Tabell’s Market Letter – December 31, 1982

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY OB540 DIYISION OF MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK eXCHANGE December 31, 1982 For some years now, we have studied the familiar seasonal tendency of the stock market to stage a year-end -'-'co'ncJusionsthat can raB be y, and it has derived,from been th a study eoCctu!st1oimspohef ntohnisfflie'tnteornt-op-oOinUtYoourtisgoimnaelofsttuhdeoing- back to when the Dow-Jones Industrial Average first was computed in 1897, indicated that such a raIly, however miniscule, invariable had taken place. However, two recent periods, 1976-77 and 1977-78, provided exceptions, with the DJIA, in each case reaching its year-end raBy high prior to the first day of January. The last four years have seen the resumption of the usual year-end rally pattern. The following facts about the year-end raBy may be noted. 1. The year-end raBy 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 raIIy 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, 1974, 1981, and 1982, the raIIy reached a peak by the first week in January, and, as noted above, the 1976 and 1977 year-end ralIies 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, 1977, and 1981, the rally began late in the year. This year, an up year, the December low occurred on December 16 at 990.25. 3. The important thing to watch in connection with the market action in the early …..,. monthsofthe.newyearistheaforementioned3igurj)..thaJ!reviousDecembeJ'.,….,,……, low. This low has been broken in 50 years out of the past 82. However in 29 of these 50 cases, it was broken in January and February. For example, in 1970, 1973, 1977, 1978, 1981, and 1982, the December low was broken by early January. Since 1937, it has never been broken later than mid-March with three exceptions, 1965, 1974 and 1981, when it was finally penetrated in August. Thus, if the market is able to hold above its December low for the first 2t 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, 1978, 1980, and most recently, 1982 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 December low has been foIIowed by an upward or neutral market in 35 of the 41 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 29 of the 41 years. In 1963, 1964, 1971, and 1980, the year-end rally approximated 10, and 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 year-end rally under 10 being followed by an up year. 6. The length of time in which the rally continues into the new year is important. For example, in 23 years, the ral1y continued into March or later. In 19 of these 23 years, the eventual trend was-upward.-, In1964,-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. reached December 16 at 990.25, will become an important reference point to watch. If the Dow is able to advance from this low by 10. roughly to the 1100 level. or continue a rally into February or March, the long-term historical implications would be bulIish. RJS rs Dow-Jones Industrial Average (1100 a.m.) 1047.09 S & P Composite (1100 a.m.) 140.28 Cumulative Index (12/30182) 1516.70 ROBERT J. SIMPKINS. JR. DELAFIELD. HARVEY, TABELL No statement or expression of opinion or any other matter herein contOlned Is, or IS 10 be deemed to be, directly or indirectly, an offer or Ihe ollcLto!lon of 0 offer to buy or sell onr. security referred to or mentioned The mOiler IS presented merely for Ihe convenience ollhe subSCriber. While we belIeve the sources of our ,formo 1101'1 10 be reHob e. we ' no way represent or guorentee the euracy thereof nor of the slotements mude herem Any actIon 10 be token by the subSCriber should be based on hIS own Inve51lgotlon and ,formohon Janney Montgomery SCali, Inc, as a corporatIon, and Its offICers or employees, may now have, or may later toke, poSItions or trades m respect to any securitIes menTIoned m This or any future Issue, and such pOSItIon may be different from any vIews now or hereafter e.opressed In Ihn or any other ISsue Janney Montgomery Scott, Inc, whIch IS regIstered With lhe SEC as on ,vestmenT odvisor, may gIve adVICe 10 lIs ,vesTment advISOry and olher customers Independently of ony ,tolements mode Il'I Ihls or Il'I any olher Issue Further InformatIon on any serunty mentIoned hereIn 1 ovmlable on ruest