Viewing Year: 1982

Tabell’s Market Letter – January 08, 1982

Tabell’s Market Letter – January 08, 1982

Tabell's Market Letter - January 08, 1982
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TABELL'S MARKET LETTER 909 STATE 'lOAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, tNC MEMBER AMERICAN STOCK EXCHANOE January 8, 1982 We -br-edN ew Years in our usual fashion last-week- by resurrecthlg our nu -t;';;t- …. ise on the year-end rally. Once in a while, 1982 being such an instance, we have the opportunity, shortly following this annual event, to pronounce its denouement. The year-end rally is over. It was over, for the record, on the second trading day of the year and qualifies as one of the shorter such rallies on record. Its starting point was the December low, scored at 868.25 for the Dow on December 29. It continued for three days reaching a high of 882.52 on January 4, the first trading day of the new year. On the next day, in a 17-point decline, that low was broken, and the market slide then initiated continued at least through mid-day Thursday. As we noted in our year-end exercise, the early breaking of the December low has led to a downward year some two-thirds of the time that it has occurred. This may, at first blush, seem at variance with our year-end forecast of a fortnight ago in which we stated our opinion that 1982 would see the start of a new bull market. The two, however, are not necessarily in conflict. Our most probable scenario, as we outlined, is for a new major low to be made some time in 1982 followed by the start of said anticipated upswing. Since we now have a whole week's worth of 1982 data to analyze, it is perhaps worth pondering just what the year's abysmal first week means. Much has been made in some circles about Tuesday's action which was, on the face of it, not too much more than your average run- -0fthemill-badstock-mal'ketday-.Aboutthe01l1y.thingAhat.differentiated..lastTue8day-f.rom– the rest of the pack was the action of what is commonly called the short-term .trading index, although it is known by a host of other titles. This device is fast becoming one of the most over-followed indicators in the technician's bag of tricks, largely because its level at any given time can be ascertained by punching a few buttons on a quote machine. It did, however, on Tuesday reach the second highest single-day close in its history at 4.10. This caused some excitement among those who occupy themselves with these things, since extreme levels of this sort have, in the past, occured in the area of major market bottoms, albeit often with fairly substantial lead times. By other measurements, however, Tuesday's trading totally failed the standard tests for climactic action. Only 61 of all issues traded declined, a figure that has been exceeded on no fewer than 564 market days over the last 32 years. Thus, such an occurrence can be legitimately expected on one day in every 15, a frequency hardly calculated to make the session particularly momentous. Meanwhile, volume continued its stubborn refusal, which has persisted ever since last summer, to show the sort of increase associated with major lows. Tuesday's 47-million share figure was almost exactly the average of the prior 25 days, and the 51-million shares which changed hands on Wednesday were equally unexciting. Climactic action at the moment would require a volume increase to somewhere between 65 and 90 million shares, which levels, of course, have not recently even been approached. All-in-all, from a technician's point of view, not all ,that much seems to have been estab- lished by last week's action. The Dow can now be said to have entered a minor downtrend from its December high of 892.-69.from which point-it-has dropped a miniscule 4. It has, at current prices, declined to a support level of some importance, which might, conceivably, for the time being, hold. About the only interesting grounds for speculation at the moment center around what sort of configuration might make the situation somewhat more optimistic. One such pattern might be a thorough test of the September 25 low at 824.01, coupled with signs of a climactic reversal and a worthwhile rally. By the time such a process and the necessary rebasing period were over, a fairly bullish configuration might emerge. This is the most opti- mistic alternative to the current decline'S continuing until it penetrates the September low, which eventuality would suggest the emergence of a new bear market leg and an ultimate bottom to occur at significantly lower levels. Dow-Jones Industrials (1200 p.m.) 866.53 S & P Composite (1200 p.m.) 119.67 Cumulative Index (1/7J82) 1097.51 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No Ialement or epre5Ion of opinion or any other motler herein contOlned is, or IS to be deemed to be, directly or Indirectly, on offer or the soliCitation of on offer to buy Of sell any sec;unly referred to or mentioned The motter Is presented merely for the convenlenc of the subscriber While Ne believe the sources of our information to be reliable, we In no way repreent or guarantee the accurocy thereof nor of the statement mude herem Any action 10 be token by the subscriber should be based on hiS own InvesTlgahon and Informotlon Janney Montgomery Scotl, Inc, as a corporation, and lIs officers or employees, may now have, or may latcr tole, POltlOni or trades In respect to any securities mentioned In thiS or any future ISUe, and such pOSitIOn rnoy be different from any views now or hereafter expressed In this or ony other ISue Janney Montgomery Scott, Inc, which IS registered with the SEC os on Investment odvisor, moy 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 security mentioned herein 15 available on requesT

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Tabell’s Market Letter – January 15, 1982

Tabell’s Market Letter – January 15, 1982

Tabell's Market Letter - January 15, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 081540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE January 15,,1982 This letter ha.' pen fair..aount pace J!.!..its last.!.ew issues,!ocurn.eJ1ting \V.!t.aJ we. taketo , be tne rather.-aisma,Lnear-term outlook for equity. prices …Expertise in technical-aiuilysis is hardly-a requirement for recognizing the fact that the past week's rather dreary performance could hardly be said to be indicative of any sort of imminent reversal. It is possible, however, to take what is, in one sense, an optimistic view of the current technical picture. That view arises out of the fact that antici- pated weakness in the case of many stocks will produce the broadening of longer-term base patterns. This is in line with our presently-favored market scenario, calling for a major low, one of cycle dimen- sions, to be made during 1982 — in all probability during the first half of the year. If our assumption is correct, it can hardly be improper, even at this early stage, to attempt to look ahead and try to single out what impelling forces might cause a rise off this anticipated low. Candi- dates for the cause of such impetus are not, at this point, all that easy to find. We have in mind, however, one such possible force, the importance of which, we feel, has been insufficiently recognized insofar as financial markets are concerned. That force is the I.R.A., not the terrorist organization, but the Individual Retirement Account. Our suggestion of insufficient recognition is not meant to imply lack of attention. Indeed the only Americans currently unaware that something called an I.R.A. now exists are those who have managed somehow totally to insulate themselves from the modern advertising age. Media of all flavors have been chock-a-block with ads, most of them demonstrating how a 25-year-old, who can manage to scrape to- gether 2000 per year, are, of course, by and can larg etulrines.himsTehlfe into an instant multimillionaire individual retirement account, upon reaching retirement. despite the fact that it is They de- signed to be a mass-mo rket product, is probably one of the more complicated financial instruments cur- rently available. It is, as the ads only marginally point out, entirely dependent for its end result on the level of investment return that will obtain over a long period. Anyone possessing a crystal ball which will forecast the level of money rates over the 40 years between now. and a 25-year-old's retire- mel'!tis.theownerof.,.ae,..pieceof-eq.uipment..iOO..ed…..–'f-heI…a…A-also.,-to-sugg..st-just-one-rnore-in- sufficiently emphasized fact, is an instrument for tax-deferral, not tax avoidance. The value of this tax deferral is an immensely complex function of the age of the individual, future tax rates and a host of other factors. The problems of calculating true anticipated return for an I.R.A., we think, are sufficiently complicated to provide fuel for MBA dissertations for the next ten years. None of the above is to be taken as an argument against the I.R.A. Indeed, we heartily endorse it as one of the more exciting programs to become available to the individual in recent memory. Like most complexities, it can be reduced to basic principles. George Goodman summarized the entire thrust of the U. S. housing program of the past forty years in the sentence, The government wants you to buy a house. The I.R.A. can be summed up in the sentence, The government wants you to save money. In the first instance, it has paid — and very generously — to do )'lhat Uncle Sam wanted — as anyone owning residential real estate is quite aware. We think that for most individuals it will be equally profitable to follow Uncle's dictates as far as retirement planning is concerned. The individual in even a modest 30 tax bracket is, in effect, being handed 600 as an incentive to start an I.R.A. this year. Our own expectation is that this incentive will not be widely ignored. Which brings us to the' effect on financial markets. Some 90 million currently employed Americans are presumably eligible to sock 2000 apiece into plans this year, which, if they all took advantage of the fact, would result in an investment of 180 billion. Now we are fully aware that 100 participation is wildly unrealistic, but what is the proper estimate If it is only 10, 18 billion is a not-inconsider- able sum. Furthermore this 'x'-billion-dollar-infusion is a sum that is likely to rematerialize this year and the year after that. In ,addition, the interest being accrued on this sum remains temporarily un- taxed and therefore also available for future investment. The belief that such sums can become avail- able for deployment with no effect on financial markets is,. in our view, incredibly naive. Yet we have seen few models that attempt to take the I. R.A. 's investment effect into account. More complete discussion of possible I.R.A. effects must await future issues of this letter. In our view, however, those effects could well be considerable enough to provide part of the fuel for the next major upswing in the prices of financial assets. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Dow-Jones Industrials (1200 p.m.) 846.18 S & P Composite (1200 p.m.) 115.94 Cumulative Index (1/14/82) 1069.73 Lying is herewith defined as the placing of questionable assumptions in footnotes at the end of the text. No stalemen' or expression of opinion or (lny olher mailer herein conlOlned IS, or 1 to be deemed to be, d,reclly Of Indlrectl!., on offer or the sollc!iohon of an offer to buy or sell ony security referred to or menhoned The moiler IS presented merely for the convemenCE of The subSCtlber Whl e we believe the sources of our mformo lion 10 be rehoble, we In no woy represent or guorontee The occurocy Thereof nor of the statementS mode herem Any action to be token by the subSrlber should be based on his own Investlgotlon and Information Jonney Montgomery Scott, Inc, os 0 corporation, and Its officers or employees, moy now have, or moy later toke, posItions or trades m respect to any SeCUrities mentioned m thl5 or any future Issue, and such position may be different from ony views now or hereafter expressed m thIS or any other ISSl)e Janney Montgomery Scoll, tnc , which 15 registered With the SEC as an Investment adVisor, moy give odvlce to Its mvestment odvlsory and other C\.Istomers Independently of any statemenTS mode In thiS or m any other ISiue Furlher Informollon on any security menhoned herCln IS oVOIloble on request

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Tabell’s Market Letter – January 22, 1982

Tabell’s Market Letter – January 22, 1982

Tabell's Market Letter - January 22, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 06540 DIVISION OF MEMBER NEW VORK STOCI( EXCHANGE, INC, MEMBER AMERICAN STOel( EXCHANQE January 22, 1982 A month ago we occupied this pace with a study of the action of major market indi- catol'S using–what-is.knownas.aeference..,qz;cle-approach .-T.hisappr9ach. cpmpal'edthe. action. .,.,.. of those indicators-following-'the September 25,- 1981 low, the low scorea- 75 trading days ago which remains, to date, unbroken, with market action at past known major low points — the low points of each of the eight major market cycles since 1949. The purpose of the exercise, of course, was to determine whether or not market action was consistent with the thesis that an important low was being formed. When we first did the study on December 11, we concluded that there were precious few similarities between market action in 1981 and the sort of thing that had taken place at past major bottoms. Updating that study, with 75 days of market action since September 25 now available to us, reinforces the previous conclusion. It must be rngrettably noted that there is almost nothing in the current market pattern historically consistent with the formation of past major reversals. The table below, a current update of the previous one, shows the 75-day high figure reached for each of four market indicators as a percentage of the prior market low. As can be seen, the Dow has acted notably worse in the first 75 days than on any of the previous major oottoms, and, at most past important lows, the S & P 500 has performed notably better than it has in the present instance. As the fourth column shows, volume expansion in most prior cases was considerably greater than it has been to date. The most notable divergence between the present market and past low points, however, is seen in the action of the advance-decline line. As the table clearly suggests, it moved up a great deal more following past cycle bottoms than it did following September 25. What the table does not show is that,after making its high, – – -th-eA'-D-line-has'recentlyQniovedd6wnwartlah-d-isC\irrentlytesting itSS'ej5'tember251TI1i's' action is totally inconsistent with the maimer in which it behaved at past major low points. Date of Market Low Jun 13 1949 Sep 14 1953 Oct 22 1957 Jun 26 1962 Oct 7 1966 May 26 1970 Dec 6 1974 Feb 28 1978 Sep 25 1981 DJ I A 113.42 110.98 109.26 114.98 113.89 122.50 136.17 116.76 108.34 High in First 75 Days As Percentage of Market Low S & P 500 Adv Dec Line 116.16 129.63 110.04 11 7.36 108.93 132.26 114.26 136.01 118.18 142.53 ll9.84 127.40 132.30 157.98 ll5.26 122.96 ll2.04 113.29 Volume 126.43 137.73 109.36 100.18 150.95 111. 76 168.91 211. 40 ll2.28 If current market action is unlike that at major lows, what sort of historical period does it, in fact recall It is, unfortunately, all too easy to find a significant parallel. Market behavior since September has been strikingly similar to that following December 5, 1973. On that date, the Dow had completed an 11-month, 25 decline from 1051. 70 to 788.31. This is roughly analogous to the five-month 20 drop posted in April-September, 1981. The December, 1973 low was to hold for six months through the summer ,of 1974. ,During those six months there were four se parate advances and retracements of 5 or more, 'all of which failed to pim- etrate the December 5 low, just as two advance-retracement cycles have failed to penetrate the low made on September 25. Two of the 1973-4 rallying phases took the Dow slightly higher percentagewise than it has moved up so far. However, just as in the current case, volume totally failed to expand, and — most notably — breadth peaked out and declined to its previous low in just about the same time frame which it demonstrated since September. As we all know from history, the aftermath of December, 1973 was a full-scale, bearmarket leg which took the DJIA down from a trading-range high of 891. 66 to an ultimate low of 577.60, a further 35 decline. It should be noted that we do not foresee a drop of anything like this magnitude in the present case. However, the similarities between the present period and that past one seem to be real and disturbing Dow-Jones Industrials (1200 p.m.) 845.89 S & P Composite (12 00 p.m.) 115.70 Cumulative Index 1I21/82) 1068.42 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or eXpreSlon of opinion or cny other moiler herein tonlomed is, or , 10 be deemed to be, dHCdly or mdlfcctly, on offer or Ihe SOllcllohon of on offer to buy or sell any seurlty referred to or mentioned The matter IS presented merely for rhe convenlencs of the subscriber While He believe the sources of our Informa- tion to be reltable, we m no way represent or guarantee the accuracy thereof nor of rhe uotemenls mude herem Any acllon to be taken by the subscflber should be based an hiS own Investigation and Information Janney Montgomery Scott, Inc, as c corporation, and Its officers or employees, may now hove, or may later Icke, poI'lon or trades In respect to any ecurltles mentioned In thiS or any future ISSUe, and such POSition may be different from any views now or hereofter efpresscd In thl or cny other Issue. Janney Montgomery Scott, Inc, which IS (eglstered With the SEC as on Ifwestment ad….lsor, mcy give odvlce to Its mvestment adVisory ond othel customers Independently of cny stotements mode m thiS or m cny other Issue Further mformotlon on any seCIJnty mentioned herern IS cvoliohle on request

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Tabell’s Market Letter – January 29, 1982

Tabell’s Market Letter – January 29, 1982

Tabell's Market Letter - January 29, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIYISION OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCI( EXCHANGE January 29, 1982 – …..- – – – I — — …….. Following two moilths'of market action which can 'best-,be-described as 'insipid, Thursday's unexpected performance, if nothing else, provided a measure of excitement. . With 67 million shares changing hands, the Dow staged a 21-point rally with 1339 issues advancing in price. There had been little, if any previous technical groundwork to set the stage for this sort of performance. In many ways, indeed, it constituted an inverted image of the sudden declines which took place in late 1978 and late 1979. In a number of its aspects, the advance qualified for the record books. The 2.49 rise made it the 36th best market day of the p'st-1949 era, and it W!B the best percentage advance for the Dow in almost two years — dating back to April, 1980. 71. 37 of issues traded advanced in price, and in that respect the day was exceeded by only 55 trading days since World War II. It cannot be gainsaid that the whole thing was impressive. The question, however, is whether or not the performance, in and of itself, changes what had been a rather lackluster technical outlook, and the answer, unfortunately, is probably that it does not. Major downswings end either with a recognizable selling climax, or occasionally, with long periods of reaccumulation accompanied by slowly improving market action. Quite obviously, a one-day performance yesterday did nothing to provide the latter. What about the alternative Does yesterday's surprising rally qualify as climactic . —————-' We doubt it. From a purely' seatof-the-pants point' of view the sort of climax to which old-time technicians are wont to refer generally came at the tail end of a sharp, severe and recognizable decline. Thursday's skyrocket, as we noted above, suddenly emerged out of a period of utter lassitude. Moreover, as impressive as it was, the advance failed to qualify on what we have recognized, on an historical basis, as the required standards. The fact that 71 of all listed issues advanced was impressive, but 75 is the threshhold which has tended to identify major climax bottoms with a relatively high degree of certainty. Volume was impressive and indeed, the best level of trading in almost a year, but 80-85 million shares of volume, not 67 million, is what would normally be required for reliable cycle bottom identification. The rally, moreover, could do nothing to change what had preceded it. The most notable feature of trading since September 25 has been the poor action of market breadth. Indeed, breadth indicators, before Thursday's takeoff, had skidded to new lows below those of last September. We have pointed out in some detail in recent issues of this letter that such action is totally uncharacteristic of a period in which the market is forming a major low. It seems to us axiomatic that true improvement must be accompanied by protracted better breadth action. This sort of action is not provided in a single day. In terms of upside potential, the objectives suggested by the basing action of the past two weeks are moderate. For the Dow, 876 appears to be the most optimisitc current target. As far as future action is concerned, the most positive sign would be a rally to that level followed by some further basing action in, roughly, the 860-880 area. Were this to occur, the December high at around 892 would then begin to assume some significance. A breakout above that point might, in that case, suggest an advance of fullscale intermediate proportions. Whether anything more than that could, at that time, be foreseen depends entirely on ensuing market action. Such potential did not appear to be present in the technical pattern as of this week. AWT rs ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL Dow-Jones Industrials (1200 p.m.) 865.96 S & P Composite 0200 p.m.) 119.67 Cumulative Index (/28/82) 1049.81 , No statement or expression of opinion or any other matter herein contained I, or IS 10 be deemed 10 be, directly or indirectly, on offer or Ihe SOllCIlolion of on offer to buy Of lell ony secunty referred to or mentioned The maHer 1 presented merely for the convemenCE of the subscriber Whde -Ne believe the sources of our Informolion 10 be reliable, we In no way represenl or guaranlee the ocuracy Iherecf nor of Ihe statements mude herein Any oCllon 10 be toen by the subscriber should be based on hiS own lnvestlgatton and Information Janney Montgomery Scali. Inc. os a corporalron, and Its officers or employees, moy now have. or may later take, positions or trades In respect to any securilles mentioned In thiS or any future Issue, and such position may be different from ony views now or hereafter expressed In this or ony other uSue Janney Montgomery Seoll, tnc, which IS registered With the SEC as on Investment adVisor, may give adVice 10 lIs Investment adVISOry and otner customers Independently of ony statements mode In thiS or In any other luue Further tnformahon on ony secursty mentioned herern avo liable on request

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Tabell’s Market Letter – February 05, 1982

Tabell’s Market Letter – February 05, 1982

Tabell's Market Letter - February 05, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY OB540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANoe February 5, 1982 We.devoted. this -letter .three.,weeks.ago.-to. adiscussion .of .recent -legislation ,allowing, every ..,, .. American jobholder -to'place 2,000 in-;m Individual Retirement 'AccounC– The occasion of President Reagan's recent State-of-the-Union message is as good an excuse as any to bring up this subject once again. The President announced that he is standing by the centerpiece of his program, the personal income-tax cut, and much of the debate between him and his critics has centered around whether the deficits which mayor may not result from that cut are too high and thus require revenue enhancements to bring them down. While our legislators valiantly argue about the advisability of tacking 50 onto the price of a bottle of booze, the IRA has gone largely unnoticed –in the news columns of the press if not in its advertising lineage. This is not without irony since, in our view — in terms of long-term potential for transferring wealth from the public sector to the private sector — the IRA dwarfs anything else in the entire administration tax package. In our prior discussion, we likened the impact of the IRA to that of the various government programs to encourage housing. We think the analogy continues to be apt. Effectively, in terms of the tax advantage provided to owners of their own homes, housing policy encouraged the individual to become a borrower at what had been historically low interest rates. With that policy now foundering on the rock of expensive credit, the government is now using tax policy to encourage saving at currently high interest rates. Another similarity between the IRA and the housing program is that they are each founded on a simple, but not too widely understood, concept of financial mathematics. In the case of the housing program, that concept was leverage. In the case of the IRA, the concept is compound interest. The dramatic power of compound interest over long periods of time has been illustrated in many ways. One of our favon te illustrations involves the purchase of Manhattan Island from the Indians by the Dutch for a reputed 24. The price is widely held to be unfair, yet had the Indians simply invested that 2.4.at6.interestannuallycompounded.,theirtoJ.aL.w.ealth-w.ould,todayxceed- the-1otal value of Manhattan real estate. The power of compound .interest has, of course, also been alluded to in those bank advertisements which promise to make millionaires out of those who will cross their threshholds bearing 2000. Let us, however, try to discuss some possible realistic effects of compound interest from the point-of-view of the average IRA saver. Let us assume that this individual is in the 30 tax bracket and let us further assume an interest rate of 10 (one purposely lower than that available at the moment). Such an individual's after-tax return on savings is 7, and were said individual to save 2000 today at that 7 rate he would have, in 30 years 15,224. The IRA, however, allows him to compound those savings at the full (assumed) 10 rate. At that rate, the 2000 saved today is in 30 years worth 34,898. The IRA has effectively handed him 19,764. Now it is true that the IRA is a tax deferral program, and when he starts withdrawing those savings that withdrawal will be taxed, presumably at the same 30 rate.' Thus his 34,898 is worth only 24,429 after taxes. However, even allowing for this, a difference of 9,205 remains between what he has been able to save under an IRA and what he could have saved on his own. The present value of that difference (at the 7 after-tax saving rate) can be computed. It is 1,209. To this must be added the 600 tax saving arising from the tax deduct ability of the original 2000 investment. For the 2000 he invests, the United States is harding this individual 1,809 in present value of foregone current and future government revenue. The compound interest effect can also be used to gauge the eventual magnitude of wealth which might reside in IRA programs. We assumed three weeks ago an annual infusion of 18 billion annually, a figure based on, roughly, a 10 participation by those eligible. Under this assumption, plus a 10 interest rate, some 315 billion will reside in IRA accounts after a decade. This is, interestingly, just under one-third of the total present U. S…. government debt. Totals of this magnitude could accumulate much faster or be even greater given the continuance of present iiiferest levels or' a higher participation than the 10 we have assumed. We noted in our original commentary our feeling that it was appropriate for a letter devoted to the stock market to comment on the IRA legislation. We continue to think this is so because, as the elementary exercise above has tried to suggest, we are dealing here with very large numbers. These very large numbers are, in our view, going to find their way directly or indirectly into financial markets, admittedly over the longer term. Over that long term, however, we think the magnitude of the effect could turn out to be astonishing. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL Dow-Jones Industrials (1200 p.m.) 847.03 S & P Composite (12 00 p. m . ) 116.58 Cumulative Index (2/4/82) 1077.67 No !.tolement or eXpreSSion of opinion or any other moiler herein contained Is, or IS to be deemed to be, directly or Indirectly, on offer or Ihe 10l1cllollon of 01'1 offer 10 buy or sell any seomfy referred to or menhoned The matter I' presenled merely for Ihe convenience of the lubscflber WIllie we believe the sources of our ,formalion 10 be reliable, we In no way represcnt or guoranlee Ihe accuracy Ihereaf nor of rhe statements rnude herem Any action to be taken by the subSCriber should be bosed on hiS own Investigation and Information Janney Montgomery ScOI!, Inc, as a corporation, and Its offICers or employees, may now have, or may later toke, pasHlans or trades In respect to any securctles mentioned In Ihls or any future Issue, and such poslhon moy be dlfferenl from any views now or hereafter e)(presed In Ihls or any other Issue Janney Montgomery Scali, Inc, which IS reglslered WITh Ihe SEC 05 on Investment adVisor, may give adVICe to 115 Investment odvlsary and olher customers Independently of any slotemenlS mode In thiS or to any olhtlr ,ssue Further tnformahon on ony securlly mentioned herein IS availoble on requesl

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Tabell’s Market Letter – February 12, 1982

Tabell’s Market Letter – February 12, 1982

Tabell's Market Letter - February 12, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08840 DIVISION OF MEMBER NEW YORK STOCK EXCHANOE, INC MEMBER AMERICAN STOCI( EXCHANGE – February 12, 1982 Followers of esoteric technical indicators received somewhat of a jolt a couple of weeks ago, when the New – Yark' Stock' Exchan-ge . reportea'the' .fact -that ai!,–ofthesettlemelfCdllte of danuary— 15, total short interest had reached 84,969,000 shares. Although this was a drop from the prior month, the significant fact was that it constituted exactly twice the daily trading volume for the relevant period. An indictor known as the short-interest ratio, therefore, had reached 2.00. Since this ratio is fairly easily calculated, and two is a round number, it is widely known that this occurrence constitutes a highly bullish signaL The record certainly tends to bear out this contention. In 445 market months since 1945 it has occurred only 19 times. With a high degree of regularity these occurrences have tended to cluster around major bull-market lows, 1949, 1957-58, 1962, 1966, and 1970. Although the short-interest ratio failed to call the bottoms of 1974 and 1978, it has reached the 2.0 level around every major cycle bottom since 1949, and, with a couple of exceptions, only at such times. A record such as this, therefore, bears some scrutiny. We therefore undertook, this week, a preliminary critical look at the short-interest ratio, and we intend to pursue this research further. A few observations, however, can now be noted. The first question that needs to be explored is whether or not this particular indicator, like other indicators in the past, has been rendered obsolete by new structural market develop- ments. Two such developments come readily to mind. The first is the recent emergence of large short positions as the result of takeover arbitrages. This development does, in our view, cause a problem. The theory behind the short-interest ratio has always been that a high level signi- fies a potential future market demand. This is not the case in a takeover situation where the short interest will be largely unwound on the consummation of the takeover or will be offset by an equal selling pressure should the takeover be unsuccessful. However, the extent to which this factor affects Knotlier new- sdheovretl-oipnmteernetstilehveels is almost exitence impossible to quantify on of short posiTIonsheageCl an historical With options. baWsi;s;..ea,-r-e——II—I not sure that this changes the theory much, since, although the hedge protects the short-seller agnnst loss, the position must still ultimately be undone and therefore constitutes a potential demand source. A third possible distortion, whioh we tried to explore in some depth, is the fact that the ratio historically has been based on the short interest versus New York Stock Exchange volume. However, since the mid-1970's, composite volume figures have been available, and currently some 13 of the trading in NYSE-listed stocks takes place on other exchanges. Had this figure been a constant over the past 30-40 years, it could probably safely be ignored, but, as anyone familiar with recent trading developments is aware, such is not the case. Non-NYSE trading has in- creased dramatically over recent decades. Total Midwest Stock Exchange volume, for example, increased from 18.7 million shares for the year 1950 to 282.7 million shares for the year 1976. As a percentage of NYSE volume it doubled over the period. Now this MWSE volume partially consists of trading in non-NYSE listed stocks, but it can be used as a rough proxy for growth in off-board trading. Using this proxy, we have constr- ucted an adjusted short-interest ratio, which we intend further to refine, going back to 1945, using an estimator for composite volume prior to 1976 and actual composite VOlume figures, which have been available, since that time. Under this approach, the current short-interest ratio is reduced from 2.00 to 1. 72. It must be admitted that, even with the adjustment, this is a relatively high figure. As is the case with the unadjusted figure, it constitutes the highest level reached since 1970. It has been exceeded only 34 times since 1945, and many of these are, as is the case with the adjusted ratio, clustered around major ,bottoms. There are, however., an appreciably greater number of random occurrences. Also, such signals tend to occur earlier in a downswing, often before the low has been made. The essential conclusion seems to be that, while the current level of short interest is unquestionably historically high, it should be treated with a bit more skepticism than the simple unadjusted- ratio would suggest. We intend to explore this issue further in future letters. . AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL Dow-Jones Industrials (1200 p.m.) 837.23 S & P Composite (1200 p.m.) 114.70 Cumulative Index (2/11/82) 1063.10 ,. No stalement or eKpreslon of opInion or Clny other molter hercln ontolned IS, or IS to be deemed 10 be, directly or indirectly, on offer or Ihe SOIiCllollon of on offer to buy or sell ony security referred 10 or mentioned The moiler IS presented merely for the convcfliencc of the subscriber. While '0 b!!lleve Ihe souroos of our Informa tlon to be reliable, we In no way represent or guarantee tho accuracy thereof nor of the 5tctements mude herem Any action to be taken by the subscriber should bl! based on hiS own mveshgatlon and Informallon Janney Montgomery Scott, Inc, as a corporation, and lIs officers or employees, may now have, or may lalcr toke, POSitions or trades In respect to any seCUrities menhoned In thiS or any future Issue, and such posilion may be different from any Views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVICe to Its Investment adVisory and oth!!! !;UltomerS Independently of any statements made In thiS or In any other Issue Further information on any security mentioned herein IS available on request

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Tabell’s Market Letter – February 19, 1982

Tabell’s Market Letter – February 19, 1982

Tabell's Market Letter - February 19, 1982
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– – – – – – – – – – – – – – – – – —– – — TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW .JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANOE, INC MEMBER AMERICAN STOCK EXCHANGe February 19. 1982 A stock market which acts poorly is bad enough. Those of us who have been around for awhile -are'inured–t .-taily'-protracteQ-per!oqs'drinCwhicn–tb.m1frKet'supSide.–actioii'is ksomewnatlessCtl1aIi'7 – -' exciting. Presently. to make matters worse, however, the market is beginning to take on some of the aspects of bad melodrama. – Some three weeks ago. it will be recalled. we had The Great Upside Explosion. in which the Dow rallied some 21 points on 67 million shares of volume on January 28, followed by a further six-point advance on 73 million shares the next day. That was it. The market dropped 20 points the next Mon- day. did nothing for a week. and promptly turned once more due southeast. That particular decline was interrupted this week by another probable non-event to which those whose optimism is unrestrained may refer as The Test. These latest theatrics started on Tuesday. following the three-day holiday this week, with the Dow opening down some eight points at 825.06 — within a point of the September low of 824.01. There can hardly be an investor. at this point. who is unaware of the importance of that now-five-month-lld bottom. In the first hour of trading the market moved significantly below the September figure and remained there most of the day, but. in the last couple of hours. it managed to post an eight-point rally and thus avoid closing below the magic figure. The follow-through to this one was as non-existent as it had been in January. The market spent almost all of Wednesday trading below its Tuesday close. A rally attempt on Thursday was, by and large, erased in the afternoon. The first two days of this momentous action took place on the usual 40-some-odd million shares of volume which have tended to characterize the torpid trading pace of 1982 thus far. Nonetheless. however marginally, the test of the September lows is. as of this writing, still successful. At the risk of stupefying our readers with figures. we offer the following table which documents recent low figures for a number of averages. The first two columns show the level and date of the September low. For most averages, this was September 25 on a closing basis and the following day. September 28, on an intra-day basis. Shown in the next two columns are the level and date of the most ..— recentlow -.T-he;.datev-a-F-ies.a.considerably,-.dependinghieh-indicatorones!iookin-g-'-Sr-'–I ages made new lows on February 16 and 17. Others. as shown in the table, posted their recent lows a week or two earlier. The low for the Dow Jones Utilities is back in mid-January. Shown in the final tID columns is the mid-October low, enerally posted on October 26. September Most Recent Mid-October Average Low Date Low Date Low Date DJIA – Close 82'4.01 9725781 827.63 2/17/82 830.96 10726781 – Intra-Day 807.46 9/28181 817.26 2116182 823.63 10/26/81 DJ Trans. – Close 335.48 9125/81 337.28 1/26182 366.17 10/26/81 – Intra-Day 326.18 9/28/81 334.60 1/25/82 362.71 10/26181 DJ Utilities – Close 101.28 9128/81 103.61 1113/82 103.08 10/16181 S & P 500 – Close 112.77 9125181 113.68 2/9/82 118.18 10/26/81 – Intra-Day 110.19 9/28/81 112.06 2/16/82 116.81 10/26/81 S & P 400 – Close 125.93 9125/81 126.71 2/9/82 132.00 10/26/81 – Intra-Day 123.09 9/28/81 127.83 2116/82 130.45 10/26/81 NYSE Composite-Close 64.96 9/25181 65.71 2/17/82 68.58 10126/81 – Intra-Day 63.76 9/28181 65.70 2/16/82 68.25 10/26181 NYSE Ind.- Close 73.52 9125/81 74.28 2/17/82 77.86 10126/81 NYSE Fin.- Close 67.77 919/81 69.86 2/17/82 72.47 10/2818t AMEX Mkt Value – Close 276.76 9/25/81 271.68 2/16/82 305.64 10/21/81 – Intra-Day 266.40 9/28/81 269.87 2/16/82 302.95 10/22181 Viewed in this fashion, the pattern for the various averages becomes quite similar. For everyone of the indicators, except the Dow Utilities. the low of last October was penetrated in recent trading. However, for all but one, the magic September figure remains inviolate, the sole exception being the American Stock Exchange Market Value Index which may be demonstrating the downside leadership it spent two years showing on the upside. The above figures may come in handy for future reference, either in documenting formation of a bottom or for noting the ultimate penetration of each threshhold as the market moves lower. ' We have not included in the table, since it is not properly an average, the action of market breadth, which is at least of moderate interest. Most breadth indices had moved below their September lows prior to the aborted rally of January. They continued in this direction by moving again to new lows in this week's trading. As we have pointed out in recent issues of this letter, this sort of breadth action is precisely the opposite of what one would expect during the formation of a major-cycle bottom. As readers may have gathered from the above, we are inclined to view the market's two most recent attempts to display strength as something less than decisive. It remains. of course. possible that the September low will hold, and we hope we are open-minded enough' to be convinced of this case if bull- ish evidence accumulates. We do not, however, see such evidence as having accumulated in the past three weeks. ANTHONY W. TABELL Dow-Jones Industrials (1200 p.m.) 828.77 DELAFIELD. HARVEY, TAB ELL S & P Composite (1200 p.m.) 113.78 Cumulative Index (2/18182) 1059.79 No statement or expreSSion of OPiniOn or any other motter herein contained IS, or IS to be deemed to be, directly or Indirectly, on offer or the sol,cltal,on of on offer to buy or sell any ecurlty referred 10 or menhoned The molter IS presented merely for the conventence of the subsCriber While oNe believe the sources of our informa- tion to be reliable, we ,n no way represent or guarantee the accuracy thereof nor of the statements ml.lde herein Any action to be token by the subSCriber should be based on hiS own investigatIon ond information Janney Montgomery Scott, Inc, os a corporation, and Its officers or employees, may now have, or may later toke, positions or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such POSItion may be different from any views now or herealter expressed In thiS or any olher Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to Its Investment adVisory and othel cUstomers Independently of any statements mode In thiS or In any olher Issue Further information on any security mentioned herein IS avaIlable on request

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Tabell’s Market Letter – February 26, 1982

Tabell’s Market Letter – February 26, 1982

Tabell's Market Letter - February 26, 1982
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 081540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANQe February 26, 1982 -.–.. We -Jge ll!t …W!gJtS c0!lJ.ril.!tio!ltQ the markI!g–gp.tertainlJle1J..Q.C!-nvn1ion!.lYprovjqed – bY – l .- technical market letfers by'displaying a lengthy'set of figures detailing-the-September.lows compared-. with the then lows-to-date for nine different market indicators, on both a closing and an intra-day basis. The bulk of that table can now be consigned to history since, as most investors are aware, almost all major market indicators finally chalked up new lows in market weakness on Monday and Tuesday of this week, thus ending a five-month perIod over which the bottoms of last September had prevailed. There were, as usual, some exceptions to the rule and they are perhaps worth noting. The Dow Jones UtilitiES contininued their pattern of outperforming the rest of the market. remaining all last week above their February 18 close of 104.71, which, in turn, was significantly above the September low of 101.28. The New York Stock Exchange Financial Index followed approximately the same pattern and remains at this writing well above its September bottom, and, although the Dow Jones Transportation average and the New York Stock Exchange Composite Index both posted new lows on a closing basis, they remained above their intra-day lows of last Fall. All the other indicators mentioned found themselves, at the beginning of this week. in new low territory. The pattern of this market, however, has been a lack of follow-through to whatever chances to transpire. Thus, the rather extraordinary, high-volume strength of late January lasted for just two days and fizzled completely. As we noted last week. the market spent Tuesday and Wednesday a week ago putting on what looked like a successful test of the September lows. That test failed to remain successful much beyond this Mondayls opening bell. Likewise, conventional technical analysis might have anticipated a sharp market collapse following the decisive penetration of the lows early this week. Instead, Wednesday saw a solid if unspectacular up day, with an almost-14-point advance in the Dow, followed by further, albeit desultory, strength early Thursday. It would. it seems to us, require Pollyanna personified to assert the claim that the current stock market is acting well. and, indeed, those who seek out positive indicators give the strong impressIon of drowning men grasping for straws. It must be admitted, however. that there remain a few straws floating around to be grasped. One such is the level of short interest, discussed in this space a fort- night ago. Another statistic which has been widely cited as providing, grounds for optimism 1ha,;;sbeen the acbon of New rOi'k'''Slock'X'Cliangenew lows especlany-wBen the hIstory for tnat numoe'Fls compared with last September. Back last Fall, the Dow peaked in June at 1006 and began acontraseasonal pattern of trending downward. By August 24, the average had been trimmed 100 points to 911, and, for the first time during the year, more than 100 issues, on that day, reached new 52-week lows. Subsequently, through last September, when the recently-penetrated lows in the averages were scored, the 25 intervening trading days saw only four days on which the number of new lows dropped below 100 and the figure gradually built to a crescendo, reacing 311 on September 23, 497 on September 25, and 590 on September 28. The recent decline has been much less concentrated. The first day of more than 100 new lows since September was January 12, the Dow having then dropped to 847.70 from its December high of 892.69. Since that time, there have been 32 trading days, but there have been 20 of them on which fewer than 100 new lows were posted, and the highest figure to date is a rather modest 205 on February 23. This sort of action can be construed as bullish, especially by those who feel that the market may be displaying rotating leadership as it makes a bottom. Under this theory a group of issues made their lows last September, followed by a smaller group completing corrections this month. The ultimate denouement, it is argued, will be that the market will run out of issues with corrections to complete and thus will eventually start upward again. We do not find ourselves terribly impressed with this reasoning. For one thing, as we have amply documented, it is simply not the way in which major cycle bottoms are normally formed. Likewise we think an examination of the action of individual issues tends to suggest that the high-to-date of 205 new lows may not be a terribly long-lasting record. It is possible, for example, to take the issues in the Standard and Poors 500 as a reasonably rep- resentative sample and examine their close on February 23 versus that of September 25, 1981. 261 of the 500 issues, more than half. were the same, or lower on February 23 than they had been last September. Presumably, all of those 261 issues are fairly reasonable candidates for new 52-week low status on any further market weakness which might develop .-Another 45 issues were, on Tuesday, within 5 of their lows for September. and 65 more were between five and ten percent above those lows. Since we are dealing here with a group consisting of some one-third of all listed common issues, it is certainly not hard to see the number of new lows building to further peaks. We are. in sum, rather inclined to view Monday and Tuesday's market weakness as indicative and the subsequent strength as being. to date. without significance. Our feeling continues to be that the ultimate cycle bottom is likely to form atlevels appreciably lower than those of September-February. AWTrs Dow-Jones Industrials (1200 p.m.) 821. 92 S & P Composite (1200 p.m.) 112.87 Cumulative Index (2/25/82) 1060.99 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or eXpreSSion of opinion or any other motler herein contolned IS, or IS to be deemed to be, directly or Indlrectl!., on offer or the ol,cllo\lon of on oHer to buy or sell ony security referred to or mentIOned The matter IS presented Merely for the convenience of the subscriber Whl e we believe the sources of our Informo tlOn to be reliable, we In no way represenl or guarontee the accuracy thereof nor of the statements mode herein Any action to be token by the subKrlber should be bosed on hiS own investigation and Informahon Jonney Montgomery Scoll, Inc, os a corporation, and Its offICers or e'Tlployees, may now hove, or may loter toke, pOSlllons or Imdes In respect to ony securities mentioned In HilS or any future Issue, and such POSition may be ddferent from any views no ….. or hereafter epreued in thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Inveslment adVISor, may give odvlCe to lIs 1Ilvestmenl odvlwry and olhel customers Independently of any statements mode III Ihls or In any other Issue Further mformotlon on any security mentioned herein IS ovolloble on request

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Tabell’s Market Letter – March 05, 1982

Tabell’s Market Letter – March 05, 1982

Tabell's Market Letter - March 05, 1982
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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 – . w; ;-soe '-ti-s;iC-'last week the p'formana1'-gg2U',,'uii'V,,;rlU,dlu;re8Ii1;;';;';-iflin-tU;;he;SlBiidard—-I– and Poors 500. We have compared prices on September 25, when the S & P average itself reached a low of 112.77 and February 23, when it first penetrated that low at 111.51. It has, of course, moved some- what lower this week. The following table summarizes the performance of each of the component groups, including the average change (unweighted) for the stocks in the group. What is interesting is the excel- lent performance of a fair number of groups. Eliminating takeovers, many areas have demonstrated . 'superior relative strength. A number, such as Drugs, Foods, Soft Drinks, Food Chains, Department Stores, and Electric Utilities are classic defensive issues. In addition, finance-related issues have tended to perform well. We do not think this phenomenon is accidental or temporary. Individual groups that show' above-average relative strength on a downswing also tend to perform well on the next up-cycle. Some analysts have explained the above-average performance of defensive issues in terms of their low volatility. In our view, this explanation is only partially satisfactory, and we think there is a strong likelihood that many of these issues mav be leaders in the next bull market. STOC,S STOC,S AVERAGE STOC,S STOC,S AVERAGE ——G-R-O-U-P———————– Uf !oWN CHANGE .—— —— ——- GROUP ——————————— UP —— DOWN —— CHANGE ——- SUGAR REFINERS RESTAURANTS HOSPITAL SUPPLIES EN1ERTAINMENT ELECTRONICS-INSTRUMENTATION TOYS lEISURE TIME SOAPS 0' 00 ',0 1 37.1 COSMETICS 4 1 33.6 ELECTRICAL HOUSEHOLD APPLIANCE 6 o a.; PUBLISHING (NEWSPAPERS) ') o 27.26 OFFICE & BUS. EQUIP. 3 1 5.89 TIRES! RUBBER 2 I n.08 AEROSPACE 4 1 3.06 0 TRANSPORTATION , ,-5 o 1;; ;,LLANEOUS 3 3 -0.67 2 -0.67 1 3 -0.80 5 7 -0.93 2 -1.40 4 4 -1. 79 7 13 -1.80 7 13 -2.91 3 5 -3.23 MULTI-lINE INSURANCE 5 o 17.01 CHtMICALS DRUGS 9 3 14.8 AIR TRANSPORT FOODS 18 3 14.64 CHEMICALS-MISC. SOFT I'RINhS FOOD CHAIN 4 1 12.04 GENEF'AL MERCHANDISE CHAINS 6 1 11.81 CONTAINER METAL &GLASS CONTAINER PAPER 11.68 RAILROAD EQUIPMENT RETAIL STORES DEPARTMENT 7 1 11.31 TELEPHONE (XCLIJ An) TEXTILE PRODUCTS 6 1 10.41 ELECTRICAL EQUIPMENT f'FOPERTY-CASUALITY INSURNCE 6 o 10.33 HOME FURNISHINGS ELECTRIC COMPANIES 20 10. MACHINERY INDUSTRIAL/SPECIALTY MOBILE HOMES HOTEL/MOTEL 3 V 10.17 COAL FITUMINOUS I 9.0 NATURAL GAS fIPELlNES POLLUTION CONTROL 3 8,99 AUTO fARTS-ORG. EQUIPMENT TEXTILE APPAREL MFRS. 3 3 8.80 BANh5(QUTSIDE NEW YOR CITY) RADIO BROADCASTERS 5 1 8,58 ROOFING &WALLBOARD PUBLISHING 5 8.3 SHOES LIFE INSURANCE BEVERAGES BREWERS 5 o 8.21 STEEL 2 7.50 OIL WELL EOUIPMENT AND SERVICE COMMUNICAllON EDUJ'/MFRS 2 2 7.09 OIL INTEGRATED INTERNATIONAL TRUCKERS BANKS(NEW YORK CI1Y) 1 6.61 HEATING g PLUMBING 4 5. 04 fHSONAL LOANS FINANCIAL MISCELLANEOUS 1 2 3.55 OIL CRU!,E PRODUCERS TOBACCO ELECTRONIC MAJOR COS, 1 3. 12 FOREST PRODUCTS 1 2 2,83 AUTO TRUC,S ! PARTS CONGLOMERATES AUTO PARTS-AFTER MAR,ET 5 3 2.27 AUTOMOBILE 1 1.81 MACHINERY CONSTRUCTlON-& MAT. H 400 INDUSTRIALS In 208 1.73 OIL INTEGRATE!' DOMESTIC STANDARD ! POORS 500 248 252 1.54 HOME BUILDHIG 40 UTlLlTlES 40 FINANCIAL 16 1.51 COMPUTER SERVICES 15 1.41 NATURAL GA!' DISTRIBUTORS ELECTRONICS (SEMICONDUCTORS/CaMP 2 J.38 FE,'; IUZERS BEVERAGES DISTllLEfS MACHINE HlOLS 1.28 AIR FREIGHT 3 !. 06 AGRICULTURAL MACHINERY RAILROADS RETAIL STORES(DRUG) 4 4 0.88 ALUMINUM 3 1 0.82 METALS MISCELLANEOUS OFFSHORE DRILLING 3 I 0.63 COf'PER CEMENT HOSPITAL MANAGEMENT COMPANIE 0.35 GOLD -0.3 SAVINGS & LOAN COMPANIES 2 1 3 2 2 2 o I 3 I 1 3 I 1 1 1 1 0 1 J 0 0 0 1 1 1 0 0 1 0 0 1 0 0 0 -0 0 -3.52 -3.67 -3.80 3 -4.06 1 -4.31 4 -4.62 4 -4.63 -4.75 5 -5.26 3 -5,43 4 -5.61 5 -5.81 7 -6.16 4 -6.38 3 -6.78 7 -7.13 5 -7.63 5 -7.67 3 -9.12 1 -9.28 4 -9.75 7 -11.70 3 -11.83 4 -12.06 4 -12.20 8 -12.86 2 -13.00 4 -13.14 6 -14.0 4 -14.66 -17.32 4 -19.02 4 -19.77 4 -19.91 3 -25.60 3 -30.03 3 -31.01 Dow-Jones Industrials (1200 p.m.) 809.93 S& P composite (1200 p.m.) 110.01 Cumulative Index (3/4/82) 1043.62 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL ;N0os(tatseme\ntraobr resperceuSn51Y0n of opinion rcferred 10 or any or ment other Ioned matter herein The molter IS cporentaeninleedd IS, or IS to be merely for the deemed to be, convenlenc!) of dHedly or mdlredl , the subscnber Whlre on we offer or the soliCItatIOn of an offer belIeve the sourccs of our mforma bO dO h o e , we n no way represent or guarantee the accuracy thereof nor 01 the statements mude herem Any action to be token by the subscnber should be p!losn orlrde l/rslgln ond IflfOrotlon Janny M'hntgomery ;COII, Inc, as CI corporailon, and Its l)fflcers or employees, may now hOl/e, or may Jater tOKe, dIh n Ih Jpe a any securl les mef'llione m t IS or any uiure Issue, and such )OJllon may b dlfferenJ from any Ylews now or hereoftef e)lpressed m 1S or a y custorners In er 'dsuel 0rney epen ent yo any Montgomery Scott, Inc, statements made In thiS Which or In IS regIstered With the SEC as on ml/estment any other Issue Further Information on any adseVcIusfolrl may give odvlce to mentioned herein liS Inl/estment adVisory IS ol/ollob!e On request and other

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Tabell’s Market Letter – March 12, 1982

Tabell’s Market Letter – March 12, 1982

Tabell's Market Letter - March 12, 1982 page 1
Tabell's Market Letter - March 12, 1982 page 2
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW 'VOAK STOCK eXCHANGE INC MEMBER AMeAICAN STOCK eXCHANGE March 12. 1982 The New York Stock Exchange will shortly release monthly figures for February on NYSE firms carryjngcustomers…stockmarginsccountswhich.Bhouldshowacontinuingdec1ine-ln.NXSEmal'gin 1 debt. Since these figures have 'been available''debit balances'of margin 'accollntl'rin aggregate'teriDs have generally moved in the same direction as stock prices but at a more exaggerated rate. The single exception is the period from the 1976 high to the 1978 low on the DJIA. when margin debt increased with minor interruptions to new highs through June. 1981. This correlation with the longterm trend of the market can be clearly seen from the chart on the opposite page. Margin customers of the NYSE member firms reduced their margin debt in January by 970 million to 13.1 billion. the second largest monthly decline in margin debt since the start of the present series in 1965. Sale of stock from margin accounts suggests heavy liquidation. by customers who were unwilling to pay the high cost of holding shares on credit. The sharp drop in stock prices experienced in early January clearly acted as a catalyst in this reduction. On the other hand. the NYSE reported that margin accounts totaled 1.535.000 in January. a record high for the series. Because of the recent correction in the market. coupled with the extraordinarily high cost of broker loans used to finance stock purchases. this total number of margin accounts is indeed remarkable. In the following exhibit we will try to put these figures in perspective by comparing the behavior of margin accounts to margin debt. We have taken the highs and lows of the margin accounts /debt ratio and compared them to corresponding major highs and lows of the DJlA. EXHIBIT I Margin Debt (mil) Accounts (thou) Ratio Date Dow-Jones June. 1968 Hign 6690 940 I4.li5 11729768 985.08 July. 1970 Low 3780 770 20.37 5/26/70 631.16 Dec. 1972 High 7900 750 9.49 1/11/73 1051.70 Dec. 1974 Low 3910 625 15.98 12/6/74 577.60 June. 1981 High 14870 1320 8.88 4/27/81 1024.05 Jan . 1982 Low 13090 1535 11.73 3/8/82 795.47 Froffi'196S'todate 'theange6f -tliis7atioiS2073Thign on July,-l970' an-d794-low ollOctbb-er….- – -1 1978. The ratio tends to be high at major market bottoms (July. 1970 and December. 1974) and low at market tops (December. 1972). The relatively high ratio in June. 1968. a market high. can obvi- ously be attributed to the large amount of speculation in the market. Also. the ratio tends to peak before market highs and after a market low. If these observations are valid. the recent decline in customer margin debt would indicate lower levels in the DJIA. EXHIBIT II Margin Debt (mil) Total Market Value Percentage Date Dow-Jones June. 1968 H!gn 6690 641037 1.043 1i729768 985.08 July. 1970 Low 3780 531077 .712 5126/70 631.16 Dec. 1972 High 7900 872000 .906 1/11173 1051.70 Dec. 1974 Low 3910 511054 .765 12/6/74 577.60 June. 1981 High 14870 1224000 1. 215 4/27/81 1024.05 Jan. 1982 Low 13090 1116000 1.173 3/8/82 795.47 Another way we are able to analyze the customers' stock market debt is to compare it to the total market value of equities listed on the NYSE. From 1965 to date the range of the percentage of margin debt to total NYSE market value has been 1. 53 high on October. 1978 and .597 low on January. 1971. The observations seem to conclude the higher the percentage of margin debt to market value. the higher the averages. and. conversely. the lower the percentage. the lower the averages. From these studies. it is apparent since June. 1981. margin debt has peaked out coincident with highs reached early in 1981. This is the lowest level to date margin debt has reached since October. 1980. If we accept the premise that increased margin debt feeds a bull market. we must be willing to accept the opposite to be true. The gradual erosion that has been experienced since June. 1981 could pick up momentum and put further. downside pressure on.the market. This, be- comes particularly significant when we examine the number of customers carrying margin accounts under 40 equity. This figure currently totals 12 of total margin accounts. but more importantly. an alarming 37 of total margin debt. a figure in excess of 4.8 billion. In simplest terms. this means the quality of credit continues to deteriorate with 37 of the debt in accounts in the lowest equity class. It should be remembered that in August-September. 1974 this ratio reached a high of 23. a series record representing 58 of total margin debt and was thought to be a major contribu- tor to the decline in late 1974. Although it is difficult to predict how low the level of margin debt could reach. we can identify the establishment of a recent downward trend in margin debt itself. Until this trend is reversed. it would seem difficult to argue against eontinued downside' pressure on the general market. RJSrs ROBERT J. SIMPKINS. JR. DELAFIELD. HARVEY. TABELL Dow-Jones Industrials (1200 p.m.) 798.99 S P Composite (1200 p.m.) 108.39 Cumulative Index (3/11/82 1030.86 No stotement or eltpresslon of opInion or any other matler here'n COfltomed IS, or IS 10 be deemed 10 be, directly or ,nd.reclly, On offer or the sol1Cllollon of on offer to buy Or ,ell ony security referred 10 or mentioned The motter I presented merely for the convenience of Ihe subscriber While c believe the OtJrccs of our Informa- hon 10 be reliable, we In no way represent or guarantee Ihe accuracy thereof nor of The statements mude herem Any action to be loken by Ihe subCnber should be bosed On hiS o.vn Inveshgol,on and Information Janney Montgomery Scott, Inc, as a corporation, ond Its of/lcers or employC!es, may now have, or may later lake, positions or trades In respeCT to any SeCUflties mentioned In thiS or any future Issue, and such p051hon may be different from any views now or hereafter e,.;pressed In rhl!; or any other Issue Janney Montgomery Scott, Jnc, which 1 registered wlJh the SEC os on Investment odvlsor, moy give adVICe 10 liS Investment odll150ry ond othlll C\lslomer Independently of any stotements made In thiS Of In any other Issue Further mformOllan on any security rnenhoned herein IS ovallable on requesl a- ,, 0 – z(f) 0 '…. —1 –I , ' CD , .- . ICD w 0 z L'l crc- 1)nn 'I ,I, 1 Inf) 1 \ 1001 900 1 / Vvv800 NJ 1\ ,Ir r7nn I I f I I v\ V ; i , fJVv I I , 6nn 1c; 1l I 11 1) 11 1n I, ,, l I I \ I i, , I DJIR 11 II ! j . j \ IVv I! I ! 9- \ V ,I 8- I 1\ 7I 6 5 I I , !I – 4 !\t- ,, NYSE ,- i I I, I I' 3 1968 1969 ;, , 1970 1971 1972 1973 1974 1975 1976 RRGIN DET 1977 1978 'I 1979 11980 120G f- liDO – 1000 f- gOG f- 8GO 700 V. 600 IS 14 13 12 11 – 10 9 -8 f- 7 f- 6 f- 5 f- 4 3 1981 1982

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