cumulative Index, for example, retreated in the debacle of last October almost to, although not through, its early January low, the low comparable to the late February bottom on the major indicators. Measurements of raw stock market breadth plunged last fall to new low figures well below levels of early 1978, although, it must be noted, not below their previous major bottoms which had taken place in mid-1976. We have mentioned in the past the almost unprecedented viciousness of the October drop. One of its effects was to clobber broader-based indices of this type to a degree which will make any attainment of a new high both a difficult and, in any case, a distant occurance. This difficulty is further compounded by the fact that these indicators, which had been posting superior performance for almost four years, have begun to act not much better than the Dow and S & P. What the above described confirguration portends for the future, of course, is the possible manifestation of a disturbing breadth divergence, a condition in which the old highs in the major averages are equaled or exceeded but broader indices remain significantly below previously- posted peaks. A major task for 1979, therefore, will be watching, on both an actual and rela- tive basis, the performance of these broad indices in order to ascertain the likelihood of their recovery from the technical damage suffered last fall. Dow-Jones Industrials (1200 p.m.) 839.31 S & P Composite (1200 p. m.) 99.82 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL Cumulative Index (1/18/79) 715.97 AWTrak No statement or expreulon of opinion or cny other molter herein contolned IS, or IS to be deemed 10 be, directly or indirectly. on offer or the sol,Cltot.on of an offer to buy or sell any secvrlty referred to or mentioned The molter presented merely for the convef'lenCE of the subscriber While we believe the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any acllon to be token by the subscriber should be based on hiS own Investlgallon and information Janney Montgomery ScoH, Inc, 05 a corporation, and lIs officers or employees, may now have, or may Jaler toke, pOSlhons or Irades In respect 10 any securllies mentioned In thiS or any future Issue, ond such position may be different from any views now or hereafter expressed In thiS or ony other Ilue Janney Montgomery Scott, Inc. which IS registered With the SEC as an Inves/ment adVisor, may give adVice to Its Investment adVisory and othel C'Ustomers Independently of any statements mode III thiS or In any other Issue Further information on ony secuflty mentioned h.erem IS available on request

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Tabell’s Market Letter – January 26, 1979

Tabell’s Market Letter – January 26, 1979

Tabell's Market Letter - January 26, 1979
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i I TABELL'S MARKET I I LETTER 909 STATE ROAD. PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANoe, INC MEMBER AMERICAN STOCK EXCHANGE January 26, 1979 – We- eek our hiiir mighC;;'ev-;il, a -' short-term uptrend dating back to the lows of last November had definitely been established. Mter some early hesitation, that uptrend continued in this week's trading with the Dow posting a new high of 854.64 on Thursday and extending the rise early Friday. The upswing is now 48 trading days old and may be defined as a channel 4 points wide rising at the rate of some 2.25 pOints per day. The lower limit of that rising channel is now approximately 840. We went on to say last week that, in the light of that uPtrend, possibly the most plausible inter- pretation of the market's long-term action was that we remained in a major bull market. We confess lhat weJ lean toward this interpretation, However, it is appropriate to ask, why the confusion What is the peculiar quality of the present istance which makes difficult not only a forecast of future action but an analysis of what has gone by, It is necessary to remind oneself of the difference between looking at past history and looking at the present. By definition, we can be absolutely certain that we are in an upswing only at the precise time that the market is making new highs 0 As time passes between the point at which the last high in an advance was scored and the present, the possibility always exists that that previous high was in fact the peak of the bull market in question. We are now in a situation where just such doubts may exist. The last high for the averages was scored on September 11th at 907.74 in terms of the Dew. Ninety-six trading days have gone by without that high having been exceeded. If history is eventually to reveal, as of January 1979, we were still in a major upswing, that September high will be equalled or exceeded in due course. On the other -,,- h-and, 'history may-ultimately-show'1hata-downtunrbegln-!ast–8eptember,a-postl ibHity-which would be ,… confirmed by a move below the mid-November lows. A look at past markets indicates that the period of time which has thus far passed since September, 96 trading days, is not without significance. It is, by a goodly amount, the longest interruption in the upswing, the longest prior hiatus having ended on August 2nd of las year when the Dew attained a new high after having failed to do so for 40 trading days. Moreover, an interruption of this length is not historically without precedent. Indeed, every one of the major bull markets of the past 30 years has undergone at least one interruption longer than the present one. In five of the seven cases-in fact, that interruption has been considerably longer, lasting for time periods approaching or exceeding a year. Thus, if the presrnt impasse turns out to be a normal historical phenomenon, it could well continue into next summer before it is ultimately resolved. Present action, therefore, is not in the least inconsistent with our current positive short-term view of the market. It does, unfortunately, carry the implicit suggestion that, when and if a new high is scored, the upswing may well be at an advanced stage. There have been only eight previous instances in 30 years where an ongoing bull market has been interrupted for a period of 96 days or longer without posting a new high. Almost invariably, when that new high took place, the upswing in question was at a mature stage approaching its end in both time and amplitude. At the point where these eight interruptions ultimately moved to new high levels the Dow had completed amounts ranging from 81 to 100 of its ultimate total advance, the average amount being 90. At the same eight pOints in time, an average of 80 of the total tradlng days in the bull market in question had gone by. The remaining life of the bull market at the time the new high was posted ranged 491 trading days with an'average-of 158 days. Thus; in the present in– stance, if the average were to fulfill our expectation and equal or exceed the September high at 907.74, one would expect the ultimate peak of the advance to be in the vicinity of 942. One would also suspect that the continuance of the rise would be fairly short-lived lasting for perhaps 6 months after the new peak was posted. It will be interesting to see whether the present case ultimately conforms to this historical model. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (1/25/79) 856.38 101.57 725.31 .. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL AWTrak ,, No statement or expression of opinion or any other motler herein contained IS, or IS 10 be deem/!d 10 be, directly or indirectly, on offer or the SOllCIIoilon of an offer to buy or sell ony security referred 10 or mentioned The moiler IS presented merely for the convenienCE of the subscriber While we believe the sources of our tnformotlon to be reliable, we In no way represent or guorontee Ihe accuracy thereol nor 01 the stotements mude herein Any aCTion 10 be token by Ihe subscrober should be bosed on hiS own tnvestlgotlon and tnformollon Janney Montgomery Seoll, Inc, as 0 corporation, and lIs officers or employees, may now have, or may later toke, positions ar trodl'!S tn respect to any securities mentioned tn thiS or any future Issue, and such POSition may be different from any views now or hereafter expressed tn It-II, or any other Issue Janney Montgomery Scott, Int, which IS registered With th!! SEC os on InVestment adVisor, moy give adVice to lIs Investment adVISOry and olhel CUstomers Independently of any statements mode In thiS or trI any other Issue Further tnformatlon on any security mentioned herein IS available on requesl ….

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