Tabell’s Market Letter – September 10, 1976

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE September 10, 1976 As this letter has tried to show in the past, the historical record strongly suggests long trading,.ra,nge,s,,suchi'!.Uhe current,one, ,turning out to be consolidations rather than reversals. A re-examinatio- of the curent tacligangeis lnsttit'e';;;e ag'Ean'approacl1the mysti'CT(rOUlevel7 – The lowest price at which the Dow-Jones Industrial Average-bas recently sold is 958.09, first reached on the 7th of, June. The highest recent price, and the peak for the entire bull market, has been 1011.21, a figure realized on July 12th. This represents a 5.54 range from low to high. Having established these levels. we can look backwards into market history utilizing our computer data bank and find the last date this year on which the Dow sold above 958.09 and never subsequently sold be- low it. The date was February 18th, 142 trading days ago as of today. The Dow has. in other words. spent 142 consecutive trading days locked in a 53 .12-point range. The following table (Exhibit I) documents the swings that have taken place within this trading range since the end of February of this year. Included in the exercise are February 25th (994.57) and September 8th (992.94) since the average did, indeed, post intraday highs above 1000. EXHIBIT I EXHIBIT II ONE-MONTH PERIODS' Date Closing D)1A Ending Month Advances Declines Avg. Chg. 2/25/76 994.57 January 33 17 0.97 3/4/76 3/11/76 970.64 1003.31 February March 28 22 0.05 27 23 -0.13 3/15/76 974.50 April 28 22 0.95 3/24/76 4/2/76 1009.71 991. 58 May June . 26 24 24 26 -0.78 0.89 4;'5/.1.6 4/9/76 0,0,L09 968.28 . — ATuulYgust- 33 17 1.98 33 17 1, 5'2 4/21/76 1011.02 September 21 29 -1. 42 5/5/76 986.46 October 28 22 -0.19 5/10/76 1007.48 November 29 21 0.44 6/7/76 958.09 December 37 13 1.28 7/12/76 1011.21 Total 347 253 0.46 8/26/76 960.44 9/8/76 992.94 We have stated that trading ranges statistically favor a consolidation pattern and have – defined the current trading range. Assuming a consolidation pattern, when will this trading range be penetrated The question may remain unresolved for at least a while as there is a seasonal pattern which we found to be significant — the tendency toward a decline in the month of September. As shown above (Exhibit II) in the 50 years beginning with September, 1926 through 1975, the Dow advanced 21 times in September and declined 29 times, and the 50 years have shown an average per- centage change on the month of -1.42,September being the only month which shows an average decline of greater than 1. Of the 600 months in the 50-year period, 347 showed advances and 253 showed declines. Standard statistical tests can be applied to give us the probability of finding a group of 21 advances and 29 declines in such a population on a purely random basis. The chance of doing so is well under 5, thus suggesting that there may well be, indeed, some validity to the September phenomenon. If,we.examine.the.Septemberrecord.more.closely-,itis.rather.interesting,.The.month.has produced declines of 30 and 13 back in the 1930's, and the biggest advance it has ever produced is 13, also in the 1930's. In the postwar period, the largest advance has been 6.71 in 1973, and the largest decline, one of 10.42 in 1974. It is also interesting to separate the Septembers into periods identifiable by hindsight as bull and bear markets. 34 Septembers have fallen within bull- market periods, and, although, by definition, in such a period there is a strong tendency for the market to be up, the score is just about even, with 18 advances and 16 declines. In the 16 years identifiable as bear-market years, there have been only three advancing Septembers and 13 declines. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (9/9/76) RJS/jb 986.62 104.41 611.22 ROBERT J. SIMPKINS, JR.' DELAFIELD, HARVEY, TABELL No statement or expreslon of opinion or any other matter herein contained IS, or 15 to be deemed to be, dlredly or ,ndirectly, on offer or the sollCltotlon of em offer to buy or 5ell ony security referred 10 or menhoned The motter IS presented merely for the converlenc/ of the subcrlber While oNe believe the sources of our information to be rehoble, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action 10 be loen by the subSCriber should be bosd on hiS own investigation and information Janney Montgomery Scoll, tnc, os 0 corporotlon, and Its officers or employees, may now have, or may later toke, pas IOns Of trades In respect to ony securities mentioned In thl or any future Issue, and iUch position may be different from any views now or hereafter expressed In II-us or any olher Issue Janney Montgomery Scoll, Inc, which IS registered wl!h the SEC as on mves!ment adVisor, may give odvlce to Its Investment adVISOry and olhel customers Independently of any statements mode In thiS or In any other Issue further Information on any seOJrlty mentioned herein IS ovoilable on request