Tabell’s Market Letter – December 02, 1983

TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON. NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC (6091 9249660 ……. ….. .. -…..,……-……,..,., -'December 1983 . . ., …,.., —;.,..-..——-…. 2-, . . -.—-..– . With the Dow moving to a new high, however marginally, early this week, there has be- gun to appear occasional commentary on the Traditional Year-End Rally, along with speculaful that such a rally already might have begun. We confess to a certain proprietary interest in this particular phenomenon, having been writing about it for lonser (some 20 years) than any- one we are aware of, and, as we have shown many times, it is indeed a demonstrable phenom- enon. If it has already begul this year, it will have to be dated from November 7, when the Dow closed at 1214.84, from which level it has since moved ahead without noticable correction. What is the precedent for a year-end rally beginning this early The table below shows the starting months for each of the 57 year-end rallies since 1926. As can be seen, the start of such a rally in November would not be a totally unprecedented phenomenon. It has begun in November 13 times out of 57 and in November or earlier 30 times of 57. Indeed, in one year (1942), it can be defined as having started as early as April, since the average proceeded from that month's low to the end of the year without any correction of as much as 4. On numerous occasions the year-end advance can be dated from mid-summer. Starting Month 57 Year-End Rallies Apr 1 May o Aug Sep 1 4 Dec -1st 10 days Dec-2nd 10 days 6 10 Jun 2 Oct 7 Dec-3rd Ie days 11 Jul 2 Nov 13 Total '57 What is, of course, of current interest is whether an early start for the year-end rally povides.,.any..jndicationoLmaI'ketation…irl.thedllonthst!head.. In gene.rJ!I.Jt would appear to be a mildly bullish factor. Since 1926 the average monthly percentage change for the month of December has been 1.21. ,In those years where the year-end rally began early, (before Dec- ember), the average change has been 3.07!. and there has, furthermore, been only one loss in those 30 years. This is somewhat of a self-fulfilling prophecy, since an early rally-start implies a rising December, but it is nonetheless interesting. There is, moreover, some evidence that an early-starting rally tends to persist longer in- to the new year. The following table shows the ending month for the previous 57 year-end rallies, broken down by whether those rallies began prior to the month of December or in December. As can be seen, there is a slight tendency for rallies which begin early to persist longer. Of the twelve rallies which persisted into the new year beyond March, ten of them started prior to December in the previous year. By contrast, more thanhalf the rallies which began late ended in January the following year, including the only two cases on record (1976 and 1977) where the year-end rally failed to extend into the new year. Ending Month 57 Year-End Rallies Rally Start Rally Start Bef Dec. Dec. Total Jan 13 15 28 Feb 5 7 12 Mar 2 3 5 Apr 5 0 5 May 2 2 4 Jun Jul Aug Sep Total Bef Dec. 1 0 1 1 30 Dec. -0 0 0 0 F. Total –1- 0 1 1 57 The longer we can continue in December, therefore, without noticable correction, the stronger the odds become that the 1983-1984 year-end rally must be dated from November 7. This in turn would tend to suggest a reasonably good continuation of that rally into 1984. AWT rs ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrials (12 00 p.m.) 1274.89 S & P Composite (12 00 p.m.) 166.52 Cumulative Index (12/1/83) 1924.65 No statement or I!KpreSSlon 01 opinion or any other matl(U herem conta!nedls, or IS to be deemed 10 be, directly Of mdlrectly, an oller or the soliCitation of an offer to buyr sell any secunly referred to or mentioned The matter IS presented merely for the convenience 01 the subSCriber While we believe the sources of our mtormatlon to be rehable, we In no way represent or guaranlee the accuracy thereof nor of fhe statements made herein Any action to be laken by the subscnber should be based on hiS own Invesl!gal!on and Information Delafield, HafV(lY, Tabelt Inc, as a corporation and lis oHlcers or employees, may now have, or may laler take. pOSitions Of trades In respect 10 any seCUrities mentioned In thiS or any lulure Issue, and such position may be different from any views now or hereafter expressed In this or any otner Issue Delafield Harvev, Tabell Inc, which Is regIstered with the SEC as an Investment adVisor, may give adVice to ItS Investment adVISOry and other customers Independently of any statements made In this or In any other Issue Further Information on any security menlloned herein Is available on reQuest