Tabell’s Market Letter – October 01, 1967

Since ili the early 19305, the silort interest has played a definite role relative to overall stock m'l.rket performance. Almost without exception, whenever the sho rt interest ratio exceeded 1.5 to 2, the general !Il3.rket experienced a relatively harp advance in following months. Early in 1933, the ratio was junt above 2.0 and the market alMost doubled within the next year. In mid-1938, the ratio again rose above 2.0 which was followed by a market rise of around 50. T, he market bottomed out in 1942 around the same time that the short interest ratio moved above the 1.5 level and kept on going up for more than a year before flattening out. Duri ng 1947 and 1948 t;hen the ratio stayed 1.5 and 2.0, the market was undergoing a consolidation-ccumulation phase prepratory to the great bull mark8t that started in 1949. I'Then that 1949 market started off on its huge rise, the short interest ratio was at the highest point since 1931, betleen 2.0 and 2.5. Again, the September 1953 low point NKX coincided with the short interest rising to between 1.5 and 2.0. A buildup in the ratio from 1.5 to above 2.0 followed the 1957 market low by several months and preceeded the sharp rise of almost 150 points that took place in the next 12 montns. Conversely, whenever the short-interest ratio fell under 1.5 and continued the market UndeTI18nt a corrective phase lasting sever3.1 months. The short interest ratio bottomed out in Spring of 1966 and started to rise sharply as the market continued its decline. ..hen the market bottomed out in October 1966, the ratio las nearing its peak, .lhich Nas reached in November. Since then the ratio dropped rather sharply backto around 1.25 in Feb-11arch of this year, from point it has been rising slowly, along .ith the general rrarket. From the above it could be assumed that either the ratio has reached another peak and soon 'ill start declining as the market rebounds to the upside, or that the ratio will continue to decline to around the 2.0 level, p3.ralleling a further wrket decline, before both it and the averges bottom out. .\ Current short interst is 1.67, or 1. 7 and do.u from 1.9 last month, August IRS 1.h6