Tabell’s Market Letter – January 03, 1975

,——————————————————————————————————————. TABELL-S MARKET LETTER J 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF' MEMBER NEW YORK STOCK EXCHANGE, INC. MEMBER AMERICAN STOCK EXCHANGE – – -.– .—. – …r —–'''''O'';;;'—-January319-75 — –,Q- –,-..,.- For some years now, we have studied the familiar seasonal tendency of the stock market to stage a year-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,slnce the Dow-Jones Industrial Average first was computed In 1897,indlcated that such a rally, however miniscule, Invariably had taken place. As a reference to this exercise, the table on the reverse page shows the yearly percentage change of the Dow-Jones Industrial Average since 1900. 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. However, on other occasions, It has been of only a few days' duration, reaching a top extremelyearly. Thus, In 1960, 1962, 1970, and, most recently, in 1973, the rally reached a peak in the first week in January. In 1961, 1954, 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 recent downward years, 1962, 1966, anqJn1969, ,tt b,egpILlate inthe–year. Ift,he,yead,!lly!Msyear startec;L earlyon !2.ep!2L–,. 6, 1974, a down year, 1975,llke the year 1974,will be an exception-to this rule. (3) – The important thing to watch in connection with market action in the early months of the new year is the low for the previous December. This low ha s ,been broken in forty-five years out of the past seventy-four. However, in twenty-six of these forty-five cases, It was broken In January and February. Since 1937, it has never been broken later than mid-March, with the exception of 1965 and 1974. 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 w!ll not be broken. For example, In 1969, 1970, and 1973, the December low was broken early In January. In 1963, 1964, 1967, and 1971, and, most recently, 1972, It never was broken. 1965, an up year, and 1974, a down year, as noted above, were unusual with the December, 1964 closing low of 857.45 being broken in June when the Dow closed at 840.59 and the December, 1973, low of 788.31 being broken In July when the Dow closed at 770.57. (4) – In years when the December low has been broken, the subsequent trend has been downward two-thirds of the time. 1962, 1966, 1969, 1973, and 1974 are typical cases. Again, 1965 was an exception. 1970, of course, was a down year In the first half. (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-seven 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. In 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 twenty years the rally continued Into March or later. In seventeen of these twenty 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. The most recent painful exception as previously noted was 1974. This year, therefore, the previous' December closing low of 577.60 becomes an important reference point to watch. On Thursday of this week the Dow-Jones Industrial Average closed at 632.04. The fact that this average has already advanced 9.43 must be viewed constructively. If the rally increases in magnitude and continues into February or March, historically a good market year would be indicated. Dow-Jones Industrials (1200 p. m.) 636.19 ANTHONY W. TAB ELL S & P Compo (1200 p. m.) 70.83 DELAFIELD, HARVEY, TABELL Cumulative Index (1/2/75) 365.15 RJS/jb No )'clement or (!xprenlon of opinion or any other moIler herein conTained IS, or 15 to be deemed to be, dIrectly or indirectly, on offer or the SOliCllollon of an offer to buy or sell ony security referr to or mentIOned The matter IS presented merely for the conve(llenre of the subSCriber While oNe believe the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action to be token by the subscriber should be bosed on hiS own InvestigaTion ond InformatIOn Janney Montgomery 5011, Inc, 05 a corpora han, and Its offICers or employees, may now hove, or may later toke, posItiOnS or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such pOSITion moy be different from any views now or hereafter eopressed In thiS or any other Issue Janney Montgomery Scott, Inc, whu;h IS registered Wllh Ihe SEC as an Investment adVisor, may give adVice to Its Investment adVisory and othel customers mdependently of any slalements mode In Itus ar In any other Issue Further information on any security menlloned herein IS available on request