Tabell’s Market Letter – October 31, 1975

Tabell’s Market Letter – October 31, 1975

Tabell's Market Letter - October 31, 1975
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMEAICAN STOCK eXCHA.NGE October 31, 1975 What with the travail of New York City and other publicized ills, it is unsurprising that – a certainount'ofpes simis m–shouldbe'Pres ent iwfina ncia 1'markets.,-l'hat-pe s simismc-isrhowever , '- expressing itself in concrete terms in a number of areas one of these areas being short interest on the New York Stock Exchange, which reached an all-time record level at well over 26 million shares last May and, after subsequently backing off, has recently returned tojust under the 25-million-share level. This sharp rise was little noted last summer, since, at that time, trading volume was heavy, and most analysts tend to view short interest in terms of its ratio to average daily volume, the classic short-interest ratio, which is designed to provide a measure of how many days' trading it would take theoretically to cover the existing short position. With trading volume dropping off sharply and the short interest remaining high, however, this ratio moved above the 1. 8 level as of September 15 (figures are recorded from the 15th of the month to the 15th of the month) before dropping off slightly in October. The table below presents all past occasions since January, 1946, when the short- interest ratio has moved to a level of 1. 8 or above. Also shown are the Dow on that date, the Dow approximately six months (125 trading days) later and the percentage change for the period. Date Short Int Ratio DJIA D..HA 61a1g Chg. Date Short Int Ratio DJIA 6DJIA lat Chg. Jun 1947 1.800 175.49 180.76 3.00 Mar 1958 2.214 453.04 518.52 14.45 Sep 1947 2.006 175.30 167.86 -4.24 Apr 1958 2.179 447.58 541.95 21.08 Mar 1948 1.804 167.62 182.52 8.89 May 1958 2.047 457.86 560.92 22.51 Mar 1949 1.931 176.02 179.24 1.83 Jun 1958 1.901 474.77 565.53 19.12 Apr 1949 – ay 1949- 1.837 176.62 182.67 3.43 Ju11958 2''177 f1520''1n9611l714-Sepl95-8 2.299 278.82 591.64 23.56 202'5n,02'6i2691759– Jun 1949 1.854 164.58 193.63 17.65 Oct 1962 1.985 589.69 710.92 20.56 Ju11949 2.405 173.48 199.39 14.94 Aug 1966 2.030 834.85 853.34 2.21 Aug 1949 1.933 178.97 199.62 11.54 Oct 1966 2.173 771.71 866.59 12.29 Sep 1949 2.310 182.16 203.47 11.70 Nov 1966 2.211 815.31 885.80 8.65 Oct 1949 1.913 186.36 207.78 11.49 Sep 1967 2.044 933.48 840.09-10.00 Nov 1949 1.867 187.98 215.05 14.40 Nov 1967 2.032 855.18 898.98 5.12 Mar 1950 1.927 207.46 218.10 5.13 Feb 1968 1.868 839.23 900.36 7.28 Apr 1951 2.084 256.18 274.34 7.09 Mar 1968 2.205 837.55 956.68 14.22 Dec 1951 2.144 265.48 260.10 -2.03 Sep 1968 1.913 917.21 927.30 1.10 Jan 1952 1.982 270.46 268.03 -0.90 Sep 1969 1.889 830.45 772.11 -7.03 Mar 1952 1.909 264.43 273.84 3.56 Jul1970 1.895 711.66 844.19 18.62 Jul1953 1.854 268.75 286.72 6.69 Aug 1970 2.075 710.84 885.34 24.55 Oct 1953 1.942 271.22 311.78 14.95 Apr 1974 1.851 843.79 648.08-23.19 Sep 1975 1.882 803.19 As is quite clearly shown, the current level of short interest has some historical significance. It has occurred only 39 times in 358 months, and on 33 of those 39 occasions, the market was higher six months later. In the entire record there are only three serious false signals on the part of the indicator, all of them, interestingly enough, occurring fairly recently. One was in September, 1967, when the indicator flashed just as the market was going into an intermediate-term daedclAinperiwl, ithin.the context 1974, oacurred of.the 1966 ;'hen the in -68 bull market. The dicatorfJashed- the en dothofeartbweoarinmsatarknceetsb,u tS'leepdtethmafbb'eore,a'1r9m6'9a,'r'–'I ket's end by some six to nine months. For the remaining periods the results shown in the table speak for themselves. It will be interesting to see whether the present instance is another example of the recently-more-frequent false signals or whether it turns out to be truly a harbinger of higher prices. Dow-Jones Industrials (1200 p.m.) 833.67 S & P Compo (1200 p.m.) 88.86 Cumulative Index (10/30/75) 489.53 AWT/jb ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL NOTE The figures in the table differ slightly from those reported in BARRON'S and other publications where average daily volume is based on settlement dates. The figures above are computed on trade dates. No statement or expression of opinion or ony other molter herein tontclned 15, or IS to be deemed to be, directly or Indirectly, on offer or the ollc,totlon of on offer to buy or sell any seclJrlty referred 10 Or mentioned The matter ,s presented merely for the COnVer-lenCE of the subSCriber WhIle Ne believe Ihe sources of our ,nformo- han to be rehable, we In no way represent or guarantee the accuracy thereof nor of the stolemenls mude hereIn Any action to be token by Ihe subscrIber should be based on hiS own inVestigation and Info'motlo Janney Montgomery Scott, Inc, as 0 carpo'otlon, cnd ,ts offICers or employees, may now have, or may later lake, POSitions or trades ,n respect to any seCurtlles men'lOned In th,s or any future Issue, and such oostlton may be ddferenl from any Vtews now or hereafter el'pressed In thiS or any other /5ue Janney Montgomery xon, Inc, which IS reglslered wllh Ihe SEC 0 all Invesl71enl adVisor, may give adVIce 10 lIs Investment odvlwry and othel customers tndependently of any statements mode In thts Or In any other tssue Further tnformotton on ony security mentioned heretn tS ovot!oble on request

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