Tabell’s Market Letter – May 29, 1981

Tabell’s Market Letter – May 29, 1981

Tabell's Market Letter - May 29, 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 EXCHANQe – May 29, 1981 For the beleaguered stock-market forecaster, certain markets are more forglVing than others. As -' —1 an exam-pIe of an unforgiVing market we'-reCal1theonewhich'emerge(rin-J.anu'fry- a -few-ye4rs a goT — shortly after we had issued our year-end forecast. In that forecast, one of the less memorable of such efforts, we ventured to suggest that the ensuing year would be an inside year, in which the Dow- Jones Industrial Average would not make a new high. The Dow-Jones Industrial Average did, indeed, make a new high somewhere around the second week in January and proceeded, without pause for breath, to move some 50 points higher. An equally unforgiving market was the period from March through November of last year. Over a six-month times pan , the Dow-Jones Industrial Average moved up some 32 and the S & P 500 by 43. Any forecast issued at the beginning of this period, in order to possess any validity whatsoever, had to be unreservedly optimistic. A prediction of any other type turned out to be extremely difficult to explain away. This was not a particularly uncommon problem, since, as of April 18, 1980, according to one survey, more than 56 of all market forecasters were, in fact, bearish. The market since November, however, has been considerably kinder to those of us in the prediction dodge. Those who were bullish last fall can triumphantly point out that the Dow-Jones Industrials, just a month ago, achieved a new bull-market high. Those who were bearish can trumpet indignantly that the Dow-Jones Industrial Average is not the market and that the broader Standard & Poors 500 posted a high, as yet unequaled, back last November. Both, of course, are correct. We doubt that this proves anything other than the fact that the market of the past six months has been a very dif- ferent one than that of the previous six months, and that, as we have often suggested, the temptation to pin a label of bull market or bear market on every stock-market period is one best avoided by those not catering to the simple-minded. For the record, the table below presents the levels of a half a dozen market indices at various atgioints s.ince March.of 1980. In addition,to three widely-followed averages, we have included – .. the'New York Stock Exchange Financial Index, the Sfanaard & Poors Oll-Composite, and a recent con'- struct of our own, the S & P 500 with oils removed, which we charted in this space a few weeks ago. 3/80 Fall/80 12/80 1/80 1-2/81 4/81 5/81 Low High Low High Low High Low Recent Dow-Jones Industrials 759.98 S & P 500 98.22 ASE Index 215.69 NYSE Financial 51.64 S & P Oil Composite 233.7 S & P 500 Ex Oils 87.46 1000.17 908.45 140.40 127.36 370.75333.28 70.7263.74 392.0 344.7 114.81106.20 1004.69 138.12 357.27 73.22 357.9 115.20 932.25 126.91 330.34 67.37 302.4 111.07 1024.05 137.11 368.50 76.62 308.9 123.50 963.46 129.71 349.65 72.79 268.4 111.96 993.14 133.77 379.77 76.64 269.4 122.60 The action, quite clearly, is diverse. The Dow, indeed, shows an unbroken pattern of higher highs and lower lows. The S & P 500, by contrast, peaked last fall and marginally broke its December low in January, remaining today not too far removed from that low. The American Stock Exchange Market Value Index for a while was exhibiting a pattern similar to that of the S & P 500, but has now destroyed that pattern by moving ahead to a decisive bull-market high. Nor has this sort of action been particularly restricted to speculative issues of the ASE stripe. The NYSE Financial Index, for example, generally composed of issues of blue chip quality, has consistently moved higher during the entire period and, in recent weeks, like the AMEX index, has moved into new high ground. The ex-oils Standard & Poors 500, while not yet at a new high, is within pennies of achieving one. As the table quite clearly shows, the stock market villains since last fall have been the oil stocks, with the S & P Oil Composite down 32 at its May low, and having barely advanced since. What are we to conclude from all this First, obviously, that it was a good deal easier to make money in the stock market between March and November of last year than it has been since November. The second conclusion, however, is that an optimistic attitude toward equities over the past six months has, indeed, been proper if duly accompanied by the caveat that it has been necessary to own the right equities. Implementation of such a policy since November has obviously required a relative reduction of exposure to oil-related issues. We think this exercise has some relevance for the future in that we do not see, based on currentlyavailable evidence, the immediate emergence of a market on which it will be easy to hang a bull or bear label. We do, however, see ample justification for the premise that such a market will treat owners of well-selected stocks at least as kindly as the last six months has done. We think, in other words, that a positive attitude toward common stocks is likely to be at least as profitable over the next half-year as it was over the last. Dow-Jones Industrials (12 00 PM) S & P Composite (12 00 PM) Cumulative Index (5/28/81) AWTsla 994.34 133.18 1164.32 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or (!XprCnlOn of oplnton or any other matter herein contolned IS, or 15 10 be deemed to be, directly or mdlfectly, on offer or Ihe OIlCllollon of on offer to buy or ell ony seCUrity referred 10 or mentioned The motler IS presented merely for the conver'lence of the subscriber While we believe the sources of our In(ormo hon 10 be reliable, we in no way represent ar guarantee the occuracy thereof nor of the s!atemenlS mude herem Any adlon to be token by the subSCriber should be based on hiS own inVestigation and InfOrmalion Janney Montgomery Scoll, Inc, as a corporal lon, and Its officers or employees, may now have, or may later lake, paslhons or trades In respect to any secufltles mentIOned In Ihls or any future ISsue, and such pOSItion may be different from ony vIews now or hereafter expressed In thiS or ony other ISlue Janney Montgomery Scott, Inc, whrch IS registered With the SEC os on Investment adVisor, may give adVice to Its Investment adVisory and other customers Independently of any statements mode In thIS or In any other Issue Further Information on any seCUrltymentloned hereIn IS available on requet

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