Tabell’s Market Letter – January 21, 1983

Tabell’s Market Letter – January 21, 1983

Tabell's Market Letter - January 21, 1983
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE January 21, 1983 Wednesday's market decline, the latest interruption in the bull market, was widely attributed – . to 'econolnic newCrn8rfillnl'i'FeaIGross'Natiimal 'lfOdticCfor r982Tlle' droIJ-could hardly-h-ave' been surprising, since it simply confirmed the fact that we were, during 1982, in a recession, a piece of information constituting news to absolutely nobody. The crucial question, of course, cen- ters around the low point of that recession. Our economist colleagues have been sticking their necks out ever so slightly, and many have lately sugested that December, 1982 may, in fact, have been the recession's low month. There is no way of accessing the accuracy of this prediction since the NBER, which is the arbiter in such matters, will probably not put a date on the recession's end for at least a year. Assuming, however, that the end was in December, how does one square this with the sharp stock-market rise since August Recession DJIA The table at left shows the low point of the Low Oct. 49 Low June 49 Lead -4- eight recessions in the past 35 years. Everyone of these eight recessions was associated with a May 54 Sept 53 8 stock-market decline, six of them with major bear Apr. 58 Oct. 57 6 markets. (The two exceptions were the 1961 and Feb. 61 Oct. 60 4 1980 recessions which produced only intermediate- Nov. 70 May 70 6 scale stock-market drops.) The second column Mar. 75 Oct. 74 5 of the table shows the date of the stock-market July 80 Mar. 80 3 lows associated with the recession, and the third Dec. 82 Au!'. 82 4 shows the number of months lead. It is quite clearly demonstrated that a stock-market bottom four months in advance of the recession low is totally consistent with past history. It may well be argued, however, that a market rise as steep as the recent one, with the re- -.—-cession-not-even-havin gbottomed, is-withoutprecedent—–Thisargumenthassomele-gree-ofvalid— – – ity. The table at right Recession Low DJIA Low High Reached Adv. shows the same eight re- Oct. 49 161. 60 190.36 18 cessions, the associated May 54 255.49 327.49 28 low in the Dow and, in Apr. 58 419.79 458.65 9 the third column, the Feb. 61 566.05 662.08 17 high which had been Nov. 70 631.16 794.09 26 reached by the Dow in Mar. 75 584.56 786.53 35 the month the reces July 80 759.98 936.18 23 sion came to an end. Dec. 82 776.92 1070.55 38 1982's 37.8 advance to the December high is indeed a record, but the rise from October, 1974 through March, 1975, the month the 1974-5 recession actually hit its low was almost as great. In all cases, a significant stock-market rise had taken place by the time the recession was over. The key point, of course, Recession High Subs. Mo. Adv. is what happened afterward. Low Reached High Oct. 49 190.36 293.79 Date Sept 53 Later Adv. Cmp!. 4'7 22 The table at left shows the seven previous recessions and May 54 327.49 521. 05 Apr. 56 23 50 27 the high which had been Apr. 58 458.65 685.47 Jan. 60 21 49 15 reached on the Dow by the Feb. 61 662.08 734.91 Dec. 61 10 11 57 time the recession bottomed. Nov. 70 794.09 1051. 70 Jan. 73 26 32 39 The next three columns show Mar. 75 786.53 1014.79 Sept 76 18 29 47 the subsequent high, the date July 80 936.18 1024.05 Apr. 81 10 67 of that high, and the number Dec. 82 1070.55 of months required for that high to be reached. In none of the seven previous cases did the market fail to advance for less than 10 months after the recession bottomed, and, in 1949, it continued to rise for almost four years. The percentage advance from the high at the recession trough to the subsequent high was, in most cases, fairly substantial as the next column shows. The final column in the table shows the percentage of the total ultimate advance that had been completed by the time of the recession trough. In only two cases had more than half of the total rise taken place by the time the recession hit its low, and, in a number of instances, only a minor portion of the rise had taken place. If the almost- 300-point advance from August to December turns out to constitute half or less of the ultimate total advance, the results will indeed be impressive. AWTrs Dow-Jones Industrials (1200 p.m.) 1057.40 S & P Composite (1200 p.m.) 144.25 Cumulative Index (1/20/83) 1627.47 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or e)(prCS510n of opinion or any other matter herein contolned IS, or IS 10 be deemed to be, directly or ,ndirectly, an offer or Ihe 501lcltallon of on offer to buy or sell any security referred 10 or mentioned The maHer IS presented merely for the convenience of the subscriber While we believe the sources of our information to be reliable, we In no way represent or guarantee the occlJracy thereof nor of Ihe statements mude herein Any action 10 be toen by the subscriber should be bosed on his awn poslhons or trades Investlgotlon In respect to and Information Janney Montgomery any securities mentioned In thiS or any SfuctolJllr Inc, as a IS5IJe, and corporation, and lIS officers or such position may be different employees, may from any views now now have, or may later take, or hereofter expressed In Ih or any olher Issue Janney Montgomery Scott, Inc, which IS registered With Ihe SEC as on Inveslment adVisor, may gIVe adVice to lIs Investment adVisory and othel customers Independently of any stalements made In Ihls or In any olher Issue FlJrther Informahon on any sewrlly mentioned herem IS available on request

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