Viewing Month: December 1976

Tabell’s Market Letter – December 03, 1976

Tabell’s Market Letter – December 03, 1976

Tabell's Market Letter - December 03, 1976
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER New' VOAK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE December 3, 1976 Technical analysiS in its simplest form has never been anything more than the analysis of a series of numbers, the numbers, in the case of this sort of analysis, being stock prices. -We exampl,,–tQhave;-manytlmes-iil-the -past used'tlle followlngslmpte- decriionstra-tethls -p-rrncipe-Take ,.. the number series 1, 2, 3,4, 5, What is the best guess as to the number represented by the questionmark Quite obviously, the answer is 6. What we have really done in making this guess is to make assumptions concerning the underlying process which produced the numbers in the first place. What we are doing in conventional technical work, as we look at stock prices, is making assumptions as to investor psychology and economic forces which are part of the underlying process of making future stock prices. Let us take a second number series, however. That series is 5, 6, 3, 1,4, What guess are we to make as to the next number. It is obviously not possible to make any rational guess at all. (Indeed, it certainly should not be, since the numbers happen to be a computer-generated random number series.) Now, there are many periods in the Course of stock market history when it is totally im- possible to look at a series of stock prices and draw a rational conclusion as to future action. The present happens to be one of those periods. This does not mean, however, that we should simply throw up our hands and await a future loud-and-clear message. The very knowledge that we possess insufficient information is, in itself, valuable, and is an aid in setting parameters by which we can judge future price action. Let us apply this to the present case. On September 21 of this year, it was possible to make one statement with absolute certainty, 1. e., that we were in a bull market which had begun on December 6, 1974, the Dow having advanced 75 to a new high on that date with no appreciable in- – – tervening correction. Given that knowledge,i! was possible to describe mathematically the state of C-affairs whlc-h existed-in the stOck- ari-tbetweEnDec-embr 6;1974a-nd Septmbr2 1976 That – . state of affairs consisted of a broad uptrend channel some 172 points wide rising at a rate of .78 pOints per day. In October, that uptrend channel was penetrated on the downSide. It Is, now, there- fore, clear that the parameters which accurately described the December, 19 74-September, 1976 period no longer describe the current situation. If they did, the Dow would today be'between 995 and 1170. Moving forward, it is likewise an ineluctable fact that, as of last November 10, we were in a minor downswing, minor because it was under 9 in the Dow and less in a number of the other averages. It was equally possible to describe that downswing mathematically by means of a trend -channel. That channel was some 64 pOints wide and was declining at the rate of just under two points per day. The channel was, in other words, a mathematical representation of the state of affairs which existed during the six-week period in question. However, a l5-day upmove ensued from November 10 to November 24 carrying the Dow from 924.04 to 956.62. That upswing decisively violated the minor downtrend channel. Had the channel not been Violated, the Dow would today be somewhere between 930 and 865. What we are saying, in other words, is that two states of affairs, which we know previously to have existed, are both inconsistent with what the stock market is doing at the moment. Still, even this lack of knowledge is helpful to us. We know, at least, what we should be looking for. One possible eventuality would be a new low below 924.04. That would reestablish a downtrend with a somewhat less steep slope and we would then be able to use this downtrend as a clue to a future rev.ersal. Ase,cond would be an extension of the.pr.esent,upswing to approximately … 5.(It hs proven less th;;n helpful in the past to try to work with trends of less than this dimension.) A 5 extension of the current advance would involve the Dow reaching approximately 970. , 970 is an important level in another sense since it, or 966 to be more precise, represents the top of a trading range that has contained the Dow since mid-September. That trading range is of SOme significance,since it is large enough to suggest a move into new high ground if heavy overhead supply, which, as we all know, exists around the 1000 level, could be penetrated. Thus, while the state of our knowledge of the future course of stock prices is at the moment highly imperfect, we have been at least able, through analysis, to establish parameters which may be worthwhile guidelines for future investment action. Dow-Jones Industrials (1200 p.m.) 949.47 S & P CompOSite (1200 p.m.) 102.46 ANTHONYW. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (1l/2/76) 617.02 AWT/jb No 'Iclement or expression of Opinion or ont' olhcr matter herein contarned IS, or IS to be deemed 10 be, dIrectly or indirectly, on offer or the sohcltatlon of an offer 10 buy or sell any security referred 10 or mentIOned The matter IS presented merely for the converlenCt of the subscriber While we believe Ihe sources of ovr information 10 be reliable, we In no way repre-en! or 9\Joranle toe occurccy thereof r.or 01' Ine '!.lolemel'\l.. mucie herel At'ly cctiOn. to be taen. by the subSCriber should be based on hiS own InvesligatlOn and lI'lformotlOn Janney Monlgamery Scolt, Inc, as a corporotlOn, and lIs officers or employees, may now have, or may Jaler tole, pOSitions or trades In respect to any CVTltles menlloned j(\ Ihls or ony future Issue, an.d such pOSition may be different from any Views now or hereafter epressed In Inls or any other Issue Janney Montgomery Scolt, Inc, which IS registered v,,,ln the SEC as an InVestment adVisor, may give ad….,ce to Its investme.,t adVISOry and olhel customers Independently of any slotemenls made In thiS or In any other Issue Further information on ony security mentioned herein IS ovallob!e on request

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Tabell’s Market Letter – December 10, 1976

Tabell’s Market Letter – December 10, 1976

Tabell's Market Letter - December 10, 1976
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TABELL'S MARKET LETTER 909 STAl'E ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEM8EA NiW YORK STOCK. EXCMANGE, INC MEMBER AMERICAN STOCK EXCHANGE , December 10, 1976 For the past few weeks, this letter has been harping, perhaps to the point of boredom, on two themes. The first of these themes related to the difficulty of recognition of intermediate-term -bottoms–We-noted-tlla-( tnelnarkefas slowlyputU;gtogethetei chaillof evidence suggestu;gtlia' an intermediate-term low might have been made at 924.04 on the Dow in early November, but that that chain was as yet incomplete. We pointed out that the most sensitive technical indicators had turned positive shortly after the low in mid-November and that the downtrend channel from the Septem- ber 21st high to the early November low had been violated. We suggested, however, that more evidence would probably be required. The second theme has been hammered away at, not only by ourselves but also by practi- cally every regular commentator on the technical action of the stock market. That theme relates to the obviousness of the fact that the widely-followed Dow has been underperforming the stock market as a whole. To a degree unprecedented in our own memory, at least, the pecularities of the Dow's construction and the identity of its components have caused it to distort the true image of what has been taking place in the marketplace. Both these themes were underscored in last week's market action. The week was gener- ally on the firm side, even as measured by the DJIA, starting off with an ll-point rally on Monday and following that up with a seven-point rise in Thursday's trading. However, the Dow, as usual, was a good deal less than the entire story. We have been noting for most of the past year, at vary- ing intervals, that one of the' nagging disturbing facts about the stock market was the inability of daily breadth indices (although not weekly ones) to confirm peaks made as long ago as last February. That state of affairs came to an end this week as our daily breadth index reached a figure of 829.64. That particular number will have no Significance to most investors, but its importance lies in the fact that itdecis ively .penetrates -theHgure-of-82 6-.93,whichwas-achieved- back-on-February 24of-this .,..-.- year and which had never been exceeded until this week. This action is, to say the least, unusual. The common relationship between the Dow and breadth indices is that they will move into new high territory within a few days of each other. Some- times the Dow will lead by a week or so and sometimes vice versa. Here, however, we have a situa- tion where breadth is achieving a new peak while the Dow remains some 50 points below its high for the year and some 30 pOints below the February high associated with the prior peak in breadth. Equally interesting is the action of OUr Cumulative Index. This index, it will be recalled, measures the action of all NYSE-listed issues and managed to close on Thursday at 636. B2 achieving an intra day high of 639.24. This figure represents a decisive new high for the year above previous peaks scored first in February, then in July and lastly in late September. That particular new high takes on even more significance when the long-term pattern for the Cumulative Index is observed. Essentially, what the index has done is to break out of a trading range between, roughly, 575 and , 625 which has contained it for the bulk of 1976. This trading range is almost a mirror image of a sim- ilar trading range which occurred between December, 1973 and April, 1974 before the index deClined to its all-time low around 350 in late 1974 and then recovered to its present level. We have, in other words, in this particular measure of all NYSE activity, a potential head-and-shoulders base whose upside implications are, to say the least, impressive. Finally, even the underperforming Dow itself provided us last week with something im- pressive. We had been drawing attention to the fact that ability of that index to move above 966 would represent an upside breakout from a trading range which has existed since late.Septelllber.. That breaJoui;- of-course, took -p1ac in Thursday's' tradtngandaffords at least the- suggestion thatthe most widely-noted market indicator might follow the other less-well-known ones into new high ground. We do not wish to suggest that the picture on the stock market scene is one of tULoi bwet- ness and light. Even the most cursory technical observer will note the existence of heavy overhead supply in the Dow just above current levels. We are, moreover, obviously in the mature stage of the bull market which began at the end of 1974 and, as would be expected at such a mature stage, we are seeing deterioration in a number of individual stock patterns. It is certainly a stage of the upswing where stock selection and the elimination from portfolios of weaker groups will be more and more im- portant. Despite all this, we think the positive implications of last week's stock market action can hardly be ignored. Dow-Jones Industrials (1200 p.m.) 969.66 S & P CompOSite (1200 p. m.) Cumulau.e Index (12/9/76) 104.4B 636.82 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWT!jb No stotement or expression of opinion or ony other motle( herein tontomed 15, or IS 10 be deemed to be, drreC1ly of mdlfectly, on offer or the sol,clloon of on offer to buy or sell any securIty referred 10 or mentioned The molter IS presented merely for the converlenc! of the subSCriber While He believe the sources of our informatIOn 10 be reboble we 1M flO way TePTeel\1 01 9IJcrCl'llee he occurccy Ihereof nor cf Ine statements. mude herem Any ac'lOn to be tolen by the subscriber should be based on hiS own',nvesllgat,on ond Information Janney Montgomery Scoll, Inc, as a corporation, and Its officers or employees, may now have, or may later toke, posilions or trades 1M respect to any securilies mentioned In thiS or ony future Issue, and such pOSition mey be different from any views now or hereofler epreSed III thiS or any other Issue Janney Montgomery SCali, Inc, which IS registered With the SEC as on Investment adVisor, m!ly gIVe adVICe to is Investment adVISOry and othel customers Independently of any statements mode In thiS or 111 ony other Issue Further mformoTlon on any security mentioned herein IS available on request –

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Tabell’s Market Letter – December 17, 1976

Tabell’s Market Letter – December 17, 1976

Tabell's Market Letter - December 17, 1976
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBEI'I NEW YORK STOCK eXCHANGE. INC MEMBER AMERICAN STOCK EXCHANGE December 17, 1976 The season has arrived in which we traditionally fill this space for a fortnight with our two-part'foreeast for the-upcoming ,year,. – We,suppose-.that-thisqear ,-, more -than-any-year, ,we.. should – be tempted to discontinue the practice. We uttered in this letter, 51 weeks ago, the memorable state- ment, 1976, we think, is likely to assume the approximate shape of an 'inside year', one in which neither the 1975 high or the 1975 low is exceeded. As Tom Wolfe might say, Zap!!!. The 1975 high of 881.81 was exceeded on January 6, the third day of trading in the new year, and the Dow went on to move above 1000 on an intra day basis for the first time in February. One of our friends and valued clients has spent the year calling us Mr. Inside. Such are the perils of the forecasting busi- ness. In partial mitigation, we will note that we did underline the word approximate and went on to suggest that we suspected that the market had entered a secondary bull-market phase, not- ing that it would be quite possible to see a new peak during the next year, probably in the first half, without destroying the essential shape of the inside-year pattern. The new peak, indeed, arrived with embarrassing rapidity, but subsequent action was more or less what we had in mind, albeit that that subsequent action took place at a level 100 points higher than we suspected it would. After reaching 1000 for the first time in February, the Dow, as we all know, penetrated and repenetrated that magic level no fewer than 12 times during the rest of 1976. It further confused the issue by posting a false upside breakout to an intraday high of 1026.26 in September, holding that high for about two days and then moving to a disturbing new low of 924.04 on November 10, this breakout apparently as false as the previous one had been. As this is written, there is some evidence that a new upward move is under- way. Although the Dow is not yet in new high territory, our Cumulative Index is chalking up new peaks for 1976 and breadth, as we noted last week, is showing unusually positive action, havmg soared to .' .ct.,is iv,.JQ 7.Q.highs overthe pas.t two-eeJ!loJh. tl1e Dow .and the…& P !iOQJ1Y.!' O\ove.d s ttrply ouL of their September-November trading ranges and the year-end ralli,; is apparently underway in tradi- – tional fashion. We couched our forecast last year in terms of primary and secondary phases of a bull market. That bull market has advanced, in 1976, to the point where we must now be thinking in terms of a tertiary phase. Indeed, a new buzz word has emerged among financial writers, that buzz word being third leg. It is based on the popular belief that there are invariably three legs to a normal bull market, a belief which probably arose from a body of theory called Elliott's Wave Principle, which has long been an often-valuable forecasting tool but which is a great deal more complicated than a Simple belief in tripartite upswings. Part of the copious comment on the question of the three legs arises from the distinct and obvious shape of the bull market to date. The current upswing began, it will be recalled, from a slough of despond two years ago with the Dow having moved below 580. Over a seven-month period it rose sharply to its July, 1975 high of 881 whereupon it spent the entire second half of 1975 in a trading range between, roughly, 800 and 840. It now becomes evident, with 20/20 hindsight, that that trading range was the correction of the first leg of the advance which occupied early 1975. 1976, in turn, duplicated the previous year's performance in a way few markets, in our memory, have done. As we noted above, it moved sharply upward in an obvious second leg over the first two months of the year. It then spent from February to November, in terms of the Dow at least, doing essentially nothing. The essential difference between 1975 and 1976 was that in the latter year the upswing phase was shorter, two months instead of Six, and the subsequent sideways movement more protracted. .. Thus, the interest in the third leg.- We tfilnk it probable that such a leg has 'begun and; – , indeed, it has, in fact, done so in terms of a number of indices which, as we pOinted out above, have, as of this moment, soared to new bull market peaks. It would be a not-unusual development to see this strength continue into early 1977. What will be crucial, however, is the length and vigor of that continuance. We are dealing, let us remember, with an upward cycle now two years old which, based on the historical record of past bull markets, is, if not senility, at least advanced middle age. The extent to which the current upswing can sustain itself into 1977 will be crucial in drawing conclusions regarding the basic secular market trend. We intend to discuss this subject at some length next week. A VERY MERRY CHRISTMAS TO ALL Dow-Jones Industrials (1200 p. m.) S&P Composite (1200 p.m.) 984.71 104.88 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (12/16/76) 644.17 AWT/jb No stotfment or expression of opinion or any other motter herein contolned IS, or IS to be deemed 10 be, directly or indirectly, on offer or the sollCltotlon of on offer 10 buy or sell any security referred to Of mentioned The motter IS presented merely for the conVI'!ilence of the subscriber While oNe believe the sources of our Informotlon to be reliable, we In no woy represent or guorontee the occurocy thereof nor of the stotement& mude herein Any action to be token by Ihe subscnber should be based on hiS own InVesllgatlon and information Janney Montgomery Scott, Inc, as a corporation, and 11& officers or employees, may now have, or moy laler toke, posiTIons or trades III respect to any securiTies menlloned III thiS or any future 1Ue, ond such position tTIoy be different from any views now or hereafter expressed III ttliS or any other Issue Janney Montgomery Scott, Inc, whIch IS regltered With the SEC as on IIlvestment adVisor, tTIoy give adVice to Its IIlvestment adVIsory and olhel custotTIers Independently of any statements mode III thiS or III any other Issue further ,nformat,on on any security mentioned herein IS available on request

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Tabell’s Market Letter – December 23, 1976

Tabell’s Market Letter – December 23, 1976

Tabell's Market Letter - December 23, 1976
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TABELL'S MARKET LETTER , 909 STATE ROAD, PRINCE1ON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK S1'OCK EXCHANGe, INC MEMBER AMeRICAN STOCK eXCHANGE December 23, 1976 In last week's edition of this letter, we reviewed in SOme detail market action during 1976 — – or ,. more ,properly ,.market actlon..during -thecbullcrnarket.wh.ich-began,in,late'-l974-and.hasextended/,-on- .' a number of indices at least, through this week. We tried to suggest that there were two major features of this action to consider in the formulation of a 1977 forecast. These were, first of all, that the bull market had attained an age of two years, placing it, on an historical basis, in a mature stage. The second factor to which we tried to draw attention was the shape of the bull market to date. It had consisted of two obvious upward legs, the first encompassing the first half of 1975, and the second, en compassing the first few months of 1976. Each one of these legs was followed by a rather protracted consolidation. With the recent market strength, there has developed a good deal of speculation as to whether a third leg of the bull market is now, in fact, underway. Based on the action of breadth and our Cumulative Index, as we discussed last week, we are willing to hazard a guess that such is the case and that market strength may continue at least into the early part of 1977. Beyond this, the glass becomes somewhat murky and, as we noted a week ago, all this raises some very interesting questions as to the secular market trend. Final bull-market legs, in most cas es, are not terribly exciting in terms of the market averages, and, indeed, current technical patterns suggest that this may also be the case in the pres- ent instance. The Dow has a number of possible upside counts which center around 1040. In terms of the other averages, the Utilities, one of the leading performers to date, run into heavy overhead supply at around the 110 level, not too far above the present price of 105. Only in the case of the Dow Transportation Index is it possible to read significantly higher upside targets. It should be noted, however, that although the averages seldom perform outstandingly in the late stages of bull markets, individual stocks often tum in stellar performances, and this stage becomes a time when stock selec- .tion assumes increasing,importance. — ……. 'c' .'-. – -li—; third leg is, in fact, develOPing;- it 'will bTa highly intertTng phenomenon to ob- serve. In a market letter last September, we pOinted out the fact that one of the more interesting and reliable postwar phenomena has been a cycle averaging 51 months between major market bottoms .., There have been six such recorded cycles ranging in length from 43 to 56 months, and, Since wl now are 24 months past a major bottom in December, 1974, this pattern should begin to arouse some interest. We noted in our original study that the basic difference between the two most recent such cycles and the four earller ones was that, while the trough-to-trough measurement was consistent in all cases, the four earlier cycles spent over 80 of their time advancing while the two later cycles spent only 60 of their time in an upward phase. Thus, if the current cycle were to turn out to be one of the shorter Ones and spend only 60 of its time span moving up, a market peak in early-to-mid 1977 would be a distinct possibility. This, in tum, would suggest that the market remained in the grip of the flat secular trend which we all know has been its salient feature since the mid-1960's. If, on the other hand, the present cycle were to approximate the shape of 1949-53, 1953- 57, 1957-61 or 1962-66, we could expect that 80 of its time would be spent moving ahead. Such action would postpone the occurrence of the next major top not only through 1977 but on into 1978. Thus, the most interesting time to formulate a long-range forecast is not the present mo- ment when, as we noted above, the picture is somewhat clouded, but will be sometime in the middle part of next year. If we were to manage to get that far without serious market deterioration taking place and were new upside leadership to emerge, possibly among the cyclical issues which have spent a great deal of 1976.cOl!ecting.theirI7\.-75-2dva!,!c',.ll.!uld then.be.pCl.ssibl1P !ss)1eahighly bullish'long-term prognosis. Such action would suggest that, while the inevitable bear markets might OCCur along the way, equity prices as a whole were headed for a new and higher plateau. On the other hand, deterioration in mid-to-early 1977 would suggest that we were in for a few more years of the dreary sort of action which has been characteristic of the past decade. It is, in sum, in our view, difficult to say much about 1977 other than to suggest the prob- ability of moderate strength during the first half. The fascinating thing about 1977, we think, however, is that it is likely to be the year in which the pattern for the next decade may emerge and become clear. WE WISH YOU ALL A HAPPY AND PROSPEROUS NEW YEAR Dow-Jones Industrials (1200 p.m.) 986.12 ANTHONYW. TAB ELL S & P CompOSite (1200 p,m.) 104.86 DELAFIELD, HARVEY, TAB ELL Cumulative Index (12/22/76) 644.54 AWT/jb No statement or expression of opmlon or ony other motte herein contolned IS, or IS to be deemed 10 be, directly or indirectly. an offer or the sollcltotlon of an offer to buy or sell any security referred to or menlroned The mOiler 1 presented merely for the conver'lenCe of Ihe subscnber. White we beheve Ihe sources of our InfOfll'lO' lion to be reliable, we In no way represent or guaranlee Ihe accuracy thereof nor of the Slalemenls mude herern Any achan 10 be token by Ihe subscriber should be based on hl own Invesllgollon and rnformallon Janney Montgomery SCali, Inc, as a corporal lon, and Its officers or employees, may now have, or may 10ler lake, positions or trades m respect to any securl lies mentioned In thiS or any future Issue, and such paSlhan may be dlfferen' from any views now or hereaher expressed rn thiS or any other ISSue Janney Montgomery Scott, Inc, which IS registered With the SEC as an Investment adVisor, may give adVice to Its Investment adVisory and other customers mdependently of any statements mode m thiS or In any other Issue Further information on any security mentioned herein IS available on request

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Tabell’s Market Letter – December 31, 1976

Tabell’s Market Letter – December 31, 1976

Tabell's Market Letter - December 31, 1976
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TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON. NEW JERSEY 08540 DIYISION OF MEMBER NEW YORK STOCK EXCHANGE, tNC MEMBER AMERICAN STOCK EXCHANGE December 31, 1976 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 -conclus iOns thatCan bYderived'ftomOa stu-dyOf'thfs p hen-Omerion;- We'ha vesuggested'that -an' exha us- tive study of chart patterns, since the Dow-Jones Industrial Average first was computed in 1897, in- dicated that such a rally, however miniscule, invariably had taken place. As a reference to this ex- ercise, 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- ly 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, 1971, 1975 and 1976, 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 1975 the year-end rally started early on December 5, an up year, at 818.80. This year is no exception to this rule as the year-end rally started on December 2nd,1976, at 946.45. In recent downward years, 1962, 1966, and in 1969, the rally began late in the year. (3) – The important thing to watch in connection with market action in the early months of the new C'- yearisthelOwfor the pl'evfoiiIl'DeCeinber; – ThTslow has- been- bi'Oken- infOFtYIive years ouiofthe – -.-. ….., past seventy-six. 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 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-three of the thirty-nine 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 ex- ample, in twenty-one years, the rally continued into March or later. In eighteen of these twenty-one . – ye a rs, t he eventual- – trend w- -as u- rT- pward..,. In 196… 4.., 197 2 , -1.975 and1976.. -. , t he y e a r – end rally,1 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 2nd closing low of 946.64 becomes an Important reference point to watch. On Tuesday of this week the Dew-Jones Industrial Average closed at 1000.08. The fact that this average has already advanced approximately 5.6 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 (12/30/76) 999.09 S & P Compo (12/30/76) 106.88 ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL Cumulative Index (12/29/76) 653.40 RJS/lb No statement or expression of opInion or any olner motter herein contolned IS, or IS to be deemed to be, directly or Indirectly, on offer or the 50llclloIIOn of on offer 10 buy or sell any security referred 10 or menlloned The motter IS presented merely for the convef'lence of the subscriber While 'e believe the sources of Olr Information to be reliable, we In no way represent or guarantee the occuracy thereof nor of the statements mude herein Any achon to be laen by the subSCriber should be based on hiS own InvestigatIOn and Information Janney Montgomery Scott, Inc, 05 a corporation, and Its offuers or employee may now have, or moy later take. pOSitions or trades In respect to any seCUrities mentioned 1fl this or ony future Issue, and such pOSlllon may be different from any views now or hereafter e;pressed In thiS or any other Issue Janney Montgomery Scott, Inc. which IS registered With the SEC (15 on Investment adVisor, may give adVice to Its Investment adVisory ond other customers Independently of any stalements made In thIS or 111 ony other Issue Further Information on any security menltoned herein IS ovollable on request

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