Viewing Month: March 1980

Tabell’s Market Letter – March 07, 1980

Tabell’s Market Letter – March 07, 1980

Tabell's Market Letter - March 07, 1980
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER New VORK STOCK eXCHANGE 'NC MEMBER AMERICAN STOCK EXCHANGE March 7, 1980 !Ve. tw.o ..w.eeksagoto. … bonds, suggesting that, assuming the continuance of a continued inflation-ary' environment such as the – recent one, these yields were, in fact, illusory. We went on to point out that, in such an environment, the anticipated yield to most investors on a 15 long-term bond might actually, in real-dollar terms, be negative. An obvious question thereby raised conCerns what, in comparison, might be the comparable yield for com- mon stocks The fOllowing table is admittedly a rather complex statistical exercise, but it attempts to answer that question as fairly as we know how. For each year from 1951 through 1979, the table shows, first, the actual dividend paid on the S & P 500, second, the Consumer PriCe Index, and third, those dividends in real-dollar terms, deflated to 1967 dollars by the CPI. The fourth column, in recognition of the fact that dividends tend to fluctuate over the short term, smooths that fluctuation by taking a five-year average of the deflated figure. The final three columns are the annual percentage rates of change in that five-year average taken over, respectively, five, ten, and twenty-year periods ending in each year. YEAR S & P 500 CONSUMER DEFLATED 5 – YEAR DIVIDENDS PRICE INDEX DIVIDENDS AVERAGE ANNUAL PERCENTAGE RATE OF CHG 5-YEAR 10-YEAR 20-YEAR 1951 1952 1. 41 1.41 79.3 80.0 S1. 78 1.7fi 1. 57 1. 68 1953 1954 1955 S1.45 1.54 1.64 80.5 80.1 80.4 S1.80 1.92 2.04 1.78 1. 85 1. 86 1956 1.74 82.7 S2.10 1.93 4.21 1957 1958 1.79 1.75 85.2 86.7 2.10 2.02 Sl.99 S2.04 3.48 2.70 1959 1.83 88.0 2.08 S2.07 2.31 1961 1962 1963 2.02 2.13 2.28 89.9 91.0 92.5 . .1 8 2.25 2.34 2.46 S 2. l-0—… 2.13 1.99 2.17 1.75 2.26 2.13 3.09 2.61 2.41 19fi4 15 2.50 2.72 93.6 95.4 2.67 2.85 S2.38 2.51 2.86 3.70 2.58 3.0fi 196fi 2.87 98.fi 2.91 2.65 4.49 3.23 1967 1968 S2.92 S3.07 101.6 10fi.4 2.87 S2.89 2.75 2.84 4.85 4.fi3 1.28 3.37 1969 1970 1971 3.1fi 3.14 3.07 112.9 119.1 123.1 2.80 2.64 2.49 S2.86 S2.82 2.74 3.7fi 2.32 0.67 3.11 3.01 2.56 2.83 1972 3.15 127.3 2.47 2.66 -0.71 2.03 2.32 1973 3.38 138.5 2.44 S2.57 -1.98 1. 28 1. 84 1974 1975 1976 1977 1978 1979 3.60 3.fi8 4.05 4.fi6 5.07 5.70 155.4 166.3 174.3 186.1 202.9 229.9 2.32 2.21 2.32 2.50 2.50 2.48 S2.47 2.39 S2.35 2.36 2.37 2.40 -2.90 -3.28 -2.98 -2.35 -1.59 -0.56 0.38 -0.52 -1.17 -1.54 -1. 78 -1.74 1. 47 1. 25 1.01 0.85 0.76 0.75 The obvious caveats must be noted. The table, of course, shows the past record, and there exists no past history of inflation at the current rate. Second, the table shows that constant-dollar dividends peaked in 1966 and have not exceeded that figure since. The five-year rate of change has been negative since 1972, and the ten-year since 1975. The twenty-year rate of change remains only marginally positive. There are, however, some positive elements. It must be remembered that the last three columns show the rate of increase or decline in the dividend stream. Since the dividends are deflated, a zero rate of change would suggest that stocks have provided a constant positive rate of return in real dollars. Even where the rate of change is negative, the real-dollar dividend return on stocks can be considered positive if the yield exceeds that rate of change. This has almost invariably been the case. There is, therefore, on the record, some justification for anticipating a positive rate of return after infla- tion from long-term common stock portfolios. Such may be the justification for the relatively better action of stocks in recent years. Dow-Jones Industrials (12 00 PM) S & P Composite (12 00 PM) Cumulative Index (3/6/80) 826.62 108.05 767.84 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTsla No llolement or el'pf(!slon of opinion or any other matter hereIn contained ', or IS to be deemed to be, directly or ind,rectly, on offer or the soliCItatIon of on offer to buy or ony security referred to or mentIoned The molter IS pre!oented merely for the of the subSCriber WhIle we belIeve the sources of our Informa- tIon to be relIable, we In no way represent or guarantee the ocnrrocy thereof nor of the statements mude herein Any actIon to be token by the subscrIber should be bosed on hIS own investIgatIon and InformatIon Janney Montgomery Scott, Inc, 05 a corporatIon, and Its offIcers or employees, may now have, or may loter take, posItIons or trades In respect to any seCUfltles ment.oned In thIS or any future Issue, and such posItIon moy be different from any vIews now or hereafter expressed In thIS or any other Inue Janney Montgomery Scali, Inc, whICh IS regIstered w.th the SEC as on Investment adVIsor, may gIve to Its Investment adVIsory and other customers Independently of any statements mode ,n thLs or In any other Issue Further informatIon on any security mentioned hereIn IS ova liable on request

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Tabell’s Market Letter – March 14, 1980

Tabell’s Market Letter – March 14, 1980

Tabell's Market Letter - March 14, 1980
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.', TABELL'S MARKE.r, LETTER' 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORI( STOCK EXCHANGE. INC MEMBER AMERICAN STOCK eXCHANGE . March 14, 1980 'thes-teepnessOf 'the94 28-poillf decline- .. – in the Dow-Jones Industrial Average which, since its recent high of 903.84 posted on February 13 of this year has, in the short period of 21 trading days, declined 10.45 to a low of 809.56 on Thursday of this week. This letter recently discussed the possibility of market weakness over the short term, citing the possibility of a move to the 800 level. The correction best measured by the Dow-Jones Industrial Average five-point unit chart indicates a downside objective of 805795. However, to date, all the available technical evidence does not 'suggest any sort of major long-term deterioration from these levels, particularly in the broader-based Stardard & Poors and New York Stock Exchange Composite averages. The market, quite obviously is oversold short term, by any measure that might be applied. The familiar 10-day advance /decline oscillator which on March 7 reached an oversold condition of -5806 is by no means a record. This was, however, recorded on October 27, 1978 when the 10day advance/decline oscillator reached -9382. To make these figures more compatable historically, they could be adjusted for the number of issues traded, as we have done in the past when discussing long-term breadth of the market studies. However, for this exercise, raw advance /decline data is used, which does not distort the results significantly, only limits the observations to recent periods. A study of the history of this oscillator over the years reflects a tendency of the Dow-Jones Industrial Average to rally after these oversold levels have been reached. 10-Day -Total DJIA Percent DJIA Percent DJIA Percent Date Adv-Dec DJIA 30 Dars Change 60 Days Change 120 Days Change . Aug 29 1966 -6,288 767.03 758.63 -1. 095 796.82 3.884 847.88 10.541 May 26 1970 -6,259 631.16 682.09 8..069 723.99 14.708 768.00 21. 681 Nov 26 1973 -5,898 824.95 834.79 1.193 846.84 2.654 818.84 -0.741 Oct 27 1978 -9,382 806.05 817.65 1. 439 846.41 5.007 856.98 6.318 Oct 22 1979 -6,682 809.13 824.91 1. 950 863.57 6.728 000.00 0.000 Mar 7 1980 -5,806 820.56 O.OU 0.000 000.00 0.000 000.00 0.000 . To justify this statement, with the help of our computer, the table above lists every oversold condition where a plurality of declines outnumber advances by 5800 or more to include the most current oversold condition. . It is interesting to note that there have been only six of these observations ever recorded, all occurring over the last 15-year period. The remainder of the table lists the DJIA close as of each oversold condition and then reviews the performance of the DJIA 30,60, and 120 days from the oversold condition. A casual inspection of the table shows the DJIA has advanced from the oversold condition in 12 of the 14 time periods observed. The two periods not advancing were down an average of less than one percent. The average advance of the 3O-day period was 2.31, 60-day period was 6.60, and 120-day period 9.45. Clearly what this data suggests is the tendency for markets to rally from their ultimate sharply- oversold condition. If we assume the March 7 figure of – 5806 was the ultimate oversold condition, and if we apply the above logic to our current market, we become not so concerned as to where the market is going on the downside from here — as mentioned earlier, 805-795 has seemed possible — but rather the behavior of the market after it rallies from its current oversold condition. It would seem, therefore, any clues for any further long-term deterioration would manifest itself from higher levels rather than the current 800 level. ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TAB ELL Dow-Jones Industrials (12 00 PM) 809.22 S & P Composite (12 00 PM) 105.10 Cumulative Index (3/13/80) 746.89 RJS sla No statement or expression of opinion or any other matter herein contolned IS, or IS to be deemed to be, directly or ,ndlrec1Ir,' an offer or the soJlcllohon of on offer to buy or scll ony secunTy referred 10 or mentioned The molter IS presented merely for the conver'lenC! of the subscriber Wh! e e believe the sources of our mforma lion 10 be reliable, we In no way represent or guarantee The accuracy Ihereof naf of Ihe statements mude heleln Any cctlon to be token by the ubcrlber should be based on hiS own mvest,gat,on and mformollon Janney MonTgomery Scott, Inc. os a corporotlon, and ItS officers or employees, moy now hove, or moy later toke, poSlhons or hades ,n respect to any SecUfltll.lS mentioned m thiS or any fulure lSue, ond such position moy be dlfferenl from onv views now or hereofler c)(pressed m Ih,s or ony other Issue Jonney Montgomery Stoll, Inc, which 15 regiStered With the SEC as on Inveslment adVisor, may give adVICe to la Investment adVisory and olhel customers Independently of any stalements mode In It-us or m ony olher Issue Further Information on ony.securlty menlulned herein !5 ovollable !;In request

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Tabell’s Market Letter – March 21, 1980

Tabell’s Market Letter – March 21, 1980

Tabell's Market Letter - March 21, 1980
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TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIYISION OF MEMBEFI NEW VORl( STOCK eXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE The short-term weakness in the Dow-Jones Industrial Average continues. From the recent high of 903.84 on February 13 of this year. the DJIA has declined 115.19 points to 788.65 in the short period of 22 trading da'ys. averaging durmg this period a 5.24-point per day decline. During the declme In the DJIA (-12.74) comparable performances were registered in the broader-based averages such as the Standard & Poors Composite (-13.66) and the New York Stock Exchange Composite (-14.09). Last week's market letter examined the technically oversold condition which exists in the current stock market environment and tried to compare this condition to past oversold markets. The basic tenet presented last week, that markets tend to rally from their ultimate sharply oversold condition, If has. of course,' not changed. The only thing that has changed is the market has become more sharply oversold. On Monday of this week. the 10-day advance/decline oscillator reached the previous week's fIgure was -5806. Coincident with the oversold condition of the market mentioned above, the Dow-Jones Industrial Average penetrated the 1979 low of 796.67 reached November 7 of last year. This confirmed the down- side count from a top formation indicating an 805-795 objective on the five-point unit point-and-figure chart of the DJIA. The next benchmark which looms on the horizon is the February 18, 1978 low of 742.12, less than' 50 points away. Although further short-term weakness is a distinct possibility, it would appear tech- nically that the DJIA is in need of a rest. This would seem to suggest an immediate assault on the 1978 February low is unlikely. in fact, an oversold condition of historically large magnitude. coupled with technical downside objectives being reached, would argue for a rally. It has been the contention of this letter that the broader-based averages such as the Standard &' Poors Composite and the New York Stock Exchange Composite shown above reflect technical patterns which are conSIderably less vulnerable than the Dow-Jones Industrial Averages which, for the last two years, has underperformed the market. In the case of the Standard & Poors Composite (103) the short-term top recently formed indicated a possible downside target of 106 and has been exceeded. The New York Stock Exchange Composite (59) also reached the downside count from its short-term top. In both cases neither of these averages indicate a future prospect that should cause concern. The above projections are. of course, short. term. What is more important. however, is to try and place the present market condition into longterm perspective. As far as the broad-based Standard & Poors Composite and the New York Stock Exchange Composite are concerned. both patterns appear to be in well-defined major uptrends. There is nothing in these patterns to suggest that the current weakness constitutes anything mOre than a minor to mtermediate correction withIn these uptrends, and since the downside targets mentioned above have been realized. both averages are currently trading on strong support levels. The short-term technical deterioration that has taken place since the end of February would appear to be running its course. Selective individual stocks are moving into logical support levels which would suggest purchase. The correctionary phase has not changed our long-term technical outlook. Dow-Jones Industrials (11 00 AM) 790.61 S & P Composite (11 00 AM) 103.07 Cumulative Index (3/20/80) 724.66 ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL No statement or exprenlon of opinion or any other matter herein contained IS, or to be deemed to be, dlreclly or Indirectly, (Ill offer or the of an offer to buy or any security referred to or mentIOned The molter Is presented merely for the convenience of the subSCriber While oNe believe the sources of our Informa tlon to be relloble, we In no way represent or guarantee the thereaf nor of the mude herein Any to be loken by the subSCriber should be bosed on hiS own Investigation and Information Janney MOntgomery Scolt, , as a corporation, ond It offICers or employees, moy now have, or may later take, posll!ons or Ir!;ldes In respect loony seCUrities mentioned In thiS or any future Issue, and such pOSition may be ddferent from any views now or hereafter expressed In Ihl! or any other Issue Jannty Montgomery Scott, Inc, which IS registered With the SEC os an Investment adVisor, may give odvtce to Its Investmenl OdVIKlty and olhel customers Independently of any stalements mode In ,I-lIS or In ony other l5ue further IIlformatlon on any 5eC\Hlty mentIOned herein IS avaIlable on reque5t

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Tabell’s Market Letter – March 28, 1980

Tabell’s Market Letter – March 28, 1980

Tabell's Market Letter - March 28, 1980
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANoe, INC MEMBER AMERICAN STOCK EXCHANGE One of the reasons that a study of the stock market is fascinating is that it is almost always a blend of the new and the old, the unprecedented and the familiar. This week's action constituted a particu- larly pointed example of this combination. Few, if any, stock market pundits that we are aware of had looked to silver and other commodity prices as a possible catalyst for a collapsing stock market. Yet it turned out to be the collapse of the Hunt brothers silver holdings which produced one of the more fascinating stock market afternoons in recent memory, an afternoon in which the Dow plunged some 16 points in the penultimate hour of trading and gained back some 20 points in the final hour. If the intervention of precious metal prices into equity trading was a new phenomenon, the effect it produced was an old one. Single-mindedness and massive long positions held on borrowed money are phenomena as old as markets, and the effects they have produced have caused similar consequences over the years. Thus, from a technical point of view, Thursday's trading was straight out of the textbooks, constituting the familiar phenomenon known as a selling climax. The occurrence of this particular classic example, we must quickly point out, does not necessarily suggest that the stock market saw its absoloute low of 729.95 intraday for the Dow on Thursday after- noon. Market history is replete with what are known as multiple-climax low points, and many of them have occurred at levels somewhat higher than those which turned out to be the ultimate low. The first identifiable climax in 1974, for example, took place in August when a 27-point, 6-hour decline was fol- lowed by a 12-point, 6-hour rally. This occurred around the 680 level approximately 100 points above the ultimate low. Three similar climaxes followed, including the record one in October in which a 12.2point, 3-hour decline was followed by a 55-point, 6-hour rally. However, in comparison with recent re- versals, it must be noted that Thursday's action appears most similar to those ultimate climaxes of 1974 or to trading action in late November. 1978 when a rally over a 5-hour p-eriod. – – . – – … We have in the past in this letter used the technique of suggesting that an effective bottom has been reached. Some thought has gone into the use of this phrase. It is an attempt to recognize that a sell- ing climax represents the start of the process of probing for a bottom and that the process of probing may take a multitude of shapes and forms. Almost invariably the process includes, somewhere along the line, a test of the climactic lows and, as noted above, often a significant penetration of those lows. That penetration is usually temporary, and the ultimate recovery generally proceeds above the climax levels, but the period of uncertainty that normally follows a sharp market decline can produce all manner of results. This reminder is, we think, applicable in the present instance, since we do not foresee that the uncer- tainties which have been interjected into the commodity markets plus the chaotic credit market conditions which have accompanied the past six weeks' collapse are going to go away over night. Our feeling, however, based on Thursday's action plus the historically oversold condition which prededed it, is that the preliminary stages of a technical rebuilding process have probably begun. Part of the reason we do not project significantly lower prices is that, in our view, individual stock patterns do not show the same sort of massive distributional characteristics that were present prior to earlier major declines such as those of 1968-1970 or 1973-74. In a longer-term sense, most issues have returned to the lower part of what we think will ultimately be regarded as base formation levels, rather than having broken down following long-term up moves, with no visible support. None of this is to say that the stock market has not suffered severe technical damage over the past six weeks. This is, indeed, the case, and a numb'lr of unanswered questions remain which can be resolved only by the future pattern as it emerges. It is, nonetheless, well to remind ourselves that selling climax conditions are a product of panic and uncertainty. It has always been the course of wisdom not to succumb to the sort of atmosphere produced. Dow-Jones Industrials (12 00 PM) S & P Composite (12 00 PM) Cumulative Index (3/27/80) 764.08 99.08 660.57 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWT sla No stotemenl or of op,nion or any other matter herem conlc'ned IS, or IS to be deemed 10 be, directly or ind,rectly, on offer or the lol,Cllotlon of on oller to buy or sell ony securIty referred to or menlloled The moiler IS presented merely for the conver-Ientc of the subscriber While oNe believe the sources of our Informo- lion 10 be rehoble, we In no woy represent or guarantee the accuracy thereof nor of the statements mude herein Any ocllon to be by the subscriber should be based on hiS own Invesligotlon and Informatlan Janney Montgomery Scali, Inc, as a corporation, and Its officers or employees, may now hove, or may loter toke, positions or trades In respect to any seCUrities menhoned In thiS or any future Issue, and such paslhan moy be dlfferen from any views now or hereafter expessed In thiS or any other Issue Janney Montgomery Scoll. Inc , which IS registered w,th the SEC as on ,nvestment adVisor, may give adVice to ds Investment adv,sory and othel cuS\omel5 Independently of any statements made In thiS or In any other Issue Further information on any security mentioned herein ,s available on request

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