Tabell’s Market Letter – January 04, 1974

Tabell’s Market Letter – January 04, 1974

Tabell's Market Letter - January 04, 1974
View Text Version (OCR)

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORI( STOCI( eXCHANGe, INC MEMBER AMERICAN STOCK EXCHANGe ror January 4, 1974 somE'-years no;;we'lfilve'tU1I!ea lhe'Iamillarse-a'sonal lenden-ey -of 'th-estock market tostage-ayear-end rally, and it has been the custom of this letter around the New Year to point out some of the conclusions that can be derived from a study of this phenomenon, We have suggested that an exhaustive study of chart patterns since the Dow-Jones Industrial Average first was computed in 1897 indicated that such a rally, however miniscule, invariably had taken place. A number of interesting facts about the market action of the year-end may be noted. (1) – As stated above, an identifiable year-end rally has taken place in every year since 1897. This rally often has been of great magnitude with advances as great as 28 having been recorded. It also, on occasion, has continued with only minor interruptions for as long as six months into the new year. How- ever, on other occasions, it has been of only a few days' duration, reaching a top extremely early. Thus, in 1960, 1962, 1970, and, most recently, in 1973, the rally reached a peak in the first week in January. In 1961, 1964, 1967, and 1971, it continued into February or March. (2) – There has been a perSistent tendency for the rally to begin early in years when the market has been up, and late in years when the market has been down. ' In recent upward years, 1959, 1963, and 1967 are examples, the rally commenced from early December. In 1962, 1966, and in 1969, it began late in the year. If the rally this year started on December 5, 1973 will be an exception. (3) – The important thing to watch in cam ection with market action in the early months of the new year is the low for the previous December. This low has been broken in forty-four years out of the past – .,.seventy-three. H-owever,,–ln twenty.,six. oftheseforty-fourca ses.,,, itwa sbroken.-in Ja nuaroY,,a nd-February. Since 1937, it has never been broken later than mid-March, with the single exception of 1965. Thus, if the market is able to hold above its December low for the first 2 1/2 months of the year, chances become good that this low will not be broken. For example, in 1969, 1970, and 1973, the December low was broken early in January. In1963, 1964, 1967, and 1971, and, most recently, 1972, it never was broken, 1965, as noted above, was unusual with the December, 1964 low of 850.19 being broken in June when the Dow reached an intra-day low of 832.74. (4) – In years when the December low has been broken, the subsequent trend has been downward two- thirds of the time. 1962, 1966, 1969, and 1973, of course, are typical cases. Again, 1965 was an ex- ception. 1970, of course, was a down year in the first half. d- (5) – The magnitude of the rally is an important clue as to the year's market trend. For example, an advance of 10 or more from the December low has been followed by an upward or neutral market in thirty-one of the thirty-six years that such an advance has occurred. An advance of less than 10 from the December low before an identifiable correction takes place has been followed by a downward market in twenty-five of thirty-seven years. 1963, 1964 and 1971, the year-end rally approximated 10, and in 1972 it was 17. In 1962, 1970, and 1973, for example, it was less than this figure. (6) – The length of time in which the rally continues into the new year also is important. For example, in nineteen years the rally continued into March or later. In seventeen of these nineteen years the eventual trend was upward. In 1964 and 1972 the year-end rally continued into March and in 1961, 1963, 1967 and 1971 into February, TJ1fs- year;- therefore;tlie-previousDeceiiiberciosing low of 788.3 i becomes an import-;nt -ref'e-re-n-c-e—-. point to watch. On Thursday of this week the Dow-Jones Industrial Average closed at 880.69. The fact that this average has already advanced 10 must be viewed constructively. If the rally continues into February or March, historically a good market year would be indicated. Dow-Jones Industrials (1200 p. m.) S & P Compo (1200 p. m.) 98.85 Cumulative Index (1/3/74) 604.191 RJS/jb 873.92 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL No statement or expreulon of opinion or any otner motter herein tonlo,ned IS, or 1110 be deem!!d 10 be, directly or mdlrl!c'!ly, an offer or the 501lcllollon of on offer to buy or sell any security referred 10 or mentioned The mCl1ler 15 presented merely for The corWCr,cnce of the subscrober While -He be!leve the sources of our Inforr'n,,- tlon to be reliable, we In na way represent or guarantee the accuracy thereof nor of the statements ml,lde herem Any action to be token by the subSCriber should be bosed on hiS own investlgotlOn and Information Janney Monlgomery Scott, Inc , as a corporation, and Its officers or employees, may now have, or may later toke, POSitions or trades In respect to ony secUrities mentioned In thiS or any future Issue, and such posilion moy be different from any views now or hereafter expressed In thiS or ony other Issue Janney Montgomery Scat!, Inc, whlch IS registered With the SEC as on Investment adVisor, may give adVice to Its Investment odvisory ond other customers Independently of any statemenu mode In thiS or In ony olher Issue FUr1her ,formollon on ony security mentIOned herem 1 avolloble on request

Download PDF