Viewing Month: June 1972

Tabell’s Market Letter – June 02, 1972

Tabell’s Market Letter – June 02, 1972

Tabell's Market Letter - June 02, 1972
View Text Version (OCR)

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC. MEMBER AMERICAN STOCK EXCHANGE June 2, 1972 As the advance from the 1970 lows reached its second anniversary a week ago, the major market average; celebrated the event by attaining new closing highs for the move, with the Dow-Jones Industrials attain- ., ing a Monday intra.day peak of. 979o.,41iz.'c9.mlortablyaJoyepreyio.us—.QeaksregstredJ!1ea.r!yv1aclL r- and early April. It would be nice to be able to say that the technical condition of the market in June was- as healthy as it had been in March but this is, unfortunately, not the case, and there is no use burying our head in the sand and refusing to recognize the fact. The following table shows the action of three major stock market indices over the past three months. As can clearly be seen, the pattern for the three averages is similar, a high in March followed by a minor decline, a higher peak in April followed by a drop to a new low and, finally, new high ground in late May. It is almost a textbook example of a type of action known as a broadening formation — one of the earliest patterns recognized in technical literature. Indeed, references to this sort of pattern can be found in the literature dating back to the early part of the Century. March High March Low, April High May Low May High Dow-Jones Industrials 957.03 925.87 977.52 917.37 979.46 S&P 500 109.75 105.86 111.11 103.83 111.48 S&P425 122.08 117.57 123.94 115.64 124.74 Let us quote from one of the definitive works on technical analysis, Technical Analysis of Stock Trends by Robert D. Edwards and John Magee, Jr., on the s1,lbject of broadening price formations. Broadening price patterns (are) definitely bearish in purport. They appear most oftEm at or near an important topping out of the trend. Hence, it is reasonably safe to assume that prices, when they finally break away from the formation, Nill go down or, if they do go up, will very soon turn around and come back down again … One particular manifestation .. is known to market technicians under the specific name of Broadening Top . (It) has three peaks at successively higher levels and, between them, two bottoms with the second b.ottom..l9tha !Lt!)efics t.,!,hea s s.umpUon .ha sbe.enLtha Lit J..s,completed.a ndLln. effecLa sa n.lmp.orta nt,, reversal'lI;'ciicatio;; j''st as soon as the rection from its third peak c;;rrle -below the lev';-l'';f its secod– bottom . ., It is only necessary to look at the chart of the Dow-Jones Industrial Average on the back page of the Wall Street Journal to see that recent action constitutes a perfect example of what Edwards and Magee are talking about. Compounding the situation at the present time, we have the fact that breadth indices were lower at the April peak than at the March peak and were lower still at last week's high. Moreover, all three highs in the breadth index were below its peak of April, 1971 despite the fact that all of the major averages have long since surpassed that high. Add to this such factors as a near-record low in mutual fund cash pOSition and a low level of short interest related to volume. Consider the failure of the Transportation index to come even close to confirming the highs in the other averages. The picture does not constitute a bright one. Now we are doing nothing in the above but reporting on what has happened to date. Market action could Imporve, and a new upsurge of buying power could develop from these levels but, as we enter June, 1972, any such improvement remains in the realm of hope rather than fact. To set against the unfavorable developments to date there are still some favorable factors. First is the lack of significant deterioration in large numbers of individual stock patterns. Indeed, it must be noted that a significant number of stocks have absolutely no deterioration whatsoever. And yet, as many learned to their sorrow in 1968 and 1969, top formations often do not become complete until well after the market ha s reached its high. A further case can be made for higher prices by the presence of large potential buying power in margin accounts,it.being the utilization,of this.buyingpower,which essentially was able.to drive the market up from its November lows. Furthermore, the original upside objective of 1065 for the Dow-Jones Industrial Average which we have been citing since October, 1970 still constitutes a valid reading. It is further true that the broademng formation referred to above will not be confirmed as a top until a downside break out below the May lows takes place. And finally, as we have been suggesting for some time, the n9rmal election-year pattern calls for higher prices in the second half. None of this, however, can erase what has been happening in the marketplace during March, April and May. One possible resolution to the dilemma, of course, would be the development of a decline of inter- mediate rather than major proportions which would be followed later this year by a surge into new high territory. Here agam, however, we would be willing to let the market tell its own story. From here on out we think it is incumbent upon the market to show improved technical action sufficient to erase the deterioration which has characterized the past three months. Dow-Jones Industrial (1200 p.m.) 962.22 S&P (1200 p. m. ) 109.75 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No stotement or expresSion of opinion or any other molter herein contolned IS, or 15 to be deemed to be, directly or Indirectly, on oHer or the sollcllollon of on offer to bvy or sell any security referred to or mentioned The matter IS presented merely for the conVef'lenCE of the subscriber While -Ne believe the sources of our Informa- tion to be reliable, we m no way represent or guorantee the accuracy thereof nor of the statements mude herem Any action to be token by the subSCriber should be bClsed on hiS own mvestlgatlon Clnd Information Janney Montgomery Scali, Inc, as a corporallol'\, and Its officers or employees, may now have, or may later toke, posiTions or trades In respect to any 'Ccurltles menTioned 11'\ thiS or any future luue, and such pOSition may be different from any views now or hereafter expreued In thiS or any other Issue Janney Montgomery SCali. Inc, which IS registered wllh the SEC as an Investment adVisor, may give adVice 10 lIs Investment adVisory and othel cuslamers Independently of any statements mode In Ihls or In any other Issue Further mformatlon on any security mel'\llOned herein IS available on request

Download PDF

Tabell’s Market Letter – June 09, 1972

Tabell’s Market Letter – June 09, 1972

Tabell's Market Letter - June 09, 1972
View Text Version (OCR)

.. .t; TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW .JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE June 9, 1972 We indicated in last week's letter the fact that we were becoming somewhat less than en- chanted about the technical performance of the stock market, citing at some length the evidence ,- .. of 1echnicardeterioration which-had-beenmanifesting its elf'since'a pproximately-la stMarch7-We -' confess, looking back at it, that we were somewhat surprised when this weakness began to emerge and yet, probably, we should not have been, for the occurrence of weakness as the Dow moved above the 920 level in March of this year was totally consistent with the hypothesis as to long-term market behavior which this letter has held for the past two years. We have repeatedly suggested that the single, most significant technical occurrence of the post-war period was the violation, in 1969-1970, of the secular uptrend channel which had con- tained the major market averages since 1942. As we said in this space almost a year and a half ago, on January 15, 1971, the equity market from 1942 until 1966 was buoyed by a secular up- trend advancing at the rate of about 9 a year on the Dow. Sure, there were bull markets and bear markets within the framework of that uptrend, but the bull markets were long and dynamic and the bear markets, although painful, short and quickly recovered .. There is real eVidence, at the moment however, that the secular uptrend is no longer with us. Indeed, computed from 1966, the slope of the DJIA has been virtually zero. The most statistically accurate description of the market on average for the past five years is that it is a wide, flat trading channel. Absolutely nothing has happened in the past 18 months to challenge the accuracy of that descrip- tion. Let us examine the action of the major averages since 1966 a bit more closely. For the Dow- Jones Industrial Average, the major secular trend can be described by a line which has been de- Gl4ningat the,ate-ofapproximatelYo',,017points .pertradingday..since..Jilnuaryo'L,16Ji,.P.t,that .,,- time, the central value was 879, and the slight downward slope since then now makes the central or normal value for the Dow approximately 852. The expected fluctuation about this central value can also be computed, using a device which statisticians call the standard error. In the case of the Dow, this is about 69 pOints which means that, during 1966-1972, the Dow spent approximately two-thirds of its time within a range of 69 points plus or minus the normal value and 95 of its time within 138 points (twice the standard error) either way of its normal value. Looked at another way, the Dow moved above its range of normal value at approximately 920 and would reach a range of extreme overevaluation at about 990. Conversely it would be- come undervalued at 783 and extremely undervalued at about the 714 level. For the S &P 500, the picture is a bit more bullish. Unlike the Dow, its action since 1966 can be described by an upward-sloping channel riSing at the rate of .007 points per day. Thus, while its central value in 1966 was 87.77, it has increased, at the moment, to 98.84. The standard error is approximately 7.18 points so that the index becomes overvalued at about 106 and extremely overvalued at 114. The range of undervaluation begins at 91 and reaches extreme undervaluation at 83. Viewed in this light, the fact that the market remained in a state of almost perfect health through March, 1971,at which point it began first to show deterioration, is hardly surprising. The Dow first closed above the 920 level during the la st week in February, and it was shortly after —– —that that -the weakness we referred to-last week .- began to – manifest itself. The – S&P 500. IJ- wise, moved above the 106 level at precisely the same time. Now all of the above is nothing more than a description of what has taken place in the past. If we choose to believe that the underlying process determining stock prices has changed dra- matically from that of 1966-1972, it is totally worthless. However, as we stated above, we are willing to proceed, until confronted with evidence to the contrary, on the hypothesis that seven years of statistical eVidence cannot be ignored in a future projection. We have said in the past that all too many investors are, consciously or unconsciously, bas- ing their behavior on the market pattern which prevailed between 1942 and 1966 rather than the one which has obtained from 1966 to date. We intend to discuss the market-strategy implica- tions of our hypothesis more fully in future issues of this letter. Dow-Jones Industrial (1200 p.m.) 935.73 ANTHONYW. TABELL S&P (1200 p.m.) 106.92 DELAFIELD, HARVEY, TAB ELL AWTmn No STatement or expression of op'l1lon or OilY other molter herell1 contained is, or IS to be deemed to be, directly or mdHectly, on offer or the soliCitation of on offer to buy or sell any secunty referred to or menlloned The matter IS presented merely for the converlienCE; of the subSCriber. While we believe the sources of our ,nformo tlon to be reliable, we 111 110 way represent or guarantee the accuracy thereof nor of the statements mude herein Any achon to be token by the subSCriber should be based all lIS own investigation and mfo,matlon Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, may now have, or may later toke, potlons or trades, respect to any secufltles mentioned In thiS or any future ISSUe, ond such position may be different from ony views now or hereafter expressed In this or ony other Inue Janney Montgomery Secll, Inc, which IS registered With the SEC as on Investment adVisor, moy give odvlce to liS Investment advls.ory and othel customers mdependently of any statements made In this or 111 any other Issue Further Information all any security mentioned herein IS oV(IIloble on request

Download PDF

Tabell’s Market Letter – June 16, 1972

Tabell’s Market Letter – June 16, 1972

Tabell's Market Letter - June 16, 1972
View Text Version (OCR)

! TABELL'S MARKET LETTER t , …1 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVlElION OF MEMBER New VORk STOCK EXCHANQE. INC MEMBER A.MERICA.N STOCI( EXCHA.NGE June 16, 1972 What follows is, in essence, nothing more than an exposition of past history showing how the inves- tor might have achieved superior portfolio results over the past 6-1/2 years. While it obviously contains I n – o def — We inite – i m – plic – ations ,—.,. for -th-.e. -f-u-tu r-e.,- – -w e thin – k the poi -. nt made –.- suggested last week that the action of the Ilow-Jones In may, in fact, be of some i -. – —- -,.- . dustrial Average since Jan ntere ualy, st 1 . —- 966c —- ould ..-. – – -. be described by a trendline which started at roughly 879 in 1966 and has been moving downward slightly ever since with a standard error of some 68 points. Under this conception, the market could be regarded as moderately over or under-valued when 68 pOints above or below the central trendline and is distinctly over-valued when 136 pOints above or below that line. A similar computation can be made for the S&P 500 stock index, for which the central trendline has a slight upward slope. The following table assumes that an investor, 'in January, 1966, had formulated an investment policy as follows. As the market rose above its computed trendline, he wished to be 50 invested in stocks; when it became moderately over-valued, he wished to be 25 invested; and, when distinctly over-valued, he wished to be 100 in cash. Conversely, as the market became moderately under-valued, he wished to in- crease his stock investment to 75 and, at the distinctly under-valued figure, he wished to be 100 in- vested in stocks. Following this policy he would have made an initial investment followed by 14 changes in his stock pOSition in a 6-1/2-year period. The dates these changes would have been made and the value of the account on each of these dates, assuming an initial 100,000 investment, together with the current value, are shown below. The performance of the stock portion of the account is assumed to be the same as the DJIA. The table is for illustrative purposes only and commissions and taxes are not in- eluded. -Date DpA Desired Stock lnvestment Action Cash Portfolio Value 1/3/66 968.54 25 Buy 25,000 75,000 100,000 5/13/66 876.11 50 Buy 26,192 48,807 97,614 – 8/19/66 3i',nfu7 804.62 8-766'7 75 50 Buy 25,399 SBlt55'1 23,407 49-;l59 93,631 99-;-919 9/25/67 943.08 25 Sell 27,818 77,778 103,704 lI/1/67 867.08 50 Buy 26,970 50,807 101,615 9/4/68 938.28 25 Sell 28,532 79,340 105,787 7/9/69 861. 62 50 Buy 27,527 51,813 103,626 12/3/69 793.36 75 Buy 26,932 24,880 99,521 5/4/70 714.56 100 Buy 24,880 0 92,107 11/30/70 794.09 75 Sell 25,589 25,589 102,359 1/22/71 861. 31 50 Sell 28,839 54,428 108,857 4/12/71 926.64 25 Sell 30,310 84,739 112,986 8/3/71 850.03 50 Buy 29,414 55,325 110,650 2/16/72 922.94 25 Sell 31,221 86,547 115,396 6/15/72 945.96 86,547 116,897 As the last figure shows, the present value of an account invested along the lines of this policy is 116,897 giving a 16.9 increase over the six years. A simple policy of buying and holding the Dow over the 6-1/2-year period would have resulted in a 2 loss, For the more sharply rising S&P 500 a 29.5 gain would have been shown vs. a 16.2 gain achieved by Simply buying and holding. Now it may be argued that neither of these results are particularly spectacular in terms of actual return. It should be pOinted out, however, that the investment policy suggested would have enabled the investor to outperform the market with a relatively low degree of risk. Despite the fact that the hypothetical per- formance was better than that of the average, the investor, for the bulk of the period, was 50 or less in- vested in stocks. He thus maintained, for the.most,part, a highly defensive,position with no. sacrifice of capital gains Prospects' – – .- – It may also be argued that superior stock selection over the 6-1/2-year period could have achieved still better results. The same would be true under the plan suggested above. Had the performance of the stocks owned under the plan been better than that of the market, the overall results would have been proportionately better. We purposely started this exercise by saying that it represents history and history only. If the inves- tor were to adopt such a polley today, as of mid-197, and the market were to do something inconsistent with its 6-1/2-year record, such as moving ahead to substantive new highs, the policy would obviously turn out to be inferior to that of Simply holding common stocks. What we have been repeatedly suggesting in this letter, however, is that the behavior of the market in the past 6-1/2 years may have some implica- tions for the future. Under these conditions a policy of adjusting equity exposure in accordance with market levels may well prove rewarding for the investor. Dow-Jones Industrial (1200 p. m.) 943.03 ANTHONY W. TABELL S&P (1200 p.m.) 108.21 DELAFIELD, HARVEY, TABELL AWTmn No statement or expressIon of opinIon or ony other matter herem contolned IS, or 15 to be deemed to be, directly or indirectly, on offer or the 5011(llollon of on offer to buy or sell any security referred to or mentioned The matter .s presented merely for the canverlIence of the subSCriber While we believe the sources of our Informa tlon to be reltable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action fa be token by the subscriber should be bosed on h.s own inVestigation and information Janney Montgomery Scali, Inc, as a corporation, and Its officers or employees, may now have, or may later toke, pOSlhons or trades In respect to any cur.tles mentioned In thiS or any future Issue, and such pOSition may be different from any views now or hereafter expressed In th.s or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to lIS Investment adVisory and othel customers Independently of any statements mode In ,I-IIS or In any other Issue Further Information on any security mentioned herein IS available on request

Download PDF

Tabell’s Market Letter – June 23, 1972

Tabell’s Market Letter – June 23, 1972

Tabell's Market Letter - June 23, 1972
View Text Version (OCR)

., L 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCI( EXCHANGE June 23, 1972 The single question most familiar to anyone in the securities industry is, What is the market doing'. The problem has always been how to couch the answer. Generally, an average, most commonly the Dow- Jones Industrials, less often the S&P 500, is used as a proxy for the market as a whole. With the grow- – lng-'te-'Chntta1'sophlstict1oii'e'-nmi\gtITe'ilfvesCtmenecommu-rrity,'brea-dth'action'isalso–often citediwlth'- – the number of advances and declines being mentioned. However, in a market consistmg of over 3,000 listed stocks, accurate description is always a diffi- cult task and the action of an average can never serve as much more than an approximation of the true state of events. This is especially true at the present time when a discussion of the market's action over the past four months must be presented in terms a great deal more complicated than the simple traCing of a market index. The action of the Dow since March is fairly simple and straightforward. It reached an intraday peak of 957.03 in the early part of the month, declined moderately and then rallied to a bull market high of 977.72 in mid-April. After a drop in late April and early May, it rallied again and exceeded the previous peak, reaching 979.46 on May 26. Subsequently, it declined into mid-June and this week rallied above the 950 level, fairly close to its previous peaks. The table below compares this action with that of the S&P 500 stock index. At first glance, the action of the two indices would appear almost identical, with similar peaks and troughs. However, the third column, which shows the ratio of the two (the S&P divided by the Dow) highlights an interesting fact. The decline in this ratio indicates that, since March, the Dow has been outperforming the S&P. This is of more than passing significance. The secular uptrend of the broader average has for many years been better than that of the 30 Industrials. A superior performance by the Dow generally occurs only in down markets. Dow-Jones Industiial Average S&P 500 Ratio 957.03 109.75 .1147 .'—–'——–924-ZZ——————–roS;-86,.. 1-1'45 -.-.- 977.72 111.11 .1136 917.37 979.46 103.83 111.48 .1132 .1138 Looking at other market indicators, the divergence is even more striking. The Dow Industrials and the S&P made successive new peaks in March, April and May but the Dow-Jones Transportation Index at its May high of 264.33 was a striking 5 below its April peak and last week, while the general market was recovering, the carrier index was sinking to new lows. The Dow-Jones Utilities, moreover, made their high for 1972 back in January and have, essentially, been declining ever since, with the March, April and M3Y highs each at successively lower figures. There is even a divergence between the American Stock Exchange and New York Stock Exchange. The peak of the Amex Index was made at 28.80 in April and not even approached at 28.10 in May. It is, moreover, demonstrable that the bulk of individual issues have been showing action quite different than that of the averages. The following table is based on a study of 2897 New York and Ameri- can Stock Exchange issues at recent prices, dividing these issues into percentiles based on, first, their percentage below their 1972 high and, second, their percentage above their 1972 low. Percentile 1-10 Below 1972 High 3.85 or Less Above 1972 Low 43.36 or More 11-20 21-30 3.85 6.80 6.78 .64 43.28 – 27.96 27.94 – 20.41 31-40 41-50 . . 9.65 – 12.50 — – – 12;50–15.37 -. 20.40 – 14.13 —–..– -14.-12 9.46- 51-60 15.38 18.41 9.45 – 6.47 61-70 18.42 – 22.29 6.47 – 4.16 71-80 22.32 27.54 4.15 2.36 81-90 91-100 27.59 – 34.78 34.78 or More 2.36 – 0.77 0.77 or -Less For comparative purposes, the Dow is, at the moment, well within 3 of itS 1972 peak. As the table shows, less than 10 of all stocks are as close to that peak, and a good half of all issues are 15 or more below their year's high. Likewise, while the Dow is up almost 8 from its low for the year, almost half of all listed stocks have been unable to equal this figure. Thus, as we have mdicated in past letters, while the action of the Dow has recently been unspec- tacular, a good deal of underlying deterioration has, in fact, been taking place. Dow- Jones Industrials (12 00 p. m.) 949.20 S&P (1200 p.m.) 108.59 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL AWTmn No statement or expression of opinion or any other maHer herein contained IS, or IS 10 be deemed to be, directly or mdlrectly, on offer or the 501lciloilOn of on offer to buy or sell any seunty referred to or mentioned The matter IS presented merely for the onvel'!ene of the subsrlber While -tie believe the oures of our information to be reliable, we In no way represent or guarantee the accuracy thereof nOf of the statements mude herein Any action to be token by the SUbscfloer should be bosed on hIS own mvestlgallon and mformatlon Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, may now have, or may later toke, pOSitions or trades In respect to any securilles mentioned In thiS or any Future Issue, end 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 the SEC as on Investment adVisor, may give adVice to Its Investment adVisory and othel customers Independently of any statements made !n thiS or In any other Issue FUr1her Information on any security mentioned herein IS available on request

Download PDF

Tabell’s Market Letter – June 30, 1972

Tabell’s Market Letter – June 30, 1972

Tabell's Market Letter - June 30, 1972
View Text Version (OCR)

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER New YORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK eXCHANGE – June 30, 1972 T)1esefi!i,E1!Y l o,fJhe most ,uncerta.in o!l i,dysyies–,- nd , in the light of this uncer- tainty, it is not surprising that market commentators should' seek 'security-in- nffieTts of fammar fftual' , Many of these ritual events are seasonal, and, as the 4th of July approaches, we are predictably being treated to speculatlOn about the so-called summer rally. Much of this speculation tends to treat the event as a phenomenon comparable to the early tomato crop — a happening that occurs with unvarying regular- ity with only the exact date varying slightly. Since almost no two-month period goes by without a market rally of some sort occurring, it is very easy to seize on whatever advance happens to occur in July or August and call it the summer rally. A look at the record indicates that while the summer rally is by no means a mythical beast, Some caveats about making it too strong a factor in a market forecast may well be expressed. ONE-MONTH PERIODS TWO-MONTH PERIODS Ending Month Advances Declines Avg . Chge Advances Declines Avg. Chge January 30 16 0.75 30 16 2.05 February 25 21 -0.03 25 21 0.71 March 25 21 – 0.23 22 24 – 0.37 April 26 20 0.94 28 18 0.80 May 24 22 -0.76 28 18 0.43 June 22 24 0.95 23 23 0.14 July 32 14 2.31 30 16 3.22 August 31 15 1.88 34 12 4.36 September October November December 20 24 27 . 35 26 – 1.34 22 – 0.54 19 0.71 ' 1-1 '15 27 19 0.47 23 23 – 1.81 28 18 0.23 31 1-5 -2,.10 -1 Total 321 231 0.50 329 223 1.03 The table above shows the action of the Dow-Jones Industrial Average in every one-month and two- month period from 1926 to 1971. For each period the number of instances when the market advanced and de- clined is shown, together with the average percentage change for the period. A preliminary look at the table, indeed, supports the notion of a probable summer rally. The average monthly advance for the Dow over the period has been .5 whereas the average performance in July is an advance of 2.31, more than four times as great. Likewise, the average advance of 4.36 for the two months ended August is four times larger than the average two-month advance. It would, indeed, appear that the expectation of an advancing market during July and August has some solid grounding in fact. Having made this statement, however, a few doubts must be raised. The first factor which needs to be pOinted out is that a large part of the high average advance for the summer period rests on the accident of the 1932 bottom's having occurred at the end of June. Thus, July and August of that year produced the largest two-month advance in stock-market history, an astounding 70 rise. If this single year is elimi- nated from conslderation, the results for July and August are much closer to normal. Secondly, while lt is true that July and August do show significant pluralities of advancing months over declining months, it must be remembered that advancing periods tend to outnumber declining ones over the 46 years by almost three to two. When standard tests of statistical Significance are appli,ed, the period with the clearest seasonal action is the month of December, which is why this letter has always empha- sized the importance of the year-end rally. Likewise, the tendency toward a declining market in Septem- ber is statistically more significant than that of a rise in July or August. Interestmgly enough, none of the other months show any discernible seasonal pattern whatsoever. Lastly, in looking for seasonal patterns/ it is wise to examine the most recent data to see ifit seems- to be deviating from the past and, indeed, this is, apparently, the case. The six years between 1966 and 1971 have produced two rallies and four declines in July and four rallies and two declines in August, and the two-month period ended August ha s produced three rallies and three declines with an average advance of only 6o/ Even the familiar December rally appears to have lost its recent reliability, and, mterestingly enough, a new seasonal tendency, not heretofore apparent, seems to be emerging — that of a decline in May-June. Every May, from 1965 through 1972, has produced a declining market and the same is true of every two-month period ending in June. The moral of the whole exercise, we suppose, is that the stock market is a difficult and changing beast, and, whlle certain seasonal tendencies are apparent, they constitute only one factor in what is invariably a highly complex equation. Dow-Jones Industrials (1200 p.m.) 930.01 S&P (1200 p.m.) 107.26 ANTHONY W. TABEI.1. DEl.AFIELD, HARVEY, TABEI.L AWTmn No 'talemenl or expressIon of opinIon or any other moiler herein contolOed IS, or . to be deemed to be, directly or indirectly, on offer or Ihe SOIIC.lollon of on offer to buy or sell any security referred 10 or mentIoned The molter IS presented merely for the conver'!cnce of Ihe subscrIber While oNe believe the sources of our information to be reltoble, we In no way represent or guoranlee Ihe accuracy thereof nor of the statements mude herein Any actIOn to be token by the subscriber should be bIlsed on hiS own Investigation and Information Janney Montgomery Scott, Inc. 05 a COrporatIon, and lIS offIcers or employees, may now hove, or moy loler toke, poSitions or trades In respect to any seCUrities mentioned In thIS or ony future Issue, and such POSitiOn may be different fram any views now or hereofter expreued In thiS or (my other Issue Janney Montgomery colt, Inc, which 1 registered With the SEC as on Investmen! adVisor, may give adVice 10 Its Investment adVISOry and othel evstomers Independently of any statements made In thiS or In any other Issue Further mformotlon on any security mentioned herein 1 ovollable on request

Download PDF