Tabell’s Market Letter – January 11, 1980

— …—– TABELLS MARKET LETTER 909 ST…..TE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF' MEMBER NEW YORK STOCI( EXCHANGE, INC MEM9EA AMERICAN STOCK EXCHANGE January 11, 1980 – …- '\ .;;… . – , For 79 years through 1975, the year-end rally had invariably contmued for at least a day or so on into the new year. In 1976-77 and this failed to happen', with the Dow moving im- mediately down from its December 31 high. This year, the Dow has returned to the long-term pattern of establishing a year-end rally. In the process, the December closing low of 819.62 on the Dow, which we discussed last week, was closely tested. This year-end rally pattern, as our readers are aware, is an indicator to which we have been drawing attention for a number of years. It has, of late, begun to attract fairly widespread notice, especially since last year's January ,action again proved an accurate harbinger of the year's trend. Many writers have suggested that the first five or the first ten days of January, or the month itself, tended to forecast the year's action. There might be some truth in this, but a look at the record shows that it is not all that simple. On the opposite page is shown the yearly performance of the Dow-Jones Industrial Average for various periods during January, together with the subsequent performance till the end of the year. An asterisk denotes when the direction for the January period under study is the same as the subsequent period to year end. The following table summarizes this January action for the past 54 years as related to the 5-, 10-,and 15-day trading periods, plus the month of January as a whole, followed by the subsequent year's trend in each instance. For example, the first line shows that the market was up 35 times and down 19 times for the first 5 days of January. In the 35 years of a 5-day uptrend, the fullyear trend was up 26 times and down 9 times. The 19 five-day downtrends produced 8 up markets and 11 ; s1l.9J.Vn …….,.,,.'.C..''-''-….. January Period 1st 5 Days 1st 10 Days 1st 15 Days Entire Month Market UE 35 33 29 35 QE. 26 22 23 24 Years Trend Down (74) (67) (79) (69) 9 11 6 11 (26) (33) (21) (31) Market Down 19 21 25 19 !!E. 8 12 14 10 Years Trend Down ( 42) (57) (56) (53) 11 9 11 9 (58) (43) ( 44) ( 47) An initial glance at the table would suggest that January, indeed, does have some forecasting properties. However, more rigorous examination will suggest reservations. It is necessary to recall, for example, that, in the 54 years in question, the market was up 34 times or 63 of the total. Thus, a naive procedure of forecasting, on the first of the year. that the market was going to be up would have been right almost two-thirds of the time. To qualify as an oracle, January must better this record. If it does do so, it is done unconvincingly. Indeed, the record for all four January periods in forecasting up markets fails most standard tests of statistical significance. These standard statistical tests will be reviewed in more detail next week. Downward trends in January have a better record. While the forecasting records of 10- and 15- day periods are little better than could have been produced at random, downward trends over the first 5 days, and the entire month of January do appear to be related to the year's trend as a whole. Having documented the historical performance of the January period and accepting the valid- ity of the findings, what statistical inference for 1980 is fact.;that.the,first.five trading days of this year have seen the market up, coupled with a successful test of the Decem- ber low, and a recent upside breakout of the five-point unit chart indicating an objective of 920, reinforces a positive outlook for the Dow-Jones Industrial Average for the coming year. — Dow-Jones Industrials (12 00 PM) S &p Composite 02 00 PM) Cumulative Index 0/10179) 862.20 110.32 811.72 ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL RJSsla No stotement or expression of opinion or ony other molter herem conlalned 15, or IS 10 be deemed to be, directly or indirectly, on offer or the sohc.tatlon of on offer to b\JY or sell any !eamly referred to or mentioned The matter IS presented merely for the convellence of the subscnber While we believe the sources of our Informalion to be rehoble we In no woy leprHent or 91..alontel; Ihe mcurocy Ihert)! n)f )f Ihe Moleme1'\lS. mude herein Any action to be takc!'l by the subscnber should be bascd on hiS own'lnvestlgatlon and Informahon Janney Montgomery ScolI, Inc, os 0 corporation, ol'\d Its officers or employees, may now hove, or moy later lake, POSITiOnS or trades In respect to any securitieS mentioned In thiS or ony future Inue, and 5uch pOSition may be different from any views now or hereafter expressed In th or any other luue Janney Mon'gamery Scott, Inc wh,ch IS registered With the SEC or. an IIvtstment adVisor, moy g,ve adVice to Its Investment odvlsory and other customers Independently of any statements mode In thiS or In any olher Issue Further Information on any secuny mentioned herein IS aVailable en requt! lUI .. ……. ……………1'121 1'128 I t'l30 1931 1'I3Z , , I It 3 1'1111 1'135 t936 ', 1'137 I'! V! Y!AR DAYS END .,.'!!!., ……… ' 1,45 -I,I!!'I -1,011 30,U -Qt,!!1 48,54 -0, 53 I!I,80 -33,23 4,42 54,117 !!l,17 23,20 3,lt7 &0,33 -2,ltll T,3e 1,17 !f,13 1!I,55 211,14 1,04 -33,51 TEN DAYS ., 1 05 -r,lt -1,43 iii iii, II.. 8,2'1 5' i!7 -1,17 -I I,ll I',H YEAR END -.J5i4T0 ff, l'r 52 01 -53,0/0 5 3!! 5.38 Un.H8 .Hn FT!N . DAYS !ND -1,112 !.1!0 -1,011 3',14 -!,'4 52,81 1,38 ';'18,30 !!l,.,11 '';'33,33 -I, Itll ;'51, n 11,11 ';'U,10 ' !!,84 U,!il 5 ,110 ',12 -I,/tl 4!!l,U 24,13 2,!!9 34,!3 !!ND YEAR JANUARV 0.50 , END – 0 ,15 0,51!! -1 .. 88 111,01 , 84 -21, 14 1,51 .38,3'1 ' ' 1,.U S,U 1,33 2.,2IJ , T!! -'5!,51 -U t J4 Z,q, Gl r ! ' 19S8 1'1'1 1'140 1'1111 1911Z 1'14 1'11111 '.19115 1'1411 ,I'lliT 1'148 !94C1 1'150 -.951 9S2 1'153 1'154 1'155 ICiSII 'r1'151 1958 1'15'1 \9110 f 1'1111 1'1112 I4IU I 41 lie I 'IllS 16 \9117 I'lliII 1'1&9 1'110 ' 12,' 1\ '112\ .0-1'17'5 6 ,I!!II 2,1Il8 IIl,U 1,44 I, III -111,1113 1,111 I!!,U 111,541 IIl,U .1II,!1 l!, !Eo 1Il.'1B I!, !i! 0,111 0,53 !!I,U -!, 11 -I,n -I,1i! 2,!!1 1,88 !!l,53 1, n 3,1Il 2,13 1,51 III ,CIT I ,1/1 5,54 0,112 .!!,!8 1Il,!1 .0,2! 2,27 – 2,13 f;28 20,11 .0,811 &,'10 .S,l! I3,Z7 -2,85 -111,58 5,57 I,l! U,III 0',11 1111,31 1',08 25,111 .,,/tll ' 2,04 3,1'1 2, C!l7 1,83 -2.1111 -2,0'1 U,38 1,112 111,51 -1.1111 .11, U 1,9S 5,211 0,511 -I,a1 115 ,115 2,0' 2!1,411 11,11 1.94 eZ,4'1 -11,'8 -i!,115 1I0,i!8 15,51 2,111 .8,811 -2,90 I ,e9 8,02 U,89 12,81 -2,9' 1,54 '1./li! -20,53 1,'15 \,efl II ,27 11,05 !, !13 -13,12 4,541 ,35 12,1!4 -28 ;-441- -I,l' -1,2' -1,'11 III ,at I,n B,55 e',!!I' 2.54 -III,T! I CI to,8It Ull!! -II!! !J' e3 e0,04 11;'08 t'I,1I! 10,8! 7.B2 a',55 III 04 4,88 -10.U !0,1I1I .lI 114 15,111 1283 11 8'1I! e154t'.7U\ 5'Ui!fI -11,04 -!r,l'- ' ',il5 .!,4Z -3,l'l8 -1,05 -0,14 I!J,U 1',43 1,50 4,81 .0,12 -3,25 l!, 15 .fI,11I !I ,111'1 1,' -1,541 ! oil 2,le -5,3!1 .4,40 !!,!0 2,38 -4,' !,1!9 -!I,lt41 lI,!!9 2,41 2,23 \.n ',841 .3,6'1 -I,fli! -\,'8 l! ,67 1, 1t4 'I!!,12 1,48 III, II,!!Z .It,ltll 14,48 ','5 12,19 II'! , !U 24,fT ;'U,!II ' l!,U 1,111 lI!I , !! 0 l' ,82 e,U ',28 2,41 J9,&1 2!,3 8,n II, ',5 JIll ,55 14,!!l5 .4,/t1l 111,2'1' .', t1 !l,U 11,/18 8,4T .,,17 I!, !6 ;'\4,32 lI,n 3,55 U,41 ;.U,..,- 0,84 .T,lt '4,Sl 3,2' .5,14 9, .10, .. 1 ' -I,'U 5 .. 11 I oil 1I,8C1 lit 'I! ,8,Z! II1J r All !!S,S4 II,U el3t42 l,U e,1I1!! .1,J Itl'! 1',0! 0,8! Till 0,n ,'5 t6, .73t,08l.l. !II,I 1'1,4 J,U 2,08 e,J5 11'1 ;41,0' '4I,1!It 14,!!! -l,QlII !i!,U .4,26 e.,14 4,12 i,n J,'U 1,111 II,n 11, ',lI!! .U,1t ' 8,11 fI,S0 .S,III! UtI! ,-UtU .T,U i!!lCIJ 1,11 – ., 4 Ill . – UI!1'1'5 197!1 141 1978 14119 !,11 !II,t5 ',52 – 10,115 e2,1/1 -15,411 5,/t1 2,U !!,81 1,28 t', ',n 8,1I/t -',2l1 -, IS 5,111 II,JI I. !I,It lI!l,6S .4,2111 -',28 /I, III JIIl,U ,48 .. 1!,/t4 4,45 111,03 ' IlI,tIt 14,01 '!1110 4,iI! J,U e12,91 .1I,5f1 -0,010 , OIR!eTtoN 0' JANUARY TRADING P!RtOD SAME AS SUBS!QUENT OIRECTION 01' MARKU TO !AR