Viewing Month: January 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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