Tabell’s Market Letter – January 02, 1976

–'IE- – TABELL'S MARKET LETTER – ..1. 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK E)(CHANGE, INC MEMBER AMERICAN STOCK EXCHANGE January 2, 1976 . ' ,.Er sQme rSeno,w , weha '(. .!ltudJEd th efa mil lals.e.o.nal,tend encyof,th e. stock-rna rk ettostag 6a 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, since the Dow-Jones Industrial Average first was computed in 1897, indicated 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 extreme- lyearly. Thus, In 1960, 1962, 1970 and, most recently, in 1973, the rally reached a peak m 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 recent downward years, 1962, 1966, and In 1969, it began late in the year. The year-end rally this year started early on December 5, 1975, an up year, at 818.80, and is no exception to this rule. (3) – The important thing to watch in connection with market action in the early months of the new year -is-d;he-1Gw-f0 the -.peviGu s D ecember.-T-h is40w-ha s cbeen-broken-in-forty-five -yea rsout-of-1he–….,,,–I past seventy-five. However, in twentY-Six of these forty-five cases I it was broken In January and February. Smce 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 will not be broken. For example, In 1969, 1970, and 1973, the December low was broken early In January. In 1963, 1964, 1967, 1971, 1972, and, most recently, 1975, 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-two of the thirty-eight 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 mto the new year also is Important. For ex- ample ( in twenty-one years, the ra tly continued into March or later. In eighteen of these twenty-one years, the eventual trend was upward. In 1964, 1972, and 1975, the year-end rally contmued mto 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 closmg low of 818.80 becomes an Important reference pomt to watch. On Wednesday of this week the Dow-Jones IndustrIal Average closed at 852.41. The fact that this average has already advanced approximately 4 must be viewed constructively. If the rally continues in magnitude and contInues into February or March, historically a good market year would be indicated. Dow-Jones Industrials (Il00 a.m.) 853.00 S & P Camp. (1100 a.m.) 90.35 Cumulative Index (I2/31/75) 490.81 RJS/jb ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL No statement or exprelon of OpinIon or ony other matter here'n contaIned IS, or IS to be deemed to be, dlredly or indirectly. on oHer or Ihe sol'c,lollon of an oHer to buy or sell any secunty re!erred 10 or mentioned The molter IS presented merely for the conver,ence of Ihe subSCriber While we belIeve the sources of our ,formotlon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the sotemenl mude here,n Any action to be taken by Ihe subscriber should be based on hiS own inVestigation and information Janney Montgomery Scol!, Inc, as a corporatoon and ,ts officers or employees, may now hove, or may later lake, positions or trades In respect to any securities mentioned In llIs or any future Issue, ond such position may be ddferent from any views now or hereafter eypressed on thiS or any other Issue Janney Montgomery 5coll Inc, which 15 registered With the SEC as on ,vestment adVisor, may give adVIce to Its Investment adv,wry and othe, customers mdependent!y of any stateme'lts made In thiS or In any other Issue Further information on any security mentioned herein IS avadab!e on request