Tabell’s Market Letter – January 14, 1972

TABELLS MARKET LETTER -.. j 909 STATE ROAD, PRINCETON NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCI( eXCHANGE, tNC MEMBER AMERICAN STOCK eXCHANGe – We have referred in recent letters to the fact that 1972 is a Presidential election January 14, 1972 year and suggested that this fact should be taken into account in trying to foresee the price pattern probabilities for the next 12 months.' Numerous studies have been made of-market action in such-years,and'it'ls-an indubitable fact that normal market patterns do tend to be slightly altered. In an effort to tabulate election year action succinctly, we have prepared the following table. It shows, for each year, the President elected and his party, followed by the average price for each month expressed as a percentage of the previous December's close (i.e., 110 means the market was up 10, and 90 means it was down 10). Year President Jan. Feb. Mar. May June l!!!v.. Aug. Sept. Oct. Nov De. 1900 McKinley R 101 103 .104 105 100 9B 9B 99 97 100 lOB 114 1904 Roosevelt R 102 99 99 101 99 99 103 107 112 11B 125 126 190B Taft R 105 100 105 III 117 117 123 126 125 126 134 13B 1912 Wilson D 100 99 102 106 105 105 106 109 109 109 lOB 103 1916 Wilson D 99 9B 97 96 9B 99 9B 99 102 105 107 103 1920 Harding R 99 91 97 96 91 B9 B9 B6 89 89 85 77 1924 Coolidge R 103 104 102 100 99 101 109 113 112 1I0 115 119 1928 Hoover R 99 98 103 110 113 108 108 112 120 123 131 132 1932 Roosevelt D 103 101 102 76 66 59 63 89 102 88 87 82 1936 Roosevelt D 102 108 1I2 1I2 104 108 116 1I8 120 126 130 128 !940 Roosevelt D 99 98 97 98 85 76 80 82 86 87 88 85 1944 Roosevelt D 102 101 105 101 105 109 112 110 108 III 110 115 1948 Truman D 97 92 94 101 106 110 108 104 103 106 100 99 1952 Eisenhower R 102 100 100 100 100 102 105 106 104 104 105 109 1956 Eisenhower R 97 98 104 105 103 102 107 106 103 102 100 102 196U' Kennedy-''''''D 'j. If'''-'-'99'''''-9S-gz-'93 '-92 96'—9Y'-'94 92''901—–93 9i 1964 Johnson D 102 103 105 107 109 lOB III 110 III ll3 115 ll2 1968 Nixon R 98 94 92 99 101 104 104 101 105 108 109 110 Incumbent party did not control Congress. Incumbent party not re-elected. The eighteen years to date show an approximate normal distribution. Ten could be considered bull markets, whereas three (1920, 1932 and 1940) are distinct bear-market years. In five years, the trend was flat, as evidenced by the fact that the December average price was .within 5 either way of the previous December's close. Of even more interest is the general tendency towards a flat trend or moderate weakness during the first half of the year. Ten of the IB years showed little market change through June. Indeed, only in the three years which later turned out to be full-fledged bear markets was the action in the first half predo- minantly on the downside. It is worthy of note that a downward bias tends to be introduced on two sorts of occasions. First, when the incumbent President loses the election and, second, when the incumbent party does not control Congress. This latter tendency is especially worthy of note since such a condition obtains in 1972. Despite the fact that 10 of IB election years were bull-market years, none of the 10 took place in years when the President did not control Congress. In the six years that this has occurred, the market was down sharply twice and flat four times. The first statistic suggests the market may be a good forecaster of election returns. In none of the six years when the incumbent lost the election was the market up more than 5 in the first half of those years. Thus a booming market between now and June would augur well for Mr. Nixon's chances. The most consistent fact about election-year markets, though, is the definite tendency toward'a strong second half. Indeed, as the table shows, in 15 of the IB years the average price for December was higher than the average price for June. Even in two of the three bear markets, 1932 and 1940, the market rallied in the second half from the June lows. Furthermore, in one of the three exceptions (1912) the June-Decem- ber difference was miniscule, and the market spent most of the second half in higher territory. Only in 1920 and 194B were June prices significantly lower than December's. The problem, of course, is to fit all this into the pattern for 1972. The strength of the recent recovery, it seems to us, argues against the expectation of any serious weakness during the first half of the year. As suggested above, however, the tension between the President and Congress could well produce a market that showed little essential change from December during the first half. During the second half, we would expect the normal tendency toward a strong market to take over and, in this context, it is quite probable that the year's high might be made in the Fall. Dow-Jones Industrial (1200 P.M.) 905.4B , ANTHONY W. TABELL S&P (1200 P.M.) 103.20 AWTmn DELAFIELD, HARVEY. TAB ELL No statement or expressIon of opinion or any other motter herem tonlolrled IS, or .110 be deemed to be, directly or ,ndirectly, on offer or the sollcltallon of on offer to buy or sell any ecuflty referred 10 or mentioned The mattcr .s presented merely for the converlence of the subSCriber While ….e believe the sources of our Informot,on to be reliable, we in no wov represent or guarantee lhe accuracy thereof nor of the statements mude herein Any achon to be token by Ihe subscriber should be based on his own investigation and Information Janney Montgomery Scot', fnc, as a corporation, and Its officers or employees, may now have, or mav loter take, positions or trades In respect to anv secuntle5 mentioned In thiS or any future IS5ue, and such posITIon may be different from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With Ihc SEC as on IfIvestmenl adVisor, may give adVice to Its Investment adVisory and other customers IfIdependently of any statements mode on thiS or In ony other Issue Further .nformotlOn on any security mentioned herein 15 available on request