Viewing Month: April 1980

Tabell’s Market Letter – April 03, 1980

Tabell’s Market Letter – April 03, 1980

Tabell's Market Letter - April 03, 1980
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TABELL'S MARKET LETTER —— ————-. 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORl( STOCk eXCHANGE, tNC MEMBER AMERICAN STOCK EXCHANGE April 3. 1980 – – ;–;—— …… -..) .—-. – – -. In what must be considered normal technical action followil1g the classic intraday selling climax of March 27. the market has paused and given us some breathing space. The 17-point rally on the Dow on Friday. followed by the eight-point extension which began this week's trading. constituted a typical technical rebound. and demand. by and large. continued to manifest itself. albeit on reduced volume. for the remainder of the week. On an intraday basis. the Dow had recovered. by Wednesday. some 66 points from its March 27 intraday low of 729.95 to an intraday peak. so far. of 796.40. This constitutes a 35 recovery of the 188 points lost since the February 13 intraday high of 918.17. The task now at hand. of course. is to attempt to divine some meaning from the rather unpleasant six weeks that constituted late February and March. The first point to be made is that the decline was surprising. not in its occurrence, but in its extent. Signs of technical deterioration suggesting the probability of some sort of correction were evident in early February and were duly noted in this letter. At the same time we drew attention to this possibility. however. we also suggested that the maximum foreseeable downside target was somewhere around 800. As it turned out. this was off the mark by some 70 points. not the first time in our forecasting career that we have been taught an object lesson in humility. It is perhaps too early to reach conclusions as to precisely why the decline extended consider- ably further than technical portents would have suggested. A plausible reason. it seems to us. however. was the interjection of the metal-price collapse into a market whose major concern had been with interest rates and a credit crunch. The fact that the market this week ignored the arrival of a 20 ;–t current price expectations. It was perhaps trie unexPected silver crisis of a week ago which brought the Dow from its logical stopping place in the low 800's. a level at which it had been trading in mid-March. to the extraordinary intraday bottom attained on March 27. All this. of course. is past history. and it now remains to make some assessment of the probable future course of equity prices both over the near and the long term. In this regard. the most relevant fact at hand. we think. is the extraordinary oversold condition which prevailed as long as two weeks ago. Technicians have a tendency to point to oversold conditions when the market is declining. usually as part of some prayerful attempt that the de- cline may reverse itself. The greatest analytical value to be derived from such conditions. however. occurs once a significant rally. such as the one that began a week ago. has taken place. If such a rally is accompanied by meaningful breadth and volume (and we think such was the case in the recent instance). it is. at least. suggestive of the fact that the process of probing' for an intermediate-term bottom has begun. We do not think. in the present case. that the process will be a simple one or one which the market will undergo totally without trauma. Almost invariably. the record tells us. the process of forming a base involves. somewhere along the line. a test of the initial reaction lows. In some cases those lows have simply been approached. In many other cases on record. it must be noted however, the lows made on the initial reaction have been penetrated by a fairly significant amount. We would not care to suggest that such will not be the case in the present instance. It seems to us. in other words. that the market is now facing the necessity of forming a base. the exacLshape of which is so far-unclear-.–That process will. we think. -take time. and it would- be illogical, based on past precedent. to expect it to be over much before sometime this summer. As the formation takes shape. the ultimate upside prospects will become clearer. Dow-Jones Industrials S & P Composite . Cumulative Index (4/2/80) AWTsla 784.13 102.15 704.59 ANTHONY W. TAB ELL DELAFIELD. HARVEY. TABELL No sfatement or expression of opinion or any other motter herein contatned 15, or 1510 be deemed to be, directly or Indirectly, on offer or the OIllollon of on offer to buy or sell any security referred 10 or mentioned The molter 1 presented merely for the conver'!enc!; of the subscriber While He believe the sources of our Informa- tion to be reltoble we In no way represent or guarantee the accuracy thereof nor of the slolements mude herein Any action to be toen by the subscriber should be based on hiS own 'lnvestlgollon and ,nformat,on Janney MOnlgomery SCali, Inc, as 0 corporation, ond lIs officers or employees, may now ha,'e, or may later toke, posHlons or trodes In respect to any SeCUrities mentioned In thiS or any future Inue, and such pOSition moy be different from any views now or hereafter expressed , this or any other Issue Janney Montgomery Scoll, Inc, which IS registered With the SEC as on Investment odvlsor, may give adVice 10 lIs adVisory and othel customers Independently of any stalemenlS mode In thiS or In any other Issue Further information on any security mentioned herein 15 available on request

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Tabell’s Market Letter – April 11, 1980

Tabell’s Market Letter – April 11, 1980

Tabell's Market Letter - April 11, 1980
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIYISION OF MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK EXCHANGE We have expressed the view in these pages that the extraordinary market action of March 27 had many of the earmarks of the sort of initial selling climax which characteristically occurs in the early stages of a bottom formation. We acknowledge that there are those pessimistic observers who may argue with this view, but, accepting it as a hypothesis, it is worthwhile to ask what sort of market action we might then expect over the near term. The charts below show the market action of the Dow-Jones Industrial Average following various reference dates, each of these reference dates marking the occurrence of a previous initial selling climax. In all cases, the Dow has been adjusted to make it equal to 759.98 (the March 27 close) on the reference date. The time scale has also been adjusted to show the equivalent time period in 1980. In each chart, the actual action of the Dow for the ten trading days since March 27 so far has been shown by a dotted line. REFEPfNCE . 28 19G2 , REFERENCE DRTE . AUG 29 1966 REFERENCE DATE . or, LI 19N RE'FERENCE CATE NO'I 2 1!77 79 so 80 80 lSO …uN 80 Lu.. 80 an soY lJUN 80 an MAT 80 JUN an It is interesting to note that in almost all cases there has been an initial rally approximately equivalent or, indeed, in 1970 and 1974, substantially greater than the present one. What is also interesting, however, is that all instances, with the exception of 1970, involved the return to an area somewhere around the initial low. In 1962 and 1977-78, the market moved below the initial lows to today's equivalent of about 705. It is possible to analyze these past cycles in some detail, but One point clearly stands out. That is the fact that, if it is granted that the current process constitutes a base formation, the prospect of a move back to the old lows possesses a fairly high degree of probability. Moreover, as the charts show, such a move would not necessarily constitute evidence that a bottom is not, in fact, taking place. Dow-Jones Industrials (1200 PM) S & P Composite (12 00 PM) Cumulative Index (4/10/80) AWTsla 795.22 104.46 718.74 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expression of oplmon or ony other motler herein contained IS, or IS 10 be deemed 10 be, directly or IndlTlJctly, an offer or the ollCllollOn of on offer to buy or sell cny lecvnly referred 10 or mentIOned The moIler IS presented merely for the converJence of the 5ubSCllbcr Whde oNe believe Ihe sources of our Information to be reliable, we In no way represenT or guarantee the accuracy Ihereof nor of the statements mude herein Any action to be token by the subsctlber should be based on hIS own investigation and Informallon Janney Montgomery Seoll, Inc, as a corporation, and ils olflccrs or cmployees, may now have, or may later lake, positions or lrodes In rC!spC!CI 10 any SCUrtlies mentioned In Ihls or any future Issue, and such pOSition may be ddfcrenl from any views now or hereafter e)'p'essed In thIS or any olher I5Ul' Janney Montgomery 50011. Inc, which IS registered With Ihe SEC as on ,vestment adVisor, may give adVice to I'S Inveslmenl adVISOry and olhe customers Independently of any statements mode In thiS r In any 01 her Issue fu'tner mformaTlon on any sewnly menllOned herein IS available on request

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Tabell’s Market Letter – April 18, 1980

Tabell’s Market Letter – April 18, 1980

Tabell's Market Letter - April 18, 1980
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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 April 18, 1980 During th'estock market'sln()sf recent advancing -,-.-. first six weeks of 1980, the lack of market breadth, i.e., the relatively small number of stocks advancing, did not go unnoticed by analysts. Likewise, the pronounced breadth weakness once the declining phase began on February 13 was also widely noted. What has gone largely unremarked, is the extent to which this phenomenon has dramatically reversed itself over the short term, since about the end of March. Indeed, by one measurement, the market has shown better breadth over the past three weeks than at any comparable period since the rally in January, 1975, following the 1974 bottom. This statement in regard to a market which has recently declined almost 150 points and sits within a dozen points of that decline's low, requires some amplification. There exists something which may be called normal breadth action, and it is based on the relationship of the number of advancing stocks and the change in the Dow. The precise nature of that relationship over some 10,000 trading days since 1942 has been investigated by computer, and, using this relationship, it is possible, on any given day, to calculate an expected number of advances based on the change in the Dow. There exist relatively few time periods in which the number of advancing stocks repeatedly exeeed their expected value. This, however, has been the case to an unusual degree since March 31. In the 12 trading days between that date and April 16, the number of ad- vances was never greatly different from its expected value and often exceeded it by a large amount. By contrast, the 15 trading days between February 5 and February 26 included 13 on which the number of advances was significantly less than the expected number based on the Dow change. The contrast between the two periods is shown in the table below. POllANCES DPTE DJIA EXP. ACT'' bIFF. Feb 5 876.62 1. 53 Feb 6 881. 83 5.21 923 765 -158 Feb 7 885.49 3.66 879 802 – 77 Feb 8 895.73 10.24 1086 878 -208 Feb 11 889.59 – 6.14 5fi4 565 1 Feb 12 898.98 9.39 1056 744 -312 Feb 13 903.84 4.86 918 799 -119 Feb 14 893.77 -10.07 425 415 – 10 Feb 15 884.98 – 8. 79 465 382 – 83 Feb 19 876.02 – 8.96 469 351 -118 Feb 20 886.86 10.84 1107 868 -239 Feb 21 868.52 -18.34 159 434 275 Feb 22 868.77 0.25 757 374 -383 Feb 25 859.81 – 8.96 463 315 -148 Feb 26 864.25 4.44 885 654 -231 ADVANCES 'DATE- -, ..,. bJ 1A EXP-.-ACT–'!HFF-.– Mar 31 785.75 8.10 I04olT9o 150 Apr 1 784.47 – 1. 28 687 963 276 Apr 2 787.80 3.33 857 1018 161 Apr 3 784.13 – 3.67 601 718 117 Apr 7 768.34 -15.79 171 342 171 Apr 8 775.00 6.66 986 968 – 18 Apr 9 785.92 10.92 1129 1159 30 Apr 10 791. 47 5.55 951 1237 286 Apr 11 791. 55 0.08 757 963 206 Apr 14 784.90 – 6.65 509 497 – 12 Apr 15 783.36 – 1. 54 687 657 – 30 Apr 16 771.25 -12.11 314 747 431 – .- Typical of the February action were February 7 and February 20. On each of these days, the Dow advanced some 10 points, and over 1,000 advancing stocks would have been expected under such conditions. The actual number of advances was more than 200 lower. By contrast, the April period featured such days as April 1 and April 11. On each of these days, the average was essentially unchanged, a phenomenon which, on an historical basis, would produce some 700 ad- .ancing stocks. On each day, however, the number of advances was well over 900. ' A dramatic reversal of this sort is a fairly rll.re occurrence in the stock market and has often been associated with important lows. It will be interesting to see whether such an event occurs in the present instance. Dow-Jones Industrials (12 00 PM) 769.11 S & P Composite (12 00 PM) 101. 21 Cumulative Index (4/17/80) 713.26 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWT sla No statement Of of opInion or ony olher motter herein contolned IS, or IS to be deemed to be, directly or Ind,rectlr on offer or the soliCitation of an offer to buy or sell any security referred to or mentioned The mOiler 1 presented merely for the converlence of the subscriber Whl e we believe the sources of our Infarma han 10 be reliable, we In no way represent or guarantee the accuracy thereof nor of Ihe statements mude herem Any action to be taken by the subscflber should be based on hu own mvestlgotlon and mformallon Janney Montgomery ScOIl, Inc, as a corpo/allon, and lIS off.cers or employees, moy now have, or moy later toke, POSitiOns or trode5 m respect to any mentioned In It'liS or any future Issue, and such position may be different from any views now or hereJfter In thiS or any other Issue Janney Montgomery Scali, Inc, whICh '5 registered With the SEC as on InveStment adVisor, may give adVICe to .ts Investment advlso,), and olhel customers Independently of any statements mode In thiS or In any other Issue Further information on any security mcroncd herein IS available on request

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Tabell’s Market Letter – April 25, 1980

Tabell’s Market Letter – April 25, 1980

Tabell's Market Letter - April 25, 1980
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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 April 25, 1980 Every so often, far too seldom in an uncertain world, things turn out as they are supposed to; the good guys win, the hero marries the heroine, and everyone lives happily ever after. This satisfying 'arrangementctendscto-J)e the rule inthe in the-vola-' – tile world of finance, events occasionally transpire the way folk wisdom tells us that they should. The textbooks inform us that formation of a stock market bottom generally follows a particular sce- nario, The first act of this scenario is a selling climax characterized by a large one-day or intraday loss, heavy volume, and, in terms of prevailing mood, uncertainty and panic. This climactic washout is then supposed to be followed by a relatively dynamic rally which, after a time, loses momentum and peters out. The next act is a further decline, this time more desultory and on reduced volume. Such a decline should return approximately to tpe area of the original low — the so-called test — at which point additional demand, again on increasing volume, is supposed to manifest itself. It is interesting to examine the past four weeks of trading in the light of this description. On March 27, in a panic atmosphere caused by the collapse of silver and other commodities, the Dow reached an hourly low at 3 o'clock of 739.59. Almost all of this loss was recovered in the final hour of trading as volume expanded to 63 million shares, one of the highest levels on record. The rally continued to a close of 785.75 two days later and to 791. 55 on April 11. As the rise continued during the first week in April, volume gradually petered out, dropping under 30 million shares on April 3 and 7. Over the period between April 14 to April 21, the Dow showed consecutive declines with volume re- duced still further, as low as 23 million shares on the first day of the decline and never reaching higher than 39 million shares on April 16. By this Monday, the Dow had closed at 759.13, a closing figure actually lower than the close of March 27 and precisely within the range which the climax rally had covered four weeks earlier. Prices had been even lower an hour before the close, but improved somewhat in the final hour of trading. It is precisely from such a level that, conventional wisdom advises us, demand should materialize, the market staged its amazing,2erformance us;of last Tuesday. The Dow wound' up 30'.72 points which, as the newspapers duly lnformed' was – terms of points gained, the fifth largest rally in history. Volume expanded to 47,920,000 shares, and prices continued to firm for the remainder of this week. As of this writing, even the Iranian fiasco has shown little effect on this firmness, with prices off only moderately in early Friday trading. For the time being, at least, the textbooks have been vindicated. A few comments seem called for. The first is that we are taught in grammar school that percentage change is a more accurate way of comparing figures than raw change. Thus, comparing Tuesday's 30-point gain to past rallies overstates its relative significance. The rise was 4.05 in the Dow and 3.46 in the Standard & Poors 500. These figures have been exceeded by six rallies in the Dow and 11 in the 500 in the modern (post-1942) period. In the 1920's and 1930's, however, rallies of this mag- nitude were fairly common occurrences. There were eighty rallies of better than 4.05 in the Dow between 1926 and 1940, the record, for what it is worth, being 15.34 on March 15, 1933. If one eliminates the volatile pre-World War II period, however, and looks solely at what has happened since, the comparison is still interesting. Of the six Dow-Jones rallies which bettered Tues- day in terms of percentage advance, five occurred as the initial rally from the climax low of major bottoms in 1957,1962, 1970, 1974, and 1978. The sixth, November, 1963, was the rebound from the Kennedy assassination low. Here the current market is, in an interesting way, at variance with the past. As noted above, Tuesday's rally must be considered the aftermath of a test rather than an initial climax, that obviously having occurred on March 27. No such rally in the modern era has ap- proached this one in magnitude. The closest approximation would be the rally of June 28, 1962 of 3.79 or the 4.02 rally of October 19, 1974. Both these occurred well after the initial climactic lows had been made. Finally, although it would be an incredible pessimist would did not view the last month's action as constructive, it is still only a month. Time is required for bases to form, and even at this point, the base so far formed is insufficient to support anything more than moderately higher levels. Further- more, the success of one test of previous lows does not necessarily suggest the unlikelihood of further tests, and indeed, we would think that something like another test would be necessary to broaden the base so as to indicate worthwhile upside possibilities. In other words, we continue to regard the ex- tension of the base formation period into mid-summer, in accordance with the normal election year pattern, as the most likely course of events. Undoubtedly, somewhere along the line, the market will do something to confuse the current conventional pattern. Nonetheless, action so far is, to say the least, refreshing. ANTHONY W. TABELL Dow-Jones Industrials (12 00 PM) 794.97 DELAFIELD, HARVEY, TAB ELL S & P Composite (12 00 PM) 104.20 Cumulative Index (4/24/80) 741. 49 AWTsla No statement or eXpreSSion of opinion or any other matter herein contamed IS, or 15 to be deemed to be. directly or indirectly, on offer or the sohCltotlon of an offer 10 buy or sell any security referred to or men honed The molter IS presented merely for the conVel'llCnCE of the subSCriber While 'c bclilevQ the sources of our Informa tion to be reliable, we In no way represent or guarantee the accuracy thereof nor of thc statements mude herem Any acllon to be token by Ihe subscriber should be hosed on hiS own Investlgollon and Informallon Janney Montgomery kott, Inc, as a corporation, and ,ts offICers or employees, may /lOW have, Or may laler loke, pOSlllons or trodes In respect 10 any SeUIIIICS men honed In Ihls or ony future !Ssue, and such POSition may be different from any views now or hereafter expressed In thiS or any other Isue Janney Montgomery Scoll, Inc, which 1 registered wllh the SEC as an Investment adVisor, may give to lIS mvestment adVISOry and othel customers Independently of any statemcnts made In thiS or m any other Issue Further mformatlon on any securrty mcnlloned hefeln IS available on request

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