Tabell’s Market Letter – December 28, 1979

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORl( STOCK eXCHANGe, INC MEMBER AMERICAN STOCK eXCHANGE – December 28, 1979 w,e. hav;e hestock-m al'-ket to-,- – , , stage ayear;'end.' riilly-;-and' it has beEm the custom of this'ietter 'to point' out' some- of the conclu- sions that can be derived from a study of this phenomenon. We have suggested that an exhaus- tive study. since the Dow-Jones Industrial Average first was computed in 1897, indicated that such a rally, however miniscule, invariably had taken place. Until recently, the year-end rally as measured by the Dow-Jones Industrial Average had always carried into January. However, two recent periods, 1976-77 and 1977-78, have provided exceptions, failing for the first time in the history of the DJIA to continue into January. The 1977 bear market began from a high of 1004.65 on the last day of December, 1976. In 1978 the bear market continued, penetrating the December, 1977 low on the first day of the year, plunging almost 100 points before bottoming in February. Inspection of the 1978-79 year-end rally seems to indicate a return to normalcy, and a num- ber of interesting facts about the market action of the year end may be noted. 1. The year-end 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 interrup- tions for as long as six months into the new year. In 1961, 1964, 1967, 1971, 1975, and 1976, the rally continued into February or March. However, on other occasions, it has been of only a few day's duration, reaching a top extremely early. Thus, in 1960, 1970, and 1973, the rally reached a peak by the first week in January, and, as noted above, the 1976 and 1977 year-end rallies failed entirely to carry into January. 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 years, 1963, 1967, and 1975 are examQles, the rally – uecemoer -Ih years', 1962', 966, 1969, and 1977, the rally began late in the year. The start date this year, essentially an up year, began the early part of the month on December 3. 3. The important thing to watch in connection with the market action in the early months of the new year is the low for the previous December. This low has been broken in 47 years out of the past 79. However, in 28 of these 47 cases, it was broken in Janu- ary and February. For example, in 1970, 1973, 1977, and 1978, the December low was broken by early January. 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. 1978-79 was no exception as the December low was not broken. the entire year. 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, 1974, and 1977 are typical cases. 1965 and 1978 were exceptions. 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 34 of the 40 years that such an advance has occurred. An advance of less than 10 or more from the December low before an identifiable correction takes place has been followed by a downward market in 26 of the 39 years. In 1963, 1964, and 1971, the year-end rally approximated 10, and in 1972, it was 17. In 1962, 1970, 1973, and 1977, for 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 22 years, the rally continued into March or later. In 19 of these 22 years, the eventual trend was upward. In 1964, 1972, 1975, and 1976, the year-end rally continued into March and in 1961, 1967, and 1971 into February. ' This year, therefore, the December 3 closing low of 819.62 becomes an important reference point to watch. If the Dow is able to advance from this low by 10, not unlike last year, roughly to the 900 level, or continue a rally into February or March, the historical implications would be bullish. Dow-Jones Industrials (1100 AM) 839.33 S & P Composite (11 00 AM) 107.93 Cumulative Index (12/27/79) 781.18 ROBERT J. SIMPKINS. JR. DELAFIELD, HARVEY, TABELL RJS sla WE WISH YOU ALL A HAPPY AND PROSPEROUS NEW YEAR No stotement or expreS510n of op'nion or any other motte' herein cOntolned IS, or 15 to be deemed to be, directly or .ndlrectly. on offer or the soliCitation of on offer to buy or sell ony security referred 10 or menlloned The matter IS presented merely for the convef'lcnCC of the subscnber \'1hde we believe the sources of our Informolion to be reliable, we In no way represent or guarantee 'he accuracy thereof nor of the statements mude herein Any act,on to be token by the subscriber should be based on hiS own investigation and Information Janney Montgomery Scott, Inc, as a cortlo'otIO'1, and Its off.cers or employees, may now have, or may later toke, pos.tlons or trades In respect to any secUrities mentioned In thiS or any future .ssue, and such POSition may be different from ony views now or hereafter expressed In lhls or ony other Issue Janney Montgomery SCali, Inc, which IS registered With 1he SEC as on ,vestment adVisor, may give adVICe to 115 Investment adVisory and athel customers Independently of any clements mode In thiS or In oy other Issue Further information on any security mentIOned herein IS ovooloble on request …. 18qq Iq00 Iq01 1'I0i! 1'103 1904 1'106 1'107 1'108 1'109 1'110 1'111 \'112 1913 1'114 1'115 1916 1'117 1'118 1919 1920 1921 1922 1923 1'124 1925 1926 1927 1'128 1'129 1'130 1931 1932 1933 1934 1935 1936 t937 1938 1'139 1941 1942 1943 1944 1945 1946 1'147 1948 1'14'1 1950 1'151 1'152 1'153 1954 1955 1'156 1957 1958 1'15'1 1'160 1'1&1 ..,.,—- '—. 19&4 1'1&5 19&& 1'1&7 1'168 1'1&9 1970 1'171 1'172 1973 1914 ,975 197& 1'177 1978 ..- …………VE.A..R-E.N.D.DO.W. PERCENTAGE 66,08 67,50 2,15 63,20 61,'15 ! ,U 46,'10 -24,2'1 6'1,50 4e,I9 '13,05 '14,40 1,45 59,35 -37,13 85,60 44,23 '18,00 14,4'1 80,'15 -17,40 80,85 -0,12 88,10 A,'I7 77,10 -12,4'1 55,00 -28,66 97,00 , 76,3& '18,50 – 1,55 82,45 17.45 105,80 28,32 72,20 -31,,6 7'1,80 97,10 21.68 94.10 115,45 22,6'1 154,55 157,20 1,71 202,40 28,75 300,00 48,22 248,48 .17,17 Ib4,58 -33.'7 77 ,90 -52,67 5'1,93 99,90 66,69 104.04 4,,4 144,13 38,53 17'1,90 24,A2 120,A5 15 4 ,76 -32,82 131,13- – -2,92 .15,38 119,40 7,61 135,89 152,32 12,09 192,91 26,&5 177,20 -A,t4 181,1& 2,23 177,30 -2,13 200,13 12,88 235,41 17,63 26'1,23 2'11,90 8,42 280,90 -3,77 404,3'1 43,'16 488,40 20,77 4'19,47 435,6'1 .12,77 583,65 67'1,3& &15,8'1 1&,40 q,!4 731,14 18,71 &52,10 -10,81 874,13 '1&9,2& 185,&'1 905,11 943,75 ' 14,57 10,88 4,27 -15,19 8'10,20 1,020,02 850,8& &16,24 852,41 1,00 4 ,&5 831,17 805,01 &,11 14,58 .e1,57 38,32 11,8& -17,27 -3,15 -,-