Viewing Month: February 1981

Tabell’s Market Letter – February 06, 1981

Tabell’s Market Letter – February 06, 1981

Tabell's Market Letter - February 06, 1981
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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 STOCI( EXCHANGE February 6, 1981 We have been drawing attention for some time to the narrow trading range which has contained -the-Dowsince'last-August.,….. Thattradingcrange-reached a-timespan-of six months,at the end of Janu ary. At month's end, the Dow had held, for a six-month period in-a 10 59 percent ;-low-to-nign', trading range delimited by the January 6 high of 1004.69 and the December 11 low of 908.45. This marks the 32nd instance since 1940 where the Dow has first reached a month-end at which the past six months of trading have been confined to a range narrower than 11 from low to high. There appears to be a widespread belief that such trading ranges are invariably the harbinger of distributional tops. This is not necessarily the case, as the table below shows. MONTH M1iRT940 OCT 1943 .JAN 1944 OCT 1944 MAR 194 DEC 1947 SEP 1948 APR 1949 JUN 19,,1 JAN 192 APR 19;) JUL 193 SEP 19'3 MAR 19'7 MAR 19'8 OCTY99– JUL 1960 JUL 1961 JUL 1963 MAY 1964 DEC 1964 MAR 1966 JUL 1967 APR 1968 SEP 1968 FEB 1969 JUL 1971 JUN 1972 JUL 1976 JUL 1977 JUN 1979 DJIA CLOSE H7.9' 138.27 137.40 H6. ,,3 1,,4.41 181.H 178.30 174. H 242.64 270.69 274.7 27'.38 264.04 474.81 446.76 6T6.60 616.73 70;.37 69'.43 820.'6 874.13 924.77 904.24 912.22 93,.79 90;.21 8;8.;3 929.03 984.64 890.07 841. 98 SIX-MONTH TRADING RANGE 7. 49 8.82 9.40 9.81 10.93 6.86 9.76 10.91 10.10 7.98 8.72 10.'6 9.63 9.82 – -10.97 -10'; 9. ,,7 10.82 10.19 10.42 8.30 9.23 8.72 10., 8.94 9.49 10.7; 9.23 6.38 8.96 8.89 PERCENT CHANGE AFTER 6 MONTHS -10.3 9 MONTHS 12 MONTHS -11. 37 -17.0' -1.48 6.34 12.91 17.68 4. ,,8 -0.67 .67 6.64 11.16 24.93 -1. ,,8 -6.10 .97 11. 84 27.3, 29.36 -2.13 2.36 8.83 1'.86 23.07 10.96 11. o 13.03 3.28 0.39 6.18 14.95 -3 ;90 -0. 4 6.42 b.96 26.32 -8.24 7.0; 16.23 26.34 36.,2 -.. 91 19.10 30.24 -6.94–''-'-4–62 34.68 . 10-24 '.10 -0.76 12.93 10.0; -;.68 16.,9 14.37 -1'.23 20.9 6.69 -0.70 10.11 6.46 11. 88 10.88 -16.28 -,.39 4.40 -0.03 -7.;7 -1;.04 0.88 3.71 -6.69 -10.26 -6.36 -2.3, 4.16 -13.11 -14.10 .08 11.14 7.71 9.79 -3.07 -13. ,0 2.37 -,.86 -,.93 -4.02 -9.60 -3.12 -0.38 -6.68 3.08 The table shows the 31 prior instances where the six-month trading range for the Dow dropped below 11 after having been above that figure. It also shows the subsequent percentage change of the Dow after six months, nine months, and twelve months. It is true that previous bear markets have often been preceded by such trading ranges. Thus, the 1962 bear market was preceded by a narrow trading range for the six months ended July, 1961, the 1966 bear market by such a range ending in March, 1966, and the 1970 bear market by a narrowly confined period ending in February, 1969. However, in many cases, such protracted trading ranges have been only consolidations in on- going bull markets. This was the case for the periods ended June, 1951, September, 1953, July, 1963, and July, 1971. The most recent'instance of a narrow trading range, the one ended June, 1979, was somewhat ambiguous. It produced a somewhat lower market nine months later at the March, 1980 low, but the recovery thereafter was fairly steep. The average percentage changes for six months (2.5) and nine months (4.1) after narrow trading ranges are almost exactly in line with normal expectations based on 55 years of market experience. The average percentage change for twelve months (6.6) is slightly greater than the normal expectation. The market has moved up following such trading ranges 55 of the time over six months, 58 of the time over nine-month periods, and 61 of the time over twelve-month periods. All these figures are just about in line with normal expectations. It is difficult, therefore, on the face of the evidence, to assert that the current trading range, in and of itself, has any particular predictive significance. Dow-Jones Industrials (1200 PM) 951.19 S & P Composite (1200 PM) 130.02 Cumulative Index (2/5/81) 1032.46 AWT sla ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No stotement or e)(prelon of opinion or ony other motter herein contolned IS, or 1 to be deemed 10 be, dlrectl)' or Indlredly, on offer or the soliCitation of on offer fa buy or sell any security referred to or mentioned The maller IS presented merely for the converlenC(; of the subscriber While we believe Ihe sources of our information to be reliable, we In no way represent or guaranlee the accuracy thereof nor of the stalements mude herein Any odlon to be token by the subSCriber should be based on hiS own Iflvestlgotlon and Informollon Janney Montgomery SCOII, Inc, as a corporal lon, and lIs officers or employees, ma)' now have, or may loler lake, pOSitions or trades In respect 10 any securities mentioned In thiS or any future Issue, and such postllon may be dlfferenl from any views now or hereafler elprcssed In Ihls or any other Issue Janney Montgomery Scotl, Inc, which 15 r'glstered wllh the SEC as on Investment adVisor, may give adVice to ItS I!weslment adVisory and othel cus.tomcls Independently of any sotements mode kl thl or In any olher Issue Further Information on ol'lY eOJf\t'f mentioned herein IS (wolk!.ble 01'1 request —

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Tabell’s Market Letter – February 13, 1981

Tabell’s Market Letter – February 13, 1981

Tabell's Market Letter - February 13, 1981
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TABELL'S MARK.ET. LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANO. INC MEMBER AMERICAN STOCI( eXCHANGE February 13, 1981 Anyone who has spent some time in the securities industry is used to being greeted with the ques- – – tion,. Whatith!nn.ark-!ioing–BaQk illthe d!!rl5 'ages ;hen. we-Jirst, enterectthe 'profession-, the- question had a very specific meaning. It basically asked for the change in the Dow-Jones Industrial Average. In those simpler days, before the invention of the computer, and prior to the invasion of Wall Street by refugees from mathematics departments, the Dow-Jones Industrial Average was just about all there was. It dated back to 1884, when Charles Dow first compiled a list of 12 (later 20, then 30) stocks and utilized their average price as a market indicator. Mr. Dow's original average has subsequently been severely criticized on a number of grounds involving, among others, the inclusion of only 30 stocks, the choice of those stocks, the relative weighting method, and the unscientific method of adjusting for splits. Other market indicators have emerged, including the capitalization-weighted SliP 500 and NYSE indices, along with a host of others. The advent of the computer, and the fact that almost all securities trades are now on line to EDP equipment, has made possible the calculation of averages and indices in limitless variation. No longer restricted to the relatively few stocks that Dow and his staff could calculate by hand, we now have averages comprising individual prices of in excess of 5000 securities. What Dow was doing when he first calculated his average, of course, was following a statistical procedure that goes back into the dimmest reaches of mathematical antiquity. The creation of an average was then, and remains, an attempt to describe a disparate group of numbers bymeans of a single number. This remains true today, regardless of how many stocks an average may include or how sophisticated its calculation may be. It remains a reference to a of quantities and is a form of mathematical shorthand, an attempt to pinpoint one property oTUiiit particular group. Only a single property, however, is described. Consider these two groups 102, 96, 100, 104, 98, and; 10, 350, 5, 132, 3. One does not need to be a mathemetician to realize that the two groups are very different. Yet they have one attribute in common. The average value of each is 100. –fn-OIder-toquantify-the-diHerenee-bet-ween-the-secGndgroupandthefirst.we-needLto-examine– -. another property of groups of numbers — variability. What obviously distinguishes the second group . above is that it is a good deal more variable. This same concept of variability applies to changes in averages over time. Consider an average of three stocks, each selling at 100. If one moves to 104, another to 102, and the third stays the same, their average would have moved to 102. If one doubles and another declines to 6, with the third remaining the same, the new average will also be 102. The dimension within which the component stocks have varied over time, however, is quite different. Which brings us back to Dow. Even in the 1880's, Mr. Dow was smart enough to realize that if stocks varied widely in disparate directions, the concept of an average would be meaningless. He knew intuitively that such was not the case. Stocks tend to vary in harmony with each other, and, therefore, as Dow well knew, an average would be a useful tool. In mathematical terms, this property is called covariance, and the fact that stocks possess it was rediscovered in the 1960's and 1970's by mathematicians armed with computers. The fact that the rediscovery was not particularly earth- shaking was unfortunately lost on many of them. All of the above rambling is intended to lead us in the direction of a sermon on the current stock market. The recognition that stocks tend to move together goes back to Dow, and this tendency certainly continues, in some degree, to be a fact. There exists some evidence, in our view, however, that such may be less the case in recent years than has been true in the past. The extent of co- variance in common stock prices, in other words, may be diminishing, slightly and imperceptibly . perhaps, but to a degree significant enough to affect portfolio behavior. A recent instance that can be documented is the period 1976-1978, during which time, in general, large-capitalization stocks tended to decline significantly while smaller stocks advanced sharply. Intuitively, based on our own experience, there has been no recorded instance of comparable behavior. We are unable to quantify this suspicion, but we strongly believe it to be true. In the most recent past, the last couple of months, we have seen the averages do eSSentially noth- ing. This would lead one to believe, given a high degree of covariance, that most stocks were doing nothing at all. Such has not been the case. Energy stocks have been declining sharply, while other issues have been moving ahead. This is a lack of covariance which, again intuitively, we suspect may not often have been present during past periods, such as those enumerated last week, when the averages moved in s narrow trading range. One of the things that makes the stock market so fascinating is the fact that it possesses many properties which remain unchanged over time. Others, however, subtly become altered. In the case of variability, we may presently be witnessing such an alteration. Dow-Jones Industrials (1200 PM) 934.73 S & P Composite (1200 PM) 127.19 Cumulative Index (2/12/81) 1025.41 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL AWT sla No statement or e)(preSSlon of opinion or any other moIler herein contolned i, or IS 10 be deemed to be, directly or indirectly, on offer or the OII(llollon of on offer to buy or sell any secunty referred to or mentIOned The motter IS preented merely for the CO!'lvel'lenC of the subSCriber While oNe believe the sources of our Informa1,0 to be reluJble, we If'I no way represenl or guarantee the accuracy thereof nor of the tatement mude herein Any action to be token by Ihe subSCriber hould be based 0 hiS own investigation and Informollon Janney Montgomery Scott, Inc, as a corpo'atlon, and lIS of/'cers or employees, may now have, or may later toke, poslhons or trades In respect to any secufltles mentioned If'I Ihl or any future Issue, and SiJch pOSition may be ddferenl from any views now or hereafter expressed In llIs or any olher Issue Janney Montgomery Scolt, Inc. whICh IS registered With the SEC as on Investmenl adVisor, may give odvke 10 ,ts ,veslment adVISOry and olhe! customers Independently of any statements mode, thiS or In any olher Issue Further mformOI,on on any security men honed herein IS avatlable on request

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Tabell’s Market Letter – February 20, 1981

Tabell’s Market Letter – February 20, 1981

Tabell's Market Letter - February 20, 1981
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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 February 20, 1981 The long-term implications of President Reagan's economic address to the Nation must be viewed as constructive. However.- tne–iriIfiiirreacUon -of the-stockrriarkeLyesterday. reflectea -an-atmospnere of – ..,. skepticism as the Dow-Jones Industrial Average closed at 933.36, down 13.74 points. The Dow-Jones Industrial Average has, since last July, been contained in a trading range deiIDed by a low of 908.45, posted on December 11, 1980, and a high of 1004.69, posted on January 6, 1981. As this letter has suggested in recent weeks, within the framework of this trading range, individual components of the Dow are, by no means, acting in concert and are, in fact, in many cases, reflecting quite dissimilar patterns. Obvious examples of this apparent dichotomy would include the constructive relative strength of such securities as Alcoa, Owens Illinois, Union Carbide, and U. S. Steel, compared with the poor price performance of stocks such as Exxon, Standard Oil of California, and Texaco. – COMPUTED TREND RNRLTSIS – DJIR F'6 10 'gal III'II! jlllllllllill I1II111111111 1 11111111 I II11I1I111 1l l l-lt1 1 1Illrll 1 l . —— – Iltlrllllll 32..20, —- —1 – — –. I I I II I II1I1 .Jm. .1lJL —- .ilL 't't llao Fn 1980 y J!IBD 1..lJN 1900 LJUl !98(1 IU; 1980 lSEP 1980 OCT !9SC llllv 1981' IOfC lqs(1 JIll! 'qa' 1Ell '011' To put the past 12 months in proper perspective, an inspection of the above graph of the daily high-low-close of the DJIA is useful. As can be seen, the DJIA, in the span of 226 trading days, has advanced from a low of 759.98 on March 27. 1980, 244.71 points to a high of 1004.69 on January 6, 1981. THs 32.20 advance in the market since March of last year to early January of this year was, by any historical measure, both in terms of magnitude and duration, a respectable, but by no means unprece- dented, move. Since the January 6, 1981 high of 1004.69, the Dow has corrected 72.12 points, or 7.28, in 35 trading days to a recent low of 931. 57 on February 13, 1981. This 29.88 correction of the recent ad- vance would appear, on the surface, to represent a normal one-third to one-half correction of the move. But, clearly, that does not tell the whole story. Serious technical damage has been done to the energy- related sector with corrections in individual stocks in this area in excess of 30 not uncommon. The fact that the general market has supported this amount of concentrated selling pressure to date has been constructive. The ability of the stock market to continue to absorb this pressure, must, however, be monitored closely. Dow-Jones Industrials (1100 AM) 934.13 S & P Composite (11 00 AM) 126.60 Cumulative Index (2/20/81) 1017.19 ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL RJSsla No statement or expression of opinion or ony other motter herem contained 15, or 15 to be deemed to be, directly or indirectly, on offer or the SOI,cllol.on of on offer to buy or sell onr. seamty referred to or mentioned The matter IS presenled merely for the convef'lence of the subscrIber WhIle we believe Ihe sources of our Informo han 10 be rellob e, we In no way represent or guarantee the accuracy thereof nor of Ihe stotemenls mude herein Any act.o… to be tal-en by the subscriber should be based on hh own Investigation and Information Janney Montgomery Scott, Inc, as 0 corporat.an, and .ts offICers or employees, moy now have, or may loter toe, positions or trades In respect to ony securll1es menhoned In th.s or any future ISUe, ond such POSition may be different from any views now or hereafter expressed In Ih,s or ony other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to lIs rnvestment adVISOry and othe, customers Independently of any statements mode In th,s or In any 01 her Issue Further information on any security mentioned herein IS ova liable on request

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Tabell’s Market Letter – February 27, 1981

Tabell’s Market Letter – February 27, 1981

Tabell's Market Letter - February 27, 1981
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TABELL'S MARKEY' LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08!540 DIVISION OF' MEMBER NEW YORK STOCK EXCHANoe, tNC MEMBER AMERICAN STOCK EXCHANQe February 27. 1981 —r- .. .- .HQ'me;-hi)ine'IJ.AalJgEr.-'7.— — ! ..—– Familiar Ballad z-.r— It is the duty of the market letter writer to report on a regular basis on the meanderings of the stock market. Under these circumstances. he is required. occasionally for protracted periods of time. to find new ways of stating the fact that the market has been doing — nothing. Such has been the case in the recent past. Ever since last August. when the Dow-Jones Industrial Average began its confinement to a range. roughly between 900 and 1000. this letter has been faced with the task of finding creative ways of commenting on the internal action of a market which has. essentially. been moving sideways. Since that internal action has created a few items of interest in the past month. we are due for one more episode in the ongoing saga. We last examined the Dow's trading range in some detail on January 23. noting at that time that it had begun on August 15.when the Dow reached 966.72. 27 above its level of late March. The period between August 15. 1980 and January 6. 1981. we noted. could be described as a series of five downward. then upward. swings. the last of which achieved a high of 1004.69. None of these swings required longer than 16 trading days. and none involved a percentage change of greater than 11 . In most cases. the percentage change was considerably lower. In commenting on this sort of action s month ago. we said. 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 gree of certainty. Indeed. we see the evidence as noLbiIlg,co!,!pletely in, and we tlltl!),t-,i,sc.. –I precisely that condition of uncertainty which market action has been reflecting since mid-August. Unfortunately. we do not. at this stage. find ourselves much closer to a resolution to the dilemma. What has happened since January 6 is that a sixth cycle. within the confines of that larger trad- ing range. has occurred. After attainment of the January high. the Dow declined over a 14-tradingday period to reach a low of 938.91 on January 26. Following that occurred three separate cycles of short-term rallies and retreats all with highs in the low 950's and lows in the lower 930's. Following the familiar principle of wheels within wheels, we aChieved. over the last month. a trading range within a trading range. That particular phase may have come to an end this week. After spending a period of 18 trading days between the January 26 and February 19 lows. the market began to demonstrate some strength last Friday. On Wednesday, it closed at 954.20. better than any previous peak achieved since the range began. This occurred at the end of a day when it had managed to traverse just about the entire range on an intraday basis. This was followed by an only mildly erratic rally on Thursday which achieved a close of 966.81. a decisive breakout from what appears to be a month-long base. Modest follow-through took place in trading early on Friday. At the moment. the upside implications of that breakout are not significant enough to /lid in solving the larger problem,. Another attack on the 1000 level appears to be a likely possibility. Beyond that. we can only wait and see if indeed such an attack occurs. and if so. what strength it is able to demonstrate. Positive breadth and volume on such a short-term upmove would obviously be plus factors. Even a rally to the 1000 level would probably not return most breadth indices to their highs of last September. Therefore. further extension of the rally in terms of both the averages and breadth would be desirable. Such extension might be predictable were the base to broaden while the move up took place. Such broadening would logically occur around the 970-980 level. Meanwhile, the process of the present rally phase will simply serve to broaden the larger formation and increase the importance of the ultimate breakout of that formation whenever it should take place. It is this breakout which should determine the course of the market for the bulk of 1981. Dow-Jones Industrials (1200 PM) 970.65 S P Composite (1200 PM) 130.49 Cumulative Index (2/26/81) 1036.51 ANTHONY W. TABELL DELAFIELD. HARVEY. TABELL AWTsla No 'Iatemfmt or expression of opinion Qr any other motter herein contomed IS, or IS 10 be deemed to be, directly or indirectly, an offer or the sollcllollon of an offer 10 buy or sell any security referred to or mentioned Tile mailer 15 presented merely for the conver-Ience of the 5ubscnber While e belteve the sources of our Informo- tlon to be relloble, we ,n no woy represent or guarantee the accuracy thereof nor of the stotements mode herelll Any actIon 10 be taJ.-en by Ihe subSCriber should be based on h,s own mveshgotlon ond IIlformotlon Janney Montgomery Scolt, Inc, os 0 corporatIon, ond lis off,cers or employees, may now have, or may later laJ.-e, pos1tlons or trodes III respect to any SeCUritIes mentIoned In thIS or any future Issue, ond such posItIon may be d,fferent from ony vIews now or hereafter expressed In this or ony other Issue Jonney Montgomery Scott, Inc, whIch IS regIstered WIth the SEC as on Investment adVIsor, moy gIVe adVIce to Its Investment adVISOry and other customers ,ndependently of any statements mode In thIs or ,n any other Issue Further InformatIon on any security men honed herein IS ovalloble on request

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