Tabell’s Market Letter – March 16, 1979

0..- – .-0-.- .– .. . — – . – – – TABELL'S MARKET LETTER H , I , – – – – .I .Yt/t1C1tey, !YaM 909 STATE ROAD, PRINCETON, NEW JERSEY 08!540 DIVISION OF ,)''71 uit,n'fomcy YcdI fnc. MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGe – March 16, 1979 ..,.,.- – '— ,-the Dow' the broad 800-850 trading area moving laterally in preparation for what appears to be an attempt to penetrate the hi gh of 859.75 made on January 26. Recent ma rket weakness corrected the Dow Jones Industrial Averages to 807.00 on February 27 andthe last few weeks has been spent recouping this loss. As has been pointed out recently in this letter. the most serious technical weakness seemed to be centered around the senior growth stock area. A posting of 860 on the DJIA would clearly signal an upside breakout of this trading area on our point and figure charts indicating a potential move to new highs. ;-;; Within this framework of the Dow Jones Industrial Average, the American Stock Exchange Average continues to perform extraordinarily well completely ignoring the 26.61 correction experienced in the DJIA from the July, 1976, high to the February, 1978, low as shown in the table below. DJIA Percentage ASE Change Percentage Change Dec. , 1974 Low July, 1976 High Feb., 1978 Low March, 1979 577 .60 1011. 21 742.12 847.02 -075.07 -26.61 14.14 58.26 107.05 122.48 171. 62 -083.75 14.41 40.12 To help clarify this remarkable performance, the chart on the lower half of the reverse \—–1' dramatically outperformed the DJIA since the 1974 low. However, these figures need to be examined more closely and are not intended to infer or represent to the reader that that average issue on the American Stock Exchange has in fact outperformed the average issue on the NYSE by the percentages outlined in the above table. To better understand, it is interesting to observe the breadth behavior of the ASE and NYSE over the same period. Starting with a base of 30,000 on January 1, 1974, daily net changes (advaDces-declines) were cumulated on the ASE and NYSE. The results are shown on the upper half of the chart on the opposite page. These results seem to be in direct conflict with the averages charted below — but they are not. The apparent secular downtrend and behavior of breadth on the ASE can be explained by examining the characteristics and noting the differences of the issues which trade on the ASE from thosE!' on the NYSE. Obvious di fferences whi ch come to mind woul d incl ude fewer issues listed and traded; average price of ASE issues is smaller; listing requirements such as capitalization less stringent. Other effects on ASE breadth would include takeover by larger NYSE companies or the transfer of listings to the NYSE from ASE. What this means, then, is we are comparing two sets of statistics with different characteristics and the difference should be clearly understood when examining the breadth data. Of course, one explanation for the spectacular rise in the ASE average and the corresponding decline of the ASE breadth over the last five years can be explained by examining one group — Canadian Oils. The auction market has for years been able toC-identifY.pockets .of inefficiency.in the marketplace but in the case of the Canadian Oils, a pocket of efficiency seems to have been d,scovered. Technically, the performance of these stocks over recent years as reflected on the most active and hew high lists cannot be dismissed. We are, of course, aware of the outstanding performance of stocks like Canadian Superior Oil and Dome Petroleum. However, the concentration of this group can be extended to other technically attractive stocks such as Ashland Oil, Asamera Oil, Aquitaine of Canada Ltd., Canadian Homestead Oils, Gulf Canada Ltd., and Husky Oil Ltd. to name a few. Until the technical strength of this group is arrested it can be said — as the Canadian O,ls go so goes the American Stock Exchange Index. Dow-Jones Industrials (1200 p.m.) 846.85 ROBERT J. SIMPKINS, JR. S &P Composite (1200 p.m.) 100.08 DELAFIELD, HARVEY, TAB ELL Cumulative Index (3/15/79) 726.98 RJS rak No statement or expreSSion of opinion or (Iny other maNer herein contolned IS, or IS to be deemed to be, directly or indirectly, on offer or the soliCitation of an offer to buy or sell ony SeCUriTy referred to or The matter IS presented merely for the converlenCI; of the subscriber While oNe believe the sources of 01,1( informa- tion to be reliable, we In no way represent or the accuracy thereof nor of the statements mude herein Any action to be takcn by the subsc(lber should be based on hu own Invesllgotlon and Information Janney Montgomery Scott, Inc, 0 a corporatIon, and officers or employees, may now have, or m(ly later toke, or trodes In respect to any securities mentioned In thiS or any future luue, and such position may be different from (Iny views now or hereafter expressed In thiS or ony other Issue. Janney Montgomery Scott, tnc , which IS registered With the SEC as on Investment adVisor, may give adVice to ItS adVISory and othel customers Independently of any statements mode In thiS or In any other Issue Further InfOrmohon on ony securIty mentioned herein 1 ovoiloble on request 'aaa r aa ill aaaa. aa aa Rl ill aaro Q a,a…, ……. aa D C1 ' ao ' rnD Cl gat 93 8' …. at JJQ at foot at -1,)0 Qt .139 — . Ilr 'NiT at ..tfW aL (idtl 8t. Qj'/ 8t t.tlf' I,L tt-l.JO 'em Ll. 'JfltI u.-W H MY' UJ (.L u. Me u 9L 'J30 9L .9l.-t'l! .os 9L llf1lI 9f(' 9110' Sf ,LtIl 9L-(ltfI./ 9/ 93,1 91'. ''t/f'' Sl. lJO Sf !at.! 51L LJa 91 .os Sl. 9fl\f Sl.- 'll' 9LtT' SL 9L-fl'lJ – – – F– Ill.-'JO t)J .J3S 'ttL- 'lY' tT' , a ' a 00