Viewing Month: September 1981

Tabell’s Market Letter – September 04, 1981

Tabell’s Market Letter – September 04, 1981

Tabell's Market Letter - September 04, 1981
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08S40 DIVISION OF MEMBER NEW YOAK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE September 4, 1981 One,of!h. 1JI0resote;j.c, sttistkal ocGuI'.renQesofAhepast w,.eek was that, on Wednesday, a 14-day movmg average of NYSE new lows, expressed as a percentage 'of issues-traded, moved above the five-percent figure. This is a level which, when it has occurred in the past, has possessed a certain amount of significance. This indicator, which we call a new low index, has moved above five percent only thirty previous times in the past 20 years, and it has done so as an accompaniment to every major and intermediate correction that has taken place in those two decades. Like any other indicator, it falls short of perfection, having occasionally moved above five percent when important downswings did not ensue. It has, however, proved to be an index worth watching. , The following table shows all of the occasions since 1962 when this series moved above toe five-percent threshold, together with the level of the Dow Jones Industrial Average on the first day it did so. The next two columns show the subsequent low for toe DJlA and the ultimate high for the new low index. The final column shows the percentage change between toe day the index first moved above five percent and that final low. –…. FH,ST CROSSING THfWUGH 5 HIGH rOR PERCENT NEW LO, EVENTUAL LOW NEW LOW CHANGE — ..D.-A–T-E—-. INDEX —— –D- -.lIA—– ——D,.H.. l — D.. -J1–A–. -IN-D-E-X- T–O—L-O-W- AF'R 4 1962 OCT –j 1962 JUN 4 1965 .0543 .0557 .O51 69.,.88 5i8.06 900.87 -lUN '26 196'2 28rI) I; , 196. JLlN 1 S'6 535.76 558.06 84('.59 .'289 -3.12 .0726 0.00 .189 -6.69 MAR 3 1966 .O51 9H.J ,55 M.,F' I 5 1966 911.08 .0599 -!. 70 MI'lY 5 1966 Oj4l 899. 77 MAY 17 196. 864. J 4 .lb43 -3.96 JUL '26 1966 .0571 8S!. l7 AUG 29 1966 767.03 .399 -9.99 SEP '29 1966 .0513 77'2.66 OCT 7 1966 744.3; .1539 -3.67 NOV '2 1967 .0500 864.85 N(lV EI 1967 849.7 .0589 .. 1.76 M'R '2 1969 .0516 930.9- APf, '21 1969 917.51 .0741 -1.44 SJUENE..l4611.996.969.. 00552.30.3 928.8 /1 JUL I;-13.\,1-o64(J J – 9 1969 801.96 8 -l.9 69,8 0-.-2-0 .2354 ,0690. .-13.66 il5 DEC '2 1969 .0524' 001;3'; DEC 17 1969 769.93 .149'2 -3.92 ,JAN 28 19/0 .0515 758.84 JAN 30 1970 744.06 .0839 -1.95 Af-'R 14 1970 .0508 780. i1,W 26 1970 (,,31 16 .31'23 –19.14 .JUN 25 1970 .0529 693.!J) JUL 7 1970 669.36 .0970 -3.49 AUG (, 1971 ,05j 850.61 AUl 10 1971 839.59 .Ob08 -1.30 OCT 28 1971 .Oj9 f137 II) NOV 1 Y 1.) I .- i 7 C1 7.97 .0849 –4./3 MAY 4 1972 .0509 937.31 M';Y 9 1972 q!5.12 .0582 -1.30 JUN FEB 15., 197 1973 .0504 .0524 94!J.97 978.40 JUL 20 1'f72 JUN 25 19;'3 '-110.45 809.13 .0675 .1678 3.75 –11.17 AUG 13 1973 .0501 8133.0 AUG 1973 851.90 .')608 -3.54 NOV 16 1973 .0533 B91. n flEC 5 1973 788.31 .1791 -11.56 APR 0 1974 .0533 839.9cl MAY 9 1974 79.37 .1401 -5.31 ,JUN '21 1974 .0543 815.39 OrT 4 1974 584.56 .2209 –8.31 DEC 6 1974 .0605 j77.60 lEC 6 1974 '.l760 .090 0.00 APR 4 1977 .0508 OCT 25 1977 .0529 915. 16 EIO 1 . ',4 Af'f, NOV t;,, 1977 1977 914.7 BOO.B5 .0613 .0591 –0.09 -0.09 OCI 30 1978 .0575 Bl1.85 NOV 14 1978 785.2b .0715 3.28 OCT 19 1979 .0512 814.6H NOV 7 1979 79t,I.IJ7 .0823 -2.21 -3FEB 1980 .0509 SEI' 1981 .0511 8()8.i 884.3 MAR ,7 – ' 1980 ,759.98 .1404 -12.52 As the table shows, the current figure for the new low index was first reached well before the bear-market lows in 1962, 1970, 1974, and most recently in 1980. On other occasions, toe market's decline following the first attainment of five percent has been relatively modest. A key seems to be the ultimate high achieved by the new low ratio. It reached 29 in 1962, 24 in 1966, 31 in 1970, and 22 in 1974. Declines in which the index rose only to around the eight-percent level before its reversal have tended to be mild. Since the index is an average of 14 days, it is possible to make some projections regarding its future behavior. For the next five trading days it includes relatively low readings, taken on days in mid-August when the number of daily new lows ranged around 50. With the exception of last Wednesday, most recent trading days have produced over 100 new lows. If, over the next week, the number of daily new lows can retreat to, and remain below the 100 figure, the index should top out between seven and eight percent and begin to turn down, Should new lows move up to around or through the 150 level, the 14-day average would undoubtedly move up to a figure in excess of eight percent, and we would have action not dissimilar to that which took place on the major declines in the table above. All of this is, we think, more than just statistical mumbo jumbo. It constitutes, ratoer, a quantitative way of expressing the fact that a good deal of downside momentum has now been built up. Until some sort of reversal evidence is seen, that downside momentum suggests—at least over the short term—a continued downward course for the market. AWTrs Dow-Jones Industrials (1200 p,m.) 862.54 S & P Composite (12 00 p, m.) 120.43 Cumulative Index (9/3/81) 1066.29 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL No statement or expression of opinion or any other matter herein contained 15, or IS 10 be deemed to be, directly or indirectly, on offer or the sOI,cltollon of on offer to buy or sell any security referred to or mentioned The matler IS presented merely for the convellenCE of the subscriber While we believe Ihe sources of our Informo lion 10 be rehoble, we In no way represenl or guarantee the accuracy thereof nor of the statements mlde herein Any acllon to be token by the subSCriber should be based on hiS own investigation and information Janney Montgomery Stott, Inc, as a corporation, and ,ts officers or employees, may now have, or may later lake, posillons or trades In respect 10 any secvrttles mentioned In thiS or any future Issue, and such pOSition may be d,ffere'lt from any views now or hereafter expressed H'i thl or any other nsue Janney Montgomery Scott, Inc, which IS reglsered With the SEC as on Investmenl adVISor, may give adVice to ,Is Investment odvlOry onr! othel customers Independently of any statements mode In thl5 or In any other Issue Further Information on ony secuTity menTioned herein IS ovodabfe on request

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Tabell’s Market Letter – September 11, 1981

Tabell’s Market Letter – September 11, 1981

Tabell's Market Letter - September 11, 1981
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– TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEM8ER NEW VORK STOCK EXCHANGE. INC MEMSER AMERICAN STOCK EXCHANGE -,— – – … – It is an appropriate time, we suppose, to drag out once again the old technician's lecture about a stock's' b6ing a moving object. We have voiced this particular reminder a fair number of times over the past couple of decades, usually as an admonition to our fundamentalist brethren who persist in looking at equities largely in terms of their level rather than the direction of their motion. We have drawn the analogy to two airplanes, both at altitudes of 1,000 feet, but with one engaged in a normal takeoff and the other in a steep power dive. Quite obviously, one's level of confidence in these two moving objects is quite different. The same sort of thinking should, of course, apply to the stock market. The essential fact about the Dow Jones Industrial Average at the moment, before which flct all others pale, is that on April 27 it closed at 1024.05, and on Tuesday it closed at 851.12. Direction has been quite clearly established, and that direction is down. There is, therefore, no particular reason to get excited about the prospects for equity prices absent some fairly , clear indication that that direction may have changed. We have spent the last few issues of this letter outlining the form such evidence might take. It is probably well to reiterate that outline at this time. The one thing the market is highly unlikely to do, based on past history, is quietly turn around and begin moving slowly 'upward in an orde'rly fashion. This would be a highly uncommon aftermath in a market 'which has developed the downside momentum which this one already possesses. It is possible, of course, that that momentum could quietly dissipate and the market could form a base around current levels. However, the essential thing to remember about this process is that it would require time, a num ,. all prbility, of-.!.o-to-three months. , -,-, –If-thelrrark-m-tstolmtlom qUIetly, In otlier woras, It wouIa maIl prooaolhe the enaOf 1981 or even later before any meaningful upside move took place. A greater likelihood, of course, is the kind of climactic washout bottom that we have been discussing in this space over the past couple of months. Evidence of a meaningful selling climax would include a number of events so far distinguished by their total absence, including a rise in volume significantly above the 40-million-or-so-share level that has characterized recent trading sessions. About the only comment one can make on the likelihood of a selling climax at this time, is that the preconditions for such action may already be in place. Leaving aside the question of the level at which'Umight occur, it would be entirely consistent with past history for a meaningful low to take place within a matter of a few weeks. We discussed last week the fact that the new-low index had entered into what can historically be considered oversold territory. Such occurrences have preceded lows in the market by an average of 18 trading days in the past. Since the penetration in this case first took place on September 2, an ultimate low for the Dow occuring anytime between now and the end of the month would not be histOrically unusual. Likewise, almost all major market lows in the past 30 years have been preceded by a number of days on which 80 or more of all issues traded declined. The reader should be warned that there have been known to occur as many as three repetitions of such an occurrence. Nonetheless, the first instance of an 80 downside day has invariably been within 30 trading days of the ultimate low. The first such occurrence in this case was on August 24, and thirty trading days from that date again brings us to the end of the month. As far as reversal evidence is concerned, then, the stage has been set but the curtain has not been lifted. It is also worth remembering that preconditions such as these which exist ,at the present time have often occurred at levels considerably higher than the lows ultimately reached.While it is difficult to becomeoptimistic about the near-term prospect for stock prices, a resolution of the current decline could — from a time point-of-view — very possibly not be too far away. AWT rs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Dow-Jones Industrials (1100 a.m.) 863.11 S & P Composite (11 00 a. m. ) 120.27 Cumulative Index (9/10/81) 1051. 70 No statement or expression of OPiniOn or any other matter herein contOined 1, or IS to be deemed to be, directly or Indirectly, on offer or the sollcllahon 01 on offer to buy or ,ell any security referred 10 or mentioned The mailer IS presented merely for the convef'U!nCfi 01 the subscrober Whde JIe believe the sources of our mformo lion 10 be reliable, we m no way represent or guorantce the accuracy thereof nor of Ihe slalemenJs mude herem Any acllon to be taken by the suoscnber should be based on hiS own mvestilatlon and Information Janney Montgomery Scoll, Inc, as a corporallon, and ,ts officers or employees, may now have, or may later lake, poSitions or trades m respect to any securities mentioned HI Ih,s or any fulure Issue, and such position may be different from any VICS now or hereafter exprcss..d 10 thn or any other Issue Janney Montgomery Sott, Inc. which Is reglslered ,th Ihe SEC as on tnvestment adVisor, may gl….e ad….lce 10 Its Investment adVisory ann olhel C'Ustomer Independently of any statements mode, thiS or m any other ISSlJe Further Informotlon on any seOJrlty mentioned herein IS avaIlable on requeSI

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Tabell’s Market Letter – September 18, 1981

Tabell’s Market Letter – September 18, 1981

Tabell's Market Letter - September 18, 1981
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., . TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 081540 DIVISION OF MEMBER New VORl(, STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANOE September 18, 1981 . One central.fact.of-bear markets-isthat-the.yarenot pleasant-and.,. as- is-the case with any unpleasant experience, their ultimate reversal is a consummation devoutly fo be wished It is not surprising, therefore, that, at this stage of the market downswing, investors spend a good deal of time avidly seeking portents that such a reversal is at hand. The unfortunate absence of such portents has been a recurring theme of this letter in recent weeks. One factor noticeable by its total absence has been increasing volume. There exsists a myth that reduced volume on declines is bullish, and, while this is true in certain cases, it is definitely not the case once a mature downswing is underway. Almost every major market decline in the past has experienced some degree of increasing downside volume before it came to an end. It is such an increase that has completely failed to materialize in the downswing to date. The term increasing volume is slightly difficult to quantify, since, with the increase in shares listed, volume has been in a secular uptrend for years. The almost- 8 million shares traded after the Eisenhower heart attack 25 years ago sent back offices into a dither. Today, this amount is routinely traded in the first hour. A simple tool we have used to make volume statistics comparable over time is something called the volume ratio, which is nothing more than the NYSE volume divided by its own 25-day moving average. By comparing volume with its current normal level — as expressed in the 25-day average — one gets a statistic that remains consistent over time and whose extremes can be identified.—-.Eo.rthisJarticllJarratiQ.,therecQrd,s0r.ed.iJL..May1962.JiT.aL3.19..-Any value over 2 can be considered extreme, and anything over 1. 5 moderately unusual. Yei there is distinct evidence that at least one day with a volume ratio above 1. 5 is a necessary precursor to the end of a significant market decline. If we count all downswings of 10 or more, there have been 23 important bottoms since 1949. Since the Dow is now down almost 18 from its high, whatever low is made on this decline will constitute the 24th. Of the 23 to date, no fewer than 21 have been associated with at least one day, often a number of days, where the volume ratio has risen above 1. 5. In nine cases, usually on the major declines, it rose above 2.0. To date, the highest value has been 1.25 on August 25. It is, on the record, unlikely to be sufficient. In some cases, a downside-volume increase is manifested, not by single days of heavy trading, but by protracted periods where downside volume increases slightly above the current normal level. One way of identifying such periods is to track the average level of the volume ratio for the last ten downside days. This average occasionally reaches extremes above 1.2. It has done so on only 17 occasions since 1949, and it is interesting to note that 11 of these 17 occasions have been associated with the sorts of major bottoms referred to above. The bottoms of 1949, 1953, 1957, 1962, and 1966 were all associated with such a period, and in most cases the actual market lows occurred while the 10-day average was above the 1. 2 level. Most recently the declines in the Fall of 1978 and in the Spring of 1980 also produced similar rises in downside volume. The average volume ratio for the past 10 downside days through yesterday is only 0.97, well below the level it has tended to reach at major turning points in the past. As investors are well aware, volume has recently been meandering along at around the 40-million-share level, and the 25-day average, as of yesterday, was 42.6 million shares. For the volume ratio to reach 1. 5, some 65 million shares would be necessary, and it would take volume of almost 90 million shares to produce a ratio of 2. Alternatively, it would take a number of downside days with volume well above the 55-60-million-share level to produce a 10-day average of 1. 2. Based on the historical pattern, it is unlikely that a major low will be seen before one of these phenomena occur. AWTrs Dow-Jones Industrials (12 00 p. m.) S & P Composite (1200 p.m.) Cumulative Index (9/17/81) 841. 51 116.95 1038.26 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or expression of opinion or (lny other motter herein contOlned IS, or 15 10 be deemed to be, directly or indirectly, on offer or Ihe sol1cllatlon of on offer to buy or sell any security referri!'d to or mentioned The molter IS presented merely for the convemenCE of Ihe subscrrber. While we believe the sources of aUf Informa- tion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action to be taken by the subcrlber should be based on h own investigation and Information Janney Montgomery 5011, Inc, as a corporation, and liS officers or employees, may now have, or may later toke, POSitions or trades In respect to any securilles menl10ned In thiS or any future Issue, and such position may be different from any views now or hereofter e)'pressed In thiS or any other Issue Janney Montgomery 5011, Inc, which IS registered With the SEC as an Investment advisor, may give adVice 10 lis Investment odvl!.ofY and othel Ctlstomer Independently of any slotements mode In Ihls or In any other Issue further Information on any seCtlflly menhoned herein IS available on rcquest

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Tabell’s Market Letter – September 25, 1981

Tabell’s Market Letter – September 25, 1981

Tabell's Market Letter - September 25, 1981
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'. TABELL'S MARKET LETTER 909 STATE ROAD, PRlNCETON. NEW JERSEY 08540 DIVISION OF MEMBIR NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE September 25, 1981 Most recent issues of this letter have commented on the rather disappointing lack of tech- -'Iifcitl evidence that. thebear rifarJet whicjegah -lasCAprir is appro8.clliilg-rfs naair;- SiiIflce -irto say that no such evidence materialized in last week's trading, thus permitting us to go on to a discussion of a few other topics. It is probably scant comfort, but, in one sense at least, the 1981 weakness is, so far, not all that unusual. Many of the reasons being advanced for the market decline center, rightly or wrongly, around the uncertainties which have been created as a by-product of the new Reagan economic program. The emergence of such uncertainties, along with consequent stock-market disarray, however, is eminently consistent with past history. The market is currently down a bit over nine percent from its level just prior to the election, and, as we demonstrated in this space two weeks prior to that election, this performance is not atypical J)f the 20 years following presidential elections since 1900. The market has been down by an amount greater than nine percent in eight of these years and has been lower or essentially unchanged in eleven. The average performance over oneyear periods following elections is significantly lower than the average for all years, and there is an established tendency for the market to do less well whan a new party is installed in the White House. Since the Reagan ascendency has produced economic policy changes perhaps more radical than previous shifts of the party in power, it is not surprising, except perhaps to certain Senators, that the market's response to these shifts should be accentuated. The most unusual condition accompanying the present economic climate is obviously the record-high level of interest rates. It is of course possible to view these levels as an opportunity as well as a depressant. It is certainly an arguable premise that bonds, at their current bizarre prices, offer the possibility of an unprecendently generous return. Viewed solely in terms of its current level, in comparison with historical figures, the long bond market can certainly be said at .-I-present—toOffer-ne-of–the-more-interesting-opportunities-n–the-presenbfinancial-scene–.– .,—I– We of course cautioned in this space just recently against viewing the price of any financial asset solely in terms of its level. We suspect that part of the present trouble in the bond market is that many participants have learned this lesson the hard way in the past few years. They may indeed have learned it too well. Many bond-market investors appear only to be aware that that market's direction has been due southeast for all too many years and that supposedly safe bond investments have demonstrated a disquieting tendency to produce not safety, but substantial capital losses. This realization may explain the fact that current bond offerings find few takers, despite the prospect that their return, by historical standards, must be considered almost profligate. If the current level of bond prices accomplishes anything, it may be the laying-to-rest of the rather simplistic notion that bond yields consist of some theoretical real interest rate plus a premium for anticipated inflation. The market pricing of bonds just as that of stocks is, we suspect, a great deal more complicated than that. A major factor, just as it is in stocks, is probably investor confidence, and the only way we have discovered of tracing that elusive factor is via technical analysis. In this sort of environment it is probably no accident that, in more rarified investment circles, interest in technical analysis as applied to bonds has been growing by leaps and bounds. We suspect this will be an ongoing trend, regardless of what the bond market may do in the future. As we noted above, it is quite possible to make a bullish case for bonds at current levels. There is only one trouble with this contention. Based on the record, if bond prices are to do better over the rext year or so, the correct investment course is to buy — not bonds but stocks. Of the 452 months since 1944, 193 ended with bonds higher than they had been a year before. However, of these 193 months, stocks were also up over the same one-year period in 154 of them and down in onJy 39. In 139 of these 154 months stocks did better than bonds. Indeed the average change in the Dow Jones Industrial Average for all 12-month periods in which bonds were up was 11. 2, which is almost twice the average change in this century for all one-year periods. Indeed, in the periods in which both bonds and stocks rose, the average change in the Dow-JonesIndustrials was almost 8t times as great as the change in the Dow-Jones Bond Averages. In this sense, at least, the obsession with lower interest rates as a necessary precursor to the end of the stock price decline makes some sense. An improving bond market, if one can be foreseen, would be one of the best arguments for the approach of a stock market bottom. AWTrs ANTHONY W. TABELL DBLAFIELD, HARVEY, TABELL Dow-Jones Industrials (12 00 p. m. ) 825.82 S & P Composite (1200 p.m.) 113.37 Cumulative Index (9/24/81) 1097.89 No statement or expression of opinion or any other matter hereIn contOlned IS, or IS to be deemed to be, dIrectly or 'nd,rectly, an offer or the soliCitatIon of an offer to buy or sell any ecuflty referred to or mentioned The matter IS presented merely for the ConVellenCe of the subSCriber WhIle lie believe the sources tlf our InformatIon to be rel,oble, we In no way represent or guarantee the accuracy thereof nor of the stalements mude herem Any actIon to be taken by the subscrIber should be baed on hll own Invesllgallon and informatIOn Janney Montgomery Scott, Inc, as a corporatIon, and lIS offIcers or employees, may now have, or may later laKe, pOltlons or trades In respect to any sewr,l,es mentIoned In thIS or ony future Issue, and such pOSItIOn may be different /rom ony vIews now or hereofter expressed In thIS or ony other ISlJe Janney Montgomery Scali, Inc, whICh 15 reglMered WIth the SEC as an Investment odvlsor, may gIve adVICe to Its Investment adVISOry and othel customers Independently of any statements made rn th,s or III any other ,ssue Further IIlformotron on any securrty menttaned herem 15 available on rcqvelit

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