Viewing Month: January 1981

Tabell’s Market Letter – January 09, 1981

Tabell’s Market Letter – January 09, 1981

Tabell's Market Letter - January 09, 1981
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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 January 9, 1981 –.;o.- —- — .,.-.- ; – – -e An ancient Chinese curse is reputed to have run, May you live in interesting tim-es. If the first few days of 1981 are any indication of what the stock markef is going to be like during the year, the times should be interesting indeed. The year's first three days saw the continuation of the year-end rally with a vengance, with the Dow Industrials tacking on a total of more than 40 points and moving to a new, post-March1978 high of 1004.69. And then, of course, came Wednesday. There is not that much to be said about Wednesday's trading other than to note it as a monument to the wisdom of Phineas Taylor Barnum. In and of itself, the 23.80-point decline on record volume and its 15-point follow-through on Thursday afternoon did not alter the market's technical position any more than similar past sharp interruptions in ongoing advances have done. The irony, in our view, is that it apparently came in response to an all-inclusive sell recommendation, at a time when this sort of advice (and its converse) has been, from a practical point of view, effectively useless for the past six years. Just about the last time when selling stocks simply because they were stocks would have been a useful policy for the long-term investor was 1972-1974. Since the 1974 lows, the sum-total of stock-market downside activity has been a two-year minor bear market in the averages, during which large numbers of stocks appreciated handsomely, and a series of four short-term corrections which astute traders might have scalped to advantage but which real-world, long-term investors – owould-have-done-best-to-ignore-.—Many-investors,as-isreputed-toobethe.case-withmany-generals-,– — seem to spend a great deal of time equipping themselves to fight the last war. 1972-1974 was the I last period in stock market history when successful market timing would have overshadowed stock selection as a path to investment success. Ever since that time, the opposite has been the case. It can, we think, be documented that, for the past six years, a fully-invested stance — assuming investment in the appropriate areas — has been the proper one for the long-term investor. The current technical picture, in our view, affords some evidence that this sort of market environment may persist. There are, it cannot be gainsaid, unmistakable signs of technical deterioration in the price action of a large number of issues. At precisely the same time that this is occurring, however, an equally substantial number of individual stocks are breaking out of significant base patterns, suggesting that they may be just about ready to embark on significant advances of long-range proportions. In such an environment, both panic selling and indiscriminate buying are likely to be inappropriate, and it is best to concentrate on the more difficult but more rewarding technique of attempting to separate the investment wheat from the chaff. It is, indeed, true that, with many stocks developing distributional patterns as noted above, some pronounced signs of market deterioration are evident. Tuesday's new high in the Dow was not confirmed by a number of other indicators, most notably breadth, which has been in a disturbing downtrend since last summer, a fact which we have been noting in this space with some regu- larity. Furthermore, the o;resent market cycle which bee-an almost three years ago is, as we noted in our year-end forecast, reaching an undeniably mature phase. In view of the market's obvious selectivity, however, we have deliberately chosen to monitor and be aware of these warning signals without substantively acting upon them. Such continue to be our recommended stance. Dow-Jones Industrials (12 00 PM) S & P Composite (12 00 PM) Cumulative Index (1/8/81) AWTsla 964.33 132.75 1026.49 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL 01.No statement or expression of opinion or any other mot1er herein contomed IS, or IS to be deemed to be, directly or mdlrectly, on offer or the OIUllollon of an offer 10 buy or sell secuTlty referred 10 or mentioned The motter IS presented merely for the convenienCE; of the subSCriber While -Ne believe the sources of our Informa- han TO be reI lob e, 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 an hiS own InvestlgoTlon and Informahon Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, may now have, or may later take, pOSitions or trades In respect to any seCUriTieS mentioned In thiS or any future Issue, ond such POSition may be different from any views now or hereafter expressed In this or any other Issue Janney Montgomery Scali, Inc, which 15 registered WITh the SEC as an Investment adVisor, may give adVice to Its Investment adVISOry and other nlliomers Independently of any staTements made In Thl5 or In any olher Issue Further information on any security me'ltloned herein 15 available on request

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Tabell’s Market Letter – January 16, 1981

Tabell’s Market Letter – January 16, 1981

Tabell's Market Letter - January 16, 1981
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 081540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEM8Efl AMERICAN STOCK EXCHANGE January 16, 1981 IE)ast week's .isue9f t)Ji leH.e.rJweutiliedthe w.eeJ's.wild .market3l1,lclIBtions as .an,excuse for – – a general discourse on the' subject of market timing. We noted that; in'Our view, 'the ironic aspect of last week's action was that it resulted from the attempt of large numbers of investors to indulge in a market-timing exercise at a point when six years of evidence should have told them that such an effort was likely to be futile. We think that thought is worth expanding on a bit. It has always been true, and it remains so, that there exist two distinct aspects to successful asset management involving common stocks. The first of these aspects is, of course, that of forecasting the general behavior of the stock market, thereby determining what portion of total assets available for investment will be committed to equities as a class. The second aspect is security selection. This con- sists of, having chosen an appropriate asset mix, deciding how the equity portion of that asset mix shall be invested. The two disciplines cannot, of course, ever be completely separated. For example, a market forecast will often be part of the stock selection process, i. e., in determining the relative volatility of the stocks which are going to be held. There is often, however, room for argument as to which of the two disciplines is more important in the achievement of investment success. As we noted last week, there seems to have been a great deal of recent emphasis on the market- timing aspect of management. This emphasis arises, it seems to us, out of a number of traditions. The first is a simple-minded seat-of-the-pants awareness of what bear markets can do. This awareness was stimulated most recently in 1973-1974, but it can be traced back as far as 1929-1932. Even after a half-century, we suspect that the memories of that painful experience color today's investment think- ing. The second tradition which, we think, has helped stimulate the current interest in market timing has been the recent growth in quantitative analysis of the capital market process. A cornerstone of modern portfolio theory has been detailed mathematical examination of the variance of individual secu- rity prices. Such studies tend to suggest that well over half of the variation in individual stock prices tends to be explained by overall moves in the stock market, and only a minor portiQnoLthat –val'laHon by factors intrinsic to the individual stock or industry. – – – – – — – – – — – We are reminded of two aphorisms concerning the investment process. The source of one is a venerable old-time technician who said, When they back the paddy-wagon up to the door, they take out the good girls along with the bad. The second is from one of the founders of modern portfolio theory who warned, B eware the co-variances. Both were, of course, saying the same thing. At this point, a word about our own approach to the twin disciplines of market timing and security selection is in order. As our readers are aware, we expend a great deal of time and effort in the process of trying to formulate a general market forecast based upon technical factors. We are aided in this effort by an extensive computerized data bank which we use to track a large number of general market indicators, some of these conventional, and others, as far as we are aware, proprietary to us. The analysis of these indicators has been and will remain central to our stock-market thinking. We also, however, with a combination of computerized screening and human analysis, track some 2,000 individual issues on the New York and American Stock Exchanges on a weekly basis in an attempt to assess the individual price probabilities, from a technical point of view, for each one of these issues. We noted above that the disciplines of market forecasting and security selection tend to be intertwined. Quite obviously, our own feelings about the general market are going to be, at least in part, derived from that analysis of 2,000 separate stocks. It is this sort of individual stock analysis which, at the moment, prevents us from overemphasizing the various signs of general market deterioration which have been taking place on a progressive basis over the past six months. Inspection of individual patterns unquestionably shows that a number of issues are beginning to reach long-term upside objectives. Many have entered into what may well turn out to be distributional phases. The problem is that a large number of issues remain in confirmed longterm uptrends, some of these issues having recently entered into the initial stages of those uptrends. Now there is little doubt that a great many fewer stocks remain in uptrend phases than was the case, let us say, last summer. Indeed, one way of viewing the market process of the last six months has been that it has consisted of the number of attractive technical patterns being transformed from a distinct majority to a significant minority. Minority though it be, however, that number remains sig- nificant. We think, in other words, as we noted last week, that over the short term, investment success is more likely to be attained by adopting the contrary approach of emphasis on security selection and of decision-making based on individual stock patterns. This approach has, by and large, been successful for a half-dozen years, and our reading of the current technical picture is that it will continue to be so. Dow-Jones Industrials (12 00 PM) 970.31 S & P Composite (12 00 PM) 134.32 Cumulative Index (1115/81) 1034.70 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL AWT sla No stotement or expressIon of opinion Of any other molter hereIn conloll'led IS, or IS to be deemed 10 be, dIrectly or IndHectly, on offer or Ihe soil clIo lIon of on offer to buy or lieU any security referred 10 or mentIoned The matler IS presented merely for the convenienCE of Ihe sublicflber WhIle oNe believe Ihe sources of our Informo tlon to be rel,able, we In no way repreiienl or guarantee Ihe accuracy thereof nor at the statements mude hereIn Any actIon 10 be laken by the subSCriber should be based on hl own Investlgatlan and Informallon Janney Montgomery call, tnc, os a corporatIon, and Its offICers or employeeli, may now have, or may later toke, posItIons or trades In respect to any securllles mentIoned In Ihls or ony future Issue, and such posItIon may be dIfferent from any vIews now or hereafter expressed In thlli or any other Issue Janney Montgomery Scotl, Inc, whICh IS regIstered WIth The SEC as on Investment adVIsor, may gIve adVIce to Its Investment adVIsory and other customers IndependenTly of any statemenlii mode ,n thIS or In any other 15SUC Further informatIon on any senility mentioned herein IS avaIlable on request

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Tabell’s Market Letter – January 23, 1981

Tabell’s Market Letter – January 23, 1981

Tabell's Market Letter - January 23, 1981
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW .JERSEY 08540 DIVISION OF MEMBER NEW YOAK STOCK EXCHANGE, INC MEMBEA AMERICAN STOCK eXCHANGE January 23, 1981 – – Wehavetried to -focusin cthelast-twolssues-f..thiseHer-onthe dichotomy'sho;vn by the bhavior of -the widely-followed marketaverages and that of individual stocks. -We -have -suggested- that the loss of market momentum has been an ongoing process evident to the most casual observer ever since last summer. a point underscored by the fact that the Dow at today's level is about at the same level as during the first week of last August. We have also noted, however, that individual stock analysis reveals the fact that a certain degree of rotating leadership is indeed present, with possible new major uptrends emerging to replace the ineVltable number of stocks dropping by the wayside. This sort of environment makes a market forecast particularly difficult since so much depends on accidents of timing. If all those stocks which have entered into corrective phases begin moving toward their downside objectives at the same time, the result in terms of the averages is unlikely to be pleasanL If, however, corrective moves turn out to be slower and are combined with upside achon on the part of emerging new leaders, the ;oular indices could well give a good account of themselves. In terms of the general market, the action of the Dow ever since last August has essentially consi5ted of a series of ever-widening upward and downward swin!,s (of which more below). The last high attained was at 1004.69 on January 6, the third trading day of the new year. Through Monday of this week, it had found support m the mid-960's, but in the latter part of the week, that support level was penetrated, and an hourly low of 937,as of this wrtting, representing a 6.7 downswing from the January 6 high, has now been attained. This action has at least some of the earmarks of a correction well within the bounds of normality. How- ever momentous the trading action during the first week in January may have appeared, there was not sufficient time in that week, and in the weeks which preceeded and followed it, to form that important a distributional top. Such a top as exists may be dated as having begun to form on December 22 when the Dow went up 20 pOints to 958 and was terminated by the sharp market break this Tuesday. On the implica- tions of that formation alone, there is very little reason to expect the market decline to carry much further than it has already done. The ability to hold current levels overthe next few weeks, therefore. would have – -t.,- be interpreted as bullish evidence – –.- — .., , – – – – — – .. – – – .- – All this, however, must be viewed in a long-range context, and, as noted above, to do this, one must go back to last August. On August 15, the Dow reached a high of 966.72, 27 above its level at the starting point of the rally on March 27. Durtng that whole advance, there were only three corrections of any magnitude, the largest being 4 and lasting for 6 days. The major swings which have occurred in the Dow since that time are documented in the table below. Date DJIA Change Date DJIA Change Aug. 15, Aug. 28, Sep. 3, Sep. 8, Sep. 22, Sep. 29, 1980 1980 1980 1980 1980 1980 966.72 930.38 953.16 928.58 974.57 921. 93 -3.76 2.45 -2.58 4.95 -5.40 Oct. Oct. Nov. Dec. Jan. Jan. 15, 30, 20, 11, 6, 22, 1980 1980 1980 1980 1981 1981 972.44 917.75 1000.17 908.45 1004.69 940.44 5.48 -5.62 8.98 -9,17 10.59 -6.40 To the technician, the most outstanding feature of this five months of action is the fact that it is a broadening formation. Inspection of the first five lows shown in the table, from the correction low of August 28 to the bottom of December 11 from which point the year-end rally began, reveals that each one of these lows is successivelY lower than the previous one. With two exceptions, the peaks of September 3 and October 15, precisely the same is true in the opposite direction for the highs. Each high has tended, during this period, to take place at a higher level. For the analyst, formations of this sort are ground on which it is necessary to tread with extreme caution. As the lateral formation progressed, one has had to resist the temptation to cry wolf at each successive downside breakout or to become bullish as each new -high was made. The continuing divergence in individual stock patterns has, of course, been one factor that has helped to resist this sort of temptation. It is well to remember that no market environment goes on forever. At some stage, a breakout from this fIve-month trading range will take place, and it will be real. That trading range has now produced enough fluctuation and sufficient volume so that such a breakout, when it occurs, and if it can be properly identified, will be meaningful in whatever direction that breakout takes place. We do not ourselves possess the prescience claimed by some of our colleagues which would enable us to predict the direction of that ultimate breakout with any degree of certainty. Indeed, we see the evidence as not bemg completely in, and we think it is precisely that condition of uncertainty which market action has been reflecting since mid-August. It will be the task of this letter in future weeks to try to identify the resolution to this dilemma just as early as is honestly possible. Dow-Jones Industrials (12 00 PM) 939.59' S & P Composite (12 00 PM) 130.11 Cumulative Index (1122181) 1025.82 AWT sla ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or epreu.on of op.n.on Of any other motter here.n contcltned 'S, or .s to be deemed to be, d.rectly or IOdHectly, on offer or the SOI'C.totlon of an offer to buy or sell cny security referred to or mentioned The mailer IS presented merely for the conve,,1enct of the subscriber While we believe the sources of our informa- tion to be reliable, we In no way repreenl or guarantee the occvrocy thereof nor of the swtements mude herein Any acllon to be token by the subscriber should be based on his own investigation and Information Janney Montgomery Scott, Inc, as Il corporation, and Its offICers or employees, may now hoe, or may loter toke, positions or trodes In respect to any seCUflhcs mentioned In thiS or any future Issue, and such position may be different from any views now or hc'eofter exprened In HilS or any other .nue Janney Montgomery Scoll, Inc, wh,ch IS reglste'ed with the SEC as on Investment odv.sor, may gIVe adVice to ,ts mvestment adVisory and othe. customers Independently of any statements mode In thiS or In any alher Issue Further miormtlOn on any security mentioned herem IS avollable on request

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Tabell’s Market Letter – January 30, 1981

Tabell’s Market Letter – January 30, 1981

Tabell's Market Letter - January 30, 1981
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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 – January 30, 1981 The stock market's reaction to a new President in office and the hostages being freed has been, to date something oLa nonevent. ILis.as if the.market.issaying to-us,–n;-;–7I-,am-from .Missouri– You've got to show me. 1/ .. 1… ..; . . ' ' – – – – – – – . -;– – – – – – – — – – The action of the Dow-Jones Industrial Average in recent months has been contained in a trading area, albeit volatile, which was established from the December 11 low of 908.45 on the DJIA, to the recent closing high of 1004.69 on January 6 of this year. The significance of the December low, which we have discussed in recent market letters, becomes an important reference point to watch when trying to study the familiar seasonal tendency of the stock market for the year. Also the closing high for this year must certainly be viewed as an important benchmark, as it represents the fourth time within a period of 15 years that the Dow-Jones Industrial Average has broken the 1000 'level and been unable to significantly sustam the move. Penetration of this trading area, therefore, may well give us a clue to the direction of the market and must be monitored closely. Of the many crosscurrents present in the market today, the one most obvious to fOllowers of the stock market is the weakness in the oil-related groups. The Crude Producers, Integrated Domestic, and Integrated International Oil companies that make up the S & P Oil Composite represent 22.4 percent of the S & P 500. Obviously the current weakness ill these stocks has had a depressing effect on the averages. 52-week 1981 Percent 52-week 1981 Percent High Low Change High Low Change Oil Crude Prod. Oil Integrated Dom. General Amer. Oil 61.00 43.50 -28.69 Atlantic Richfield 74.38 58.75 -21.01 Louisiana Land 63.75 42.25 -33.73 Cities Service 61.25 40.75 -33.47 Mesa Petroleum 69.25 52.63 -24.47 Conoco 73.00 59.00 -19.18 – — Superior'Oil-25eOt\O1'85;OO6;29'-'Getty 'Oil''-'rO25,'—o82'7(JO2-25– Houston Oil & Min. 57.88 49.13 -15.12 Phillips Petroleum 62.88 51.63 -17.89 Shell Oil 65.50 48.38 -26.14 Oil Integrated Inter. Exxon Gulf Oil 8R.75 54.50 75.50 -14.93 40.00 -26.61 Standard Oil Ind. Sun Co. Union Oil Cal. 99.50 59.63 56.50 70.88 40.75 39.00 -28.76 -31. 66 -30.97 Mobil 89.50 74.75 -16.48 Royal Dutch 112.25 91. 68 -18.33 Standard Oil Cal. 117.50 Texaco 54.38 92.00 -21.17 41. 25 -24.14 As the exhibit above shows, substantial percentage declines from the stocks' 52-week intraday high to their 1981 intraday low have uniformly taken place. This across-the-board correction has done serious long-term technical damage to the oil-related group. The ability of these stocks to hold above the 1981 lows listed above would indicate the start of a possible consolidation phase, however, penetration of these lows 'WOUld reestablish the existing downtrends. Offshore Drilling, Canadian Oil and Gas, and Oil Well Equipment and Services, not included in the above study, reflect similar percentage declines. Within the framework of a general market that has been moving laterally for a period of five months, the oil-related stocks have corrected their impressive gains, while not disturbing other sectors of the market place. In other words, these bearish oil-related groups have, in fact, been offset by bullish groups in other sectors such as the Chemicals, Drugs, Papers, Steels, and interest-sensitive groups, to name a few. This rotation of leadership is constructive for two reasons. First, it has a tendency of limiting the downside risk of the general market by having groups in different stages at different times, and second, it takes the pressure away from a group like the Oils which, until recently, has performed extremely well. However. it must be noted that the majority of these stocks started their impressive rise from the 1974 lows, and it would seem logical not to expect them to continue to lead the market in the next advancing phase. . As previously stated, a trading range has been defined in the Dow-Jones Industrial Average. While contained in this area, rotation of leadership continues from group to group. At some point, an upside or downside breakout of this trading area will take place. Being unable to identify the direction of the breakout at this time, we must continue to aSsume a show me attitude. Dow-Jones Industrials (12 00 PM) 955.80 S & P Composite (12 00 PM) 130.85 Cumulative Index (1/29/81) 1029.08 ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL RJS sla No slolernen! or expren!on of opmlon or any other moiler heretn contained IS, or ., to be deemed 10 be, directly or Indlfeclly, on offer or the SollCltollon of on offer to wy 01 r,ell any set\mly rehn!!O 10 or menlooned ihe mOer IS -presented merely for the Convel'lenCe of lhe subscTlber While we beheve the lOu/cer, of our mfa/rna ttOn 10 be rel,oble, we In no woy represent or guarantee the occuracy thereof nor of thc statements mde herein Any action to be tohm by the subSCriber should be bosed on hts own investigation and Information Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, moy now have, or may later toke, positions or trades In respect to ony securlt.es mentioned In ihls or any future Issue, and such pOSition may be dlfferenl from any views now or hereafter expressed In thiS or ony other tssue Janney Montgomery Scali, tnc , which 15 registered wlh the SEC as on If1veltmenl adVisor, may give adVICe to 115 If1vestment adVisory and other tUstomlHS mdependently of any stolements mode In thiS Or In any other Issue FUrlher information on any security menhoned herelf1 IS available on request

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