Tabell’s Market Letter – August 15, 1980

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VOAK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK eXCHANGE August 15, 1980 '-The atwariance-with 'rest 'of the financial-com- munity on a -number of basic propositions. 'There eXists, for example';- conventional wisdom which states that a market which has moved up sharply is, precisely because of this fact, vulnerable and in need of a correction. The technician, by and large, would argue that market strength is a healthy condition which is more likely than not to continue. The strength of the past four months has some claim to uniqueness. The Dow has moved up 27 over 78 trading days, through August 11, with the largest correction during that period being 2.21 . The only instance of a steeper rally in almost 40 years is the 36 move which took place over just 68 trading days between December, 1974 and March, 1975. In an effort to establish a benchmark for pre- vious rallies to compare with the present one, we have identified in the table below all rallies since 1942 which have continued for 78 days or more without a 5 correction or which have advanced more than 27. There are 22 such instances. Starting Date DJIA High After 78 Dals Subsequent Advance High No. of Days Later Advance From First High – Apr 28, 1942 Nov 30, 1943 Sep 14, 1944 Mar 26, 1945 Jun 13, 1949 Jul 13, 1950 Dec 4, 1950 1Mar 14, 1955 Feb 12, 1957 Dec 17, 1957 Oct 25, 1960 Oct 23, 1962 Nov 22, 1963 Jun 28, 1965 Oct 7, 1966 Jun 5, 1967 Jul 7, 1970 Nov 23, 1971 Dec 6, 1974 Oct I, 1975 Jun I, 1979 Apr 21, 1980 92.92 129.57 142.96 152.27 161. 60 197.44 222.33 2.5,5.-12 391. 36 454.82 425.65 566.05 558.06 711.49 840.59 744.32 847.77 669.36 797.97 577.60 784.16 821. 21 759.13 108.91 139.65 152.53 169.08 183.29 231. 81 255.71 284.19 459.42 506.04 458.65 653.62 684.86 820.25 945.84 849.89 943.08 783.68 959.18 786.53 949.86 893.94 964.08 17.2 7.0 6.7 11. 0 13.4 17.4 15.0 11. 2 17.4 11. 3 17.8 15.5 22.7 15.3 12.5 14.2 11. 2 17.1 19.1 36.1 21.1 8.9 27.0 145.82 150.50 161. 52 206.97 228.38 235.47 263.13 408.89 487.45 520.77 678.10 734.91 726.96 938.23 995.10 909.63 943.08 950.82 971. 25 786.53 I, OIl. 02 897.61 287 33.9 106 7.8 63 5.9 166 22.4 204 24.6 20 1.6 45 2.9 248 43.9 57 6.1 26 2.9 332 47.9 206 12.4 73 6.1 292 14.6 79 5.3 67 7.0 127 21.3 51 2.2 62 6.4 10 0.4 The first three columns in the table above show the Dow at the start of each of the 22 rallies, the high it had reached after 78 trading days, and the percentage advance to that high. The next column, which is the crux of the table, shows the subsequent high reached before a correction of 5 took place. The last two columns show the number of days the Dow continued to advance, uncorrected by 5, and the percentage advance at the subsequent high from the high which had been reached after 78 days. As the table shows, there are numerous instances where rallies comparable to the present one have taken place, and where the index continued to advance for periods of as much as a year with percentage increases in excess of 20. It must also be emphasized that the figure in the column ('ntitled Subsequent High refers only to the high reached before a 5 correction took place. In most instances, that correction was mild, and the following advance took the market to new highs, often by substantial amounts. It is also worth noting that every period in the past 38 years that we have come to identify as a major bull market began with a rally meeting the criteria suggested above. This included the markets of 1942-1953, 1953-1956, 1957-1961, 1962-1966, 1968-1972, and 1974-1976. The record would suggest, in other words, that the sharp market strength since last April, rather than indbating that the averages are vulnerable to a serious correction, leads, based on the historical record, to precisely the opposite conclusion. Dow-Jones Industrials (1200 PM) S & P Composite (12 00 PM) Cumulative Index (8/14/80) 963.99 125.50 968.48 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTsla No stalement or expression of opinion or any olner molter herein contolned 'S, or IS to be deemed to be, d'redly or Indorectly, on offer or the 50lu;llollon of of offer hto buy or sell any secvrlty referred 10 or mentIOned The mottcr IS presented merely for Ihe converlence of the subscriber While oNe believe the wurces ofbour n hon to be relloble we III no woy represent or guarontee the accurocy thereof nor of the statements mude herem Any octlon to be taken by the svbscfl er s au e based on hiS own'mvcstlga!ion and Information JonnC!y Montgomery SCali, Inc, as a corporation, ond Its officers or employees, may naw hove, or may later tdke. positions Of trades In respect to any seeuntles mentioned Ir' thiS or ony future Issue, and such position may be different from any views now or hefeaJter expredse hln thiS or any other Issue Janney Montgomery Seolt, In.c, which IS registered with the SEC as on mvestmerlt adVISor, may give adVice to !IS Invedment a vlSoryan at el customers Independently of any stalemel'llS mode 1M thiS or In any olher Issue Further information on ony security mentioned herem IS available on request