Tabell’s Market Letter – September 24, 1971

i TABELL'S -ARKET ETTER 009 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE. INC. MEMBER AMERICAN STOCK EXCHANGE September 24, 1971 Short term weakness On low volume continued to be the dominant feature of equity markets for theJirUQl1r ys .9t.WJ..w. eek ,-Qe91yIl…TIldy ,'!J29br().thr''lghe-,JO level, reaching a closing low of 891.28 and an intra-day low of 884.64 in Thursday's trading. At that point it had pushed deeply into the 900-890 support zone, and the downside objective of the minor top formed at 920-900 had been reached. In the light of these facts, Friday morning's rally, following President Nixon's clarification of Phase 2 of his Economic Plan, was hardly surprising. There are now two benchmarks to watch in an attempt to forecast the intermediate-term course of stock prices. The first is the 920 level on the Dow, where the post-Nixon-speech rally peaked out. Inability to better this high would broaden a potential top and increase the near- term downside risk considerably. Were 920 to be surmounted, the next logical step would be a test of the April high of 950. It is, parenthetically, interesting to note that the present pattern of the S&P 500 diverges considerably from the Dow and is, in fact, somewhat more constructive. Ability of this index to move above 101. 50, not too far from its present level of 98.91, would clearly suggest a move into new high territory, a suggestion not necessarily implicit in the pattern of the senior average. It is thus apparent that we have reached a market stage when diversity and s e 1e c t i v i t Y among individual stocks is increasing, and the averages tend to give a less and less fair picture of what might be the performance of an average portfolio. The following table may serve to indicate the extent of this diversity. It is based on a study of 3,193 New York and American Stock e listed ues which s each as a of as a group to percentile and shows the performance of the best acting 10, the next best acting 10, etc. CHANGE FROM 1971 HIGH CHANGE FROM 1971 LOW PERCENTILE 1 – 10 PERFORMANCE – 0 – – 5 PERFORMANCE 53 or Greater 11 – 20 – 5 – 8 37 53 21 – 30 – 8 – – 11 26 37 31 – 40 -11 – – 14 20 26 41 – 50 – 14 – – 17 14 20 51 – 60 -17 – – 22 10 14 61 – 70 -22 – – 27 7 10 71 – 80 81 – 90 – 27 – – 33 – 33 – – 43 4 2 7 4 91 – 100 -43 or More 0 2 The figures are interesting. As of Thursday's close, the Dow was selling for just under 94 of its 1971 high. However, as the table indicates; more than 80 of all stocks were off from their highs by a greater percentage. More than one-half the list had declined at least 17 or more from peak 1971 figures, and at least one stock out of 10 had dropped 43 or more from its high for the year. ..- – The'same diversity 'is-apparent'in .individual 'ls sties . measured 'againsfthe year' s'low . Dow, again, is a bit over 7 above the low for the year, posted in early January. Yet almost one-third of all listed stocks have failed to better its upside performance and one-half the list is within 10 of its year's low. ConSidering the fact that 1971 has been a fairly good year for equities, it is at leaSt interesting that only about one-third of all issues are currently selling for 25 or more above the year's lows. Inspection of individual chart patterns, moreover, strongly suggests that this sort of diversity is apt to increase rather than decrease. This is absolutely normal at this stage and indicates that rigorous portfolio selection will become a more and more important part of the investment management process. Dow-Jones Industrial (1100 a.m.) 896,98 ANTHONY W. TABELL S&P (1100 a.m.) 98.91 DELAFIELD, HARVEY, TABELL AWTmn No statement or expression of opinion or ony other motler herein COntolned IS, or IS to be deemed to be, drrooly or IIld,rectly, on offer or the sollcitahon of an offer 10 buy or sell ony secunty referred to or mentioned The matter IS presented merely for the c.onvellence of the subSCriber While He believe the sources of our ,formahan to be reliable, we In no way represent or guarantee the atcuracy thereof nor of the statements mude herein Any aChon to be laken by the subscriber should be based on h' own Inveshgohon and Information Janney Montgomery Scali, Inc, as a corporation, and lIS officers or employees, may now have, Or may later toke. POSitiOnS or trades In respect to ony securttles menhoned In. thiS or any future Issue, and such positron may be different from ony views now or hereafter expreSsed tn thiS or any other Issue Janney Montgomery Scott, Inc, Which IS regiStered With the SEC as an mvel/mel'll adViSor, may gH'e adVICe 10 115 Investment adVISOry and other customers Independently of any statements mode III thiS or In any other Issue Further informatIOn on any secunty mentioned herein IS oVOllable on request