Viewing Month: June 1981

Tabell’s Market Letter – June 05, 1981

Tabell’s Market Letter – June 05, 1981

Tabell's Market Letter - June 05, 1981
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– TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VOR' STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE . r – – – ..- June 5, 1981 7, .-.. – We tried to lecture in this space last week on the apparent obsession of many commentators with hanging labels entitled bull market or bear market on almost every stock-market period. This obsession apparent- ly stems from the tendency of many investors to equip themselves impeccably to handle the investment en- vironment of the previous decade along the lines of the accusation often levied at generals, who, it is said, are always superbly prepared to fight the last war. This preoccupation with overall market trends obviously has its roots in 1974, which culminated the second of two bear markets, both more severe than anything that had been seen since the 1930's. Inevitably, one of the by-products of this experience was the emergence of identifying bull markets and bear markets as a growth industry. The fact that there have been, for seven long years now, no bear markets of the 1970 or 1974 stripe — or, for that matter, no bull markets of the pre-1968 variety — has not deterred these savants from continuing to issue their fearless predictions. For so long a such predictions are issued, we would suspect, correctionary market phases will continue to assume unusual shapes as was the case in the long-but-selective decline between 1976 and 1978, and the sharp but extremely short corrections which occurred in the fall of 1978, the fall of 1979, and the spring of 1980. We tried last week, by tracing various market averages, to provide a more accurate description than single-word nomenclature of what has happened over the past year or so. What we tried to suggest was that the period beginning at the end of March of last year and running through last November, and the market from November to date have been two entirely different investment environments. The first period is entitled, at least, to the label of mini-bull-market (the DJIA was up some 30), and the second quite something else again (the 3/26/80- 11/19/80- Dow was up slightly and the S & P 500 down slightly.). Perhaps 11/19/80 4/29/81 a better way than looking at averages of understanding the dif-. .–Decile.,,…;;Change ChangeJ – —–fer-en-ce-is–t-G-eGmpat!e–th)–per-for-maRce-of…Jn-di.vi-d-ualstoGk.sov..er the two periods. This is done in the table at the right which 1 f265 49.2 summarizes the price performance of 514 stocks over the two time 2 77.7 25.1 frames. The stocks selected are those contained in the S & P 3 59.0 18.6 500 plus its ancillary groups throughout the entire period. The 4 45.5 13.2 starting and ending date for each period is selected to coincide 5 36.2 9.1 as closely as possible with recent major turning points in the 6 29.3 4.4 averages. For each period, the 514 stocks are divided into 7 23.0 – 1. 0 deciles, i.e., the 10 of issues performing best, the 10 com- 8 15.9 – 6.3 prising the next best performers, etc., etc. For each decile, 9 9.2 -14.4 the mean percentage change is given. 10 4.0 -31.3 The superiority of the April-November period as an investment environment is an obvious one. The 51 best-acting issues showed an average increase of 128. 495 of the 514 issues were up over the period, and it is necessary to locate the absolutely worst-performing decile to find a group that shows a loss. What, however, of the second period The answer is that when one looks at the breakdown of individual performances, it wasn't all that bad. 329 of 514 issues advanced. It is necessary to get well into the seventh decile before a loss is seen. The performance of the top half of the list is eminently satisfactory considering the fact that it includes appreciation only, not dividends, and the percentage changes shown are for only a six-month period. If one has any faith whatever in the ability of investment managers to select stocks and to avoid, at least in part, those issues which show severe losses, it made sense, during the six months in question, to retain a reasonably agressive exposure to equities. The point is that the period since last November is not at all atypical of the market of the last seven years. Provided that one is willing to adapt a time frame of as long as six months, it would be difficult to find I'eriods over the past seven years, in which the distribution of returns were significantly worse than that shown in the second column of the table. The point we tried to make last week is that we do not see, in the current technical patterns on individual issues, the emergence of any sort of market which would be contrary to the general experience of the past seven years. We think it more sensible to think in these .terms rather than in terms which may have become obsolete a decade ago. Dow-Jones Industrials (1100 AM) 987.39 S & P Composite (11 00 AM) 131. 04 Cumulative Index (6/4/81) 1159.39 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL AWT sla No statement or expression of oplfllOn or any other matter herein tontolned Is, or IS 10 be deemed 10 be, directly or ind,rectly, on offer or the soliCitation of on offer to buy or sell any security referred to or mentioned The motter is presented merely for the convelIence of Ihe subscrlber While -He believe the sources of our informa- tion 10 be reliable, we In no way represent or guarantee the occurocy thereof nor of the stotemenls mude herein Any ochon to be token by the subSlrtber should be bOed on hiS own Investlgotlon and InformatIon Jonney Montgomery Scort, Inc, os 0 corporation, and Its offIcers or employees, moy now have, or moy tater take, pOSItions or trades In respect to any securitIes mentIoned In thiS or any future lSue, and such pOSition may be different from any views now or hereofter epreed In Ih,s or any olher Issue Janney Montgomery Scott, Inc, whICh IS reglllered With the SEC 0 on Investment odvlor, moy give adVice to Its Investment adVisory and other customers Independently of any slote,en!s made In Ihls or In any other lSue Furlher information on any securlly mentioned herein IS available on request

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Tabell’s Market Letter – June 12, 1981

Tabell’s Market Letter – June 12, 1981

Tabell's Market Letter - June 12, 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 June 12. 1981 -As the-surrifuer montnsbegin .–comments are beginning-to emerge()flthe ex-pectlltins'o-f the traditional summer rally. As long-time readers of this letter are aware. we have examined this phenomenon for some years. The following table.updated through 1980.shows the number of advances and declines for the one- and two-month periods ended each month of each year from 1926 through 1980. together with the average percentage change for the period. One Month Per iods (1926-1980) Two Month Periods (1926-1980.) End Month Advances Declines Average Chg. Advances Declines Average Chg. January February March April May June July August September October November December 36 28 30 31 28 28 36 35 22 28 33 41 19 1.08 27 -0.16 25 -0.11 24 1.12 27 -0.79 27 0.93 19 1. 96 20 1. 42 33 -1. 33 27 -0.58 22 0.56 14 1. 27 – – TOTAL 376 284 0.45 37 18 31 24 26 29 33 22 32 23 26 29 35 20 38 17 32 23 25 30 32 23 38 17 385 275 2.48 0.93 -0.36 1.08 0.55 0.10 2.84 3.53 0.05 -1.87 0.01 –1. 86 — 0.93 A preliminary look at the table. indeed. supports the notion of a probable summer rally. The average monthly advance for the Dow over the period has been .45. whereas the average perform- ance in July is an advance of 1. 96. more than four times as great. Likewise. the average advance of 3.53 for the two months ended August is a good deal larger than the average two-month advance. It would. indeed. appear that the expectation of an advancing market during July and August has some solid grounding in fact. There exist a few reservations. The first factor which needs to be pointed out is that a large part of the high average advance for the summer period rests on the accident of the 1932 bottom's having occurred at the end of June. Thus. July and August of that year produced the largest twomonth advance in stock market history. an astounding 70 rise. If this single year is eliminated from consideration. the results for July and August are much closer to normal. Secondly. while it is true that July and August do show significant pluralities of advancing months over declining months. it must be remembered that advancing periods tend to outnumber declining ones over the 52 years by almost three to two. When standard tests of statistical significance are applied. the period with the clearest seasonal action is the month of December. which is why this letter has always emphasized the importance of the year-end rally. Likewise. the tendency toward a declining market in September is statistically more significant than that of a rise in July or August. Interestingly enough. none of the other months show any discernible seasonable pattern' whatsoever. Frospects for a summer rally in 1981 are. in many ways. more obscure than usual. The bulk of listed issues. particularly basiindustry and interest-sensitive stocks. continue to act constructively from a technical point of view. Set against this action. we have the energy-related issues. a major component of the market. which remain in downtrends with only tentative possibilities for forming a base at current levels. Therefore. while we think it continues to make sense to maintain a fully invested position in selected stocks. there appears to be some doubt as to whether the traditional explosive form of the summer rally will actually materialize. ANTHONY W. TAB ELL Dow-Jones Industrials (12 00 PM) 1005.42 DELAFIELD. HARVEY. TABELL S & P Composite (12 00 PM) 133.59 Cumulative Index (6/11/81) AWTsla 1180.36 No statement or expressIon of opinIon or any other matler herem contOlned 1, or is 10 be deemed to be, directly or indirectly. on offer or the sollcitotlon of on offer to buy or sell ony security referred 10 or mentioned The molter ,s presented merely for the converlencc of the subscrIber. While .ne believe the sources of our Informa tlon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herem Any action to be token by the subscriber should be bosed on his own Investigation and Information Janney Montgomery Scott, Inc, as a corporahon, and lIs officers or employees, may now have, or may later take, poslhons or Irodes In respect to any SeCUrities mentioned In thiS or any future Issue, ond such POSition moy be different from any views now or hereofter e1pressed In thiS or any other Inuc Janncy Montgomery Scott, tnc, which IS registered With the SEC os on mvestmenl odvlsor, may give adVice to Its mvestment adVisory ond olhel customers Independently of ony statements made m Ih.s or In any other ISsue Further information on al'ly seC\Jlty menhoned herein IS ovoiloble on request l

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Tabell’s Market Letter – June 19, 1981

Tabell’s Market Letter – June 19, 1981

Tabell's Market Letter - June 19, 1981
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TABELL'S MARKET LETTER I 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMeeR New VORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGe June 19, 1981 Many analysts have a tendency to regard market forecasting as an art which follows immutable rules — rules laidaown- at 'too beginnIng -of tlniewniclf -remainf6rever iil-effectThere eXists, -certainlY;-an-'i!lement of permanence in stock-market behavior, but one of the things that makes study of the market particularly faSCinating is that, in subtle ways, the rilles of the game keep changing, and one must remain always on the alert for new phenomena. One such emerged in 1976-1978. For years, analysts had been studying market breadth, the number of stocks advancing and declining, as a clue to the market's future direction. At market tops, breadth indic'es would fail to confirm new highs in the market averages, and after some delay, the averages and breadth would usually turn down together. In the 1976-1978 period, we had a case, unique, to our knowledge, on the historical record. where the averages underwent a full-scale bear market but breadth did not move down at ail and actually improved during most of the period. Interestingly enough, what has been going on recently bears some resemblance to what took place at that time. DOW JONES INDUSTRIRL RVERRGE DOW JONES INDUSTRIRL RVERRG DRILl BRERDTH I-I U BRERDTH I.I ., (' t,/; ,. ,r,\\J' I . \l ' l – .. , \ '; i ,. , \ , ,I ' , , i\ ,, 11\I'I ,'11 'i \\ \ ,'\ , ,!I.'Vv/,I/\,. /\ \ ' i, I ' , ,t\ ,; ! .'.-. t' ,/, , ' ,/ \, 1,'1, ' . I , ,!I '. /oJ',) f' n nLT 16 76 C 76 FEB 77 I1AR 71 Y 77 .AJN 77 77 T BO 'IOV 80 DEC 80 81 FEB 81 H; 81 PR 81 r 81 .LIN 81 The charts above show the action of the Dow together with daily and weekly breadth indicators in the periods September, 1976- July, 1977 and September, 1980 to date. As can be seen, from January, 1977 onward, the Dow moved irregularly lower. Weekly breadth, however, moved in an irregular uptrend from January through May, and then, on only a small rally in the Dow, sailed ahead to new highs. Daily breadth, although the January-May downtrend was steeper, did approximately the same thing. Most recently, what appears to be a similar breadth pattern has been developing. Between September, 1980 and February of this year, both daily and weekly breadth moved in an irregular sort of downtrend despite new highs in the Dow in November and January. Since the February low, however, weekly breadth has totally cancelled this potential divergence and moved ahead to new highs, most recently posting a new peak despite the failure of the Dow and of the S & P to do so. Daily breadth figures have not yet confirmed this sort of action but have recovered almost all of the ground lost since last April and is not that far away from confirming an uptrend from its December, 1980 low. If the 1976-1978 patterns follow through, the implications may not be that bullish for the averages. In- deed. following July, 1977, the Dow dropped some 150 points to its March, 1978 low. Good breadth action prevailed throughout this period, however, and there existed a bear market in the averages but not in the average stock. That market was. in other words, one where an appropriate strategy was to remain fully invested as is, in our view, the appropriate strategy today. Dow-Jones Industrials (12 00 PM) S & P Composite (1200 PM) Cumulative Index (6/18/81) 997.34 132.16 1178.97 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTsIa No stclemenl or expreSSion of op'nion or any ather matter rereln contained IS, or IS to be deemed to be, directly or ,nd,rectly, on offer or the solICitation of on offer to buy or sell any security referred to or menlloned The mat'er IS presented merely for the converlena of the subscriber While we believe the sources of our m(ormo- tlon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herem Any aellon to be loken by the subscriber should be based on hiS own Investigation and Information Janney Montgomery ScOIl, 'nc, 05 a corporation, and Its officers or employees, may now have, or may later take, poslhons or trades 1M respect to any secuntles menhoned In thiS or any fulure Issue, ond such POSition may be different from any views now or hereafter expressed In thu or any other issue Jonney Montgomery Seo't, Inc, which IS registered With the SEC 05 on Investment odvlSor, may give adVice to Its Investment adVisory anrl o'her customer Independently of any statements made In r;ls r In any other Issue Further information on any securlly mentioned herein .s avoilable on request

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Tabell’s Market Letter – June 26, 1981

Tabell’s Market Letter – June 26, 1981

Tabell's Market Letter - June 26, 1981
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,..-, …. '-lo TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE June 26, 1981 '–Veteran-observers are well aware-that the-stocKmarket, at variOUS poiritslntime,–tenas tobecome obsessed with one particular area of the financial scene. It is obvious, at the moment, that the market's current obsession is with interest rates and the money supply, and almost every move, up or down, tends to be explained, not entirely without justification, by developments on this front. It is interesting that the market has chosen almost totally to ignore the basic fiscal policy changes being proposed by the Reagan Administration and now in various stages of progress through Congress. It is, in our view, at least an arguable premise that the final form taken by these changes will have a considerably more far-reaching effect on corporate earning power and thus on corporate market value than will the day-to-day fluctuations of interest rates which are the market's current major concern. There is .. for example, the entire approach which has become embodied in the catch-all phrase, supplyside economics. The basic supply-side claims, it seems to us, have profound implications for the stock market. The controversial assertion that supply-side tax cuts will ultimately result in increased tax revenues and thus reduced fiscal pressure is justified on the premise that the proper application of tax reduction will stimulate capital investment and thus productivity. This can only work, it would appear, through increasing corporate cash flows in many areas, thus producing a fairly profound effect on capital values. This is an area that should, at least, be of direct interest to the stock market. These supply-side claims are opposedby two equally vocal but totally different groups, one on the political left, the other on the right. The first group is comprised of the aging neo-Keynesians who dominated fiscal policy thinking for so many years and whose economic models are totally at variance with the concept of supply-side stimulus. The second group consists of balance-the-budget-beforeanything-else conservatives who are unwilling to assume the inflationary risks implicit in supply-side tax cuts, which might not perform as advertised. What is lacking in all three participants in the debate, the two above plus the supply-side proponents, is any noticeable sense of humility. One would -suppose-t-ht-economisthose-past-forecastin-record,–hkehat-of-market-analysts-,-falls-comliderllblr— short of perfection, would be aware that they practice an inexact science. and it is an unfortunate fact that no one knows, with any degree of certainty, what the effects of supply-side tax reduction will be, including those, pro and con, who are most vocal in expressing their opinions. It is this element of uncertainty, in our view, which may constitute an important barrier to the stock market's upside progress. Meanwhile, various sub-elements of the proposed tax changes seem to be of basic importance as far as the stock market is concerned. One, OfcoUllse, isapossible reduced level of capital-gains taxes, a possibility raising all manner of theoretical questions which space prevents discussing in a single issue of this letter. Another change of significant importance entails revised depreciation allowances, centering around what was originally 3-5-10 and what has now, apparently, become 3-5-15. We cannot avoid interjecting our own view that it is in this area that the administration's tax proposals find themselves on the shakiest ground. Depreciation, it should be remembered, is a provision involving recovery of the cost of an asset over the useful life of that asset. We fail to understand how an administration basically committed to an inherent skepticism regarding the beneficient powers of government can believe that the useful life of an asset can be determined by government fiat. It certainly cannot be gainsaid that present depreciation provisions fail to provide for recovery of a long-term asset's cost in an inflationary environment. The problem with monkeying around with governmentdecreed useful lives, it seems to us, is nothing more than an attempt to introduce a countervailing unreality as an antidote to another unreality. More fundamental cures for the disease exist. One such has been proposed by a pair of Harvard academics who propose replacing depreciation taken over a period of years with a one-shot allowance for an asset's cost appropriately discounted over its useful life. Arcane as this proposal may sound, a moment's thought will convince one that it has the undoubted merit of adjusting for future inflation ,regardless of amount, since the entire depreciation allowance is made available in the same dollars used to purchase the original asset. Another proposal which would work equally as well would be provision for allowing the mark-up of existing assets at various intervals to replacement value less accumulated depreciation and re-adjustment of depreciation schedules to recover that amount over the asset's remaining useful life. Despite these quibbles, however, there exists in this quarter basically very little quarrel with the administration's tax packages. It is our view, based, we freely admit, as much on hope and optimism as on analysis, that the ultimate results of supply-side tax reduction could be pleasantly surprising, not only to the recipients of the tax cuts, but to the economy as a whole. This pleasant surprise, in turn, could result in a surprisingly good equity market. Dow-Jones Industrials (12 00 PM) 994.67 S & P Composite (12 00 PM) 132.80 ANTHONY W. TAB ELL DELAFIELD, HARVEY. TAB ELL AWTsla No statement or cxpreSllon of opinion or any alher moffer herein conta,ned is, or 15 to be deemed to be. directly or indireCTly, on offer or the 10l\clloloon of on offer to buy or sell any security referred to or mentioned The motter IS presented merely for the converlence of Ihe suhscrlber While oNe believe the sources of our mformatlon to be rehoble, we In no way represent or guaran'ee the accuracy thereof nor of the statements mude herein Any action 10 be taen by the subscriber should be based on his own Investigation and Information Janney!t0ntgomery Scotl, Inc, as a corporation, and liS officers or employees, may now have, or may later lake POSitions or trades In respect to any securities mentioned In thls–or any future Issue, and such POSition may be d,fferenl from any views now or hereaher expressed In thl or any other Issue Janney Montgomery Scott, Inc, which IS r;;glstercd With the SEC as an Investment adVisor, may give adVice to Its Investmen' odvlso'Y al'lrl olhel customers Il'Idependently of ol'ly statements mode In thiS or In any other luue Further information on any security mentIOned herein IS availablE' on request

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