f ,, 1'-'. TABELL'S MARKET .. .'h' i l LETTER .,1.'..' –…. -. -. .\ e09 BTATE ROAD. PRINCETON. NEW JERSEY 081540 MEMBE NEW VOAK STOCK EXCH ….NGE. INC MEM8EA A ..' 'leAN STOCK EXCHANQE December 23, 1981 We concluded our summary of the stock-market year 1981 Isst week by saying that it can be interpreted only as a bear marker which terminated three months ago at levels not too far different from those of today or one which wiIJ terminate fairly shortly. If that 'sssumption regarding last year is correct, a forecast for 1982 becomes easy. It will be s bull-market year. Such a forecsst is. as we said. easy. but. in the early stages of 1982 at lesst. it is spt to prove less than useful. This lsck of usefulness stems from the fsct that the major unanswered question regarding recent stock-market action remains whether or not the DJIA low of 824.01 on September 25 constituted s major cycle bottom. Throughout the rmal quarter of 1981. this letter hss chosen to proceed on the assumption that such was not the case. for reasons which. we hope, we have made clear. If we are incorrect in this assumption, it has not, to date, cost us slI that much in terms of foregone opportunity. (The Dow at the moment is less than 6 above its September low.) If we are correct in our hypothesis, the possibility of another downward move in 1982 remains. This, it seems to us, would logicslly take place early in the year and might involve nothing more than a test of the lows of last September. At the worst, it could involve a full-fledged rmal bear-market leg which might carry as low as the mid-700's on the Dow. Even when considered only ss a possibility, this is serious enough to justify our present attitude of caution. There is, of course, some hypothetical justification for this expected downward leg's not materi- alizing. The table below traces the range of the Dow for various periods following the lows of October 22, 1957 and September 25, 1981. By coincidence, the Dow in the earlier period was slmost exactly one- half its level today, so figures for the post-1957 months have been multiplied by two. It is interesting to note the extent to which market action for the first three months following the two lows is similsr in each of the widely separated eras. The 1957 aftermath, as the table shows, was bullish in the extreme. W/lether 1982 can trace a similar pattern is a question yet to be answered. 1957 (times 2) 1981 Market Range Following Low First 2 weeks ext 2 -weeks- Next 2 months Next 6 months 882 – 839 878 – 859 899 – 851 986 – 873 878 – 824 873 – 847 892 – 831 Next Year 1328 – 989 1 There is no one indicator, we think, that will afford us an answer ss to whether the 1982-1981 bull market will emerge from a basing process which began last September or whether it will emerge from a new low to be made later on in the year. We think that the earliest clue will come from our regular practice of monitOring the development of individual patterns ss they unfOld in the early months of the year ahead. As we continue to observe that development, we would hope either to maintain and reinforce our present cautious attitude or to abandon it before the market hss made too much upside progress. We do not Bee this as an impossible tssk. Since we view 1982 as marking the completion of a four-year cycle, we took the occssion. this week. to review out' year-end forecast of 1977 – four years ago. We said then. If weaknells occurs in 1978, we would expt it GUrul!; the first half. This, of course, occurred, with the current cycle low reached in March, 1978. We also, however, speculated on the possibility that, 1978 might see the resolution of the dilemma — the ultimate end of the dreary sidewise action that has characterized the market since the mid-1960's. With the four-year cycle that followed that letter now completed or lsrgely completed, we now know that this did not occur. Will it occur during the cycle we expect to commence in 19821 There is, we think, accumulating evidence that points in this direction. If the past two decades can be succinctly summarized, they constituted a period of inferior performance on the part of financial assets (both stocks and bonds) vis-a-vis the performance of tangible sssets (real estate, collect- ibles, gold, etc.). No financial trend continues forever, and we do not expect this one to do so either. Indeed, we are perhaps embarking on a period when a program of government incentives toward savings and investment in financial sssets is st lesst partially replscing that of incentives toward investment in real assets that characterized the psst 20 years. That the American public has begun to discover the attractiveness of financial instruments is evidenced by some 180 billion currently residing in money- market funds, an amount equal to 16 of the market value of slI common Btocks listed in the New York Stock Exchange and equal to the market value of about six months of NY SE trading of current levels. The emergence of liberalized Individual Retirement Accounts in 1982 may produce financial shifts just as dramatic. Were these and other financial shifts to impsct even partislly, the equity market, the bull market, which we see as taking place during st lesst part of the year ahead, could indeed be one far more dramatic than the rather tepid affsirs which have characterized more recent stock-market history. Dow-Jones Industrials 869.67 S P Composite 122.31 Cumulative Index (12/22) 1108.81 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL WE WISH YOU ALL A HAPPY AND PROSPEROUS NEW YEAR No slclemen! or e;preluon of (lpm,on or any other molter herein contolned II, or II 10 be deemed to be, dHeC1ly or Indirectly, on offer or the lollcllollon of on offel to buy or sell ony security referred to or mentioned The malTel presenTed melllly for The convellence of the subSCriber While Ne believe Ihe aour'es of our Informo1101'1 to be reliable. we In no way represenT or gUO'onlee the occurocy IhelltOf nor of Ihe stoTemenh mude herein Any CIchon to be loken by Ihe subSCriber Ihould be based on hiS own II'Ivelllgcllon ond Informolion Janney Montgomery Scott, Inc, os CI corporollon ond III off,eers or employees, may now have, or mCly Icter loke, PO!t,ons or trades In respeCT to any securiTIes menhoned In Ihls or ony futule usve, ond such pos,llcn moy be dlfferenl from ony v,ews now or hereofter Itltpressed ,1'1 th.s or ony olher ISSue Jonney Montgomery coli, Inc, which IS regisTered With Ihe SEC as on Investmenl odvnor, may give odvlce to 115 Investment adVISOry ond Olhe. customers Independently of onv sloteme,s mode 11'1 thiS or 11'1 any other Inve Further ….formol,on on any security rnenoned herein U aVailable on requel.

jI I f L , TABELL'S MARKET LETTER .- '&08 STATE ROAD, PRINCETON. NEW JERSEY 08540 Dlv,a'ON 0,. MEMUfil NEW VOIllI( STOCK I)(CMANOIE, INC MIMI!1lI AMERICAN STOCI( EXCHANGe December 30, 1981 For some years now. we have studied the familiar seasonal tendency of the stock market to stage a year-end r,ally. ,and it has been the custom of this letter to point out some of the conclusions that can be derived from a study of this phenomenon. Our original study, going back to when the Dow-Jones Industrial Average first was computed in 1897. indicated that such a rally, however miniscule. invariably had taken place. However. two recent periods. 1976-77 and 1977-78. provided exceptions. with the DJIA. in each case. reaching its high for the year on the first day of January. The last three years have seen the resumption of the usual year-end rally pattern. The following facts about the year-end rally may be noted. 1. The year-end rally often has been of great magnitude, occasionally continuing through the entire subsequent year without a 5 correction being recorded. It frequently has continued with only minor interruptions for as long as six months into the new year. In 1961. 1963, 1964. 1967. 1971, 1975. and 1976. the rally continued into February. March. or beyond. However, on other occasions. it has been of only a few day's duration, reaching a top extremely early. Thus. in 1960. 1970. 1973. and 1974, 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 upward years. 1967. 1975. 1979. and 1980 are examples. the rally commenced from early December. In recent downward years. 1962. 1966. 1969. and 1977. the rally began late in the year. This year was a down E– year. and the December low was probably msde on December 29th. 3. The important thing to wstch in connection with the market action in the early months of the new year is the aforementioned figure. the previous December low. This low has been broken in 49 years out of the past 81. However. in 28 of these 49 cases. it was broken in January 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 three except- ions. 1965. 1974. and this year. when it was finally penetrated in August. Thus. if the market is able to hold above its December low for the first 2 months of the year. chances become good that this low will not be broken. 4. In years when the December low has been broken. the subsequent trend has been downwards two-thirds of the time. 1962. 1966. 1969. 1973. 1974. and 1977 are typical cases. 1965 and 1978. along with 1980. as noted above. were exceptions. 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 Dember low has been followed by an upward or neutral market in 35 of the,47 \rears that such an advance has occurred. An advance of less than 10 or–fii'ore from the December low before an identifiable Election takes place has been followed by a downward market in 28 of the 39 ears. In 1963. 1964. 1971. and 1980. the year-end rally approximated 10. d in 1972. it was 17. In 1962. 1970. 1973. and 1977. for example. it was less than this figure. This year. the rule failed to hold. with a rally of just over 10 being followed by a downward year. 6. The length of time in which the rally continues into the new year is important. For example. in 23 years. the rally continued into March or later. 1n 19 of these 23 years, the eventual trend was upward. In 1964. 1972. 1975. and 1976. the year-end rally continued into March and in 1961. 1967. 1971. and 1980. into February. This year, therefore. the December low. probably-868.25 on Tuesday, will become an important reference point to watch. If the Dow is able to advance from this low by 10, roughly to the 960 level. or continue a rally into February or March. the historical implications would be bullish. AWTrs Dow-Jones Industrials 873.10 SloP Composite 122.30 Cumulative Index (12/29/81) 1100.72 ANTHONY W. TABELL DELAFIELD. HARVEY. TAB ELL No statement or exprl!lUlon of apUlIon or any other mo'1er here'n contOlned '5. or Ii 10 be deemed to be, dlfeetly or 'ndlfeclly, on offer or the lollcllotion of on offer to buy or sell ant. seCUrity refered 10 Of me.,honed The moiler IS presenTed melely -for the con….etllencf of the subscriber wtuJelII beheve the sourtes of our Informotlon 10 be reHab e, we In no way represel'll or guaron'ee the accuracy thereof nor of the stalement, mude herein Any athon to be loken by Ihe subscnber should be based on his own mveSllgallon and Infotmallon Janney Montgomery Scott, Inc, as a torporatlon, and ltl officers or employees, moy now have, or may loler toke, poslllons or trodes in respect to ony securotles menlloned In thiS or ony hJlufl' Issue, and such position mey be dIfferent from ony views now or hereafter expreued In Ihl5 or any other Inue Janney MonTgomery Scolt, Inc, whIch IS registered wlh the SEC as on ,vestment adVisor, may gIve odve 10 II, Investment advISory and other CUSTomers ,ndependently of any statemenTS mode In Ihls or in any oher Issue FU'1her Informa'ion on ony security mentioned herein IS ovolloble on request