Tabell’s Market Letter – December 14, 1984

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9249660 – , – – —– – — H D..eSl1beJ;11… JJ)B4 .;Ea It! ..,…..- T-he-year-end rally,- a phenomenon we have discussed with some frequency in this space, has certainly not materialized to date, the slide from Election Day having continued through this week. That rally, as we have pointed out, has often been so short as to almost escape notice, but it is nonetheless real, as eVldenced by the market's pronounced seasonal upward bias for the month of December, as shown at the table at right. Months Months Months Months The table covers the 88 years Month U1 Down Up Change since the Dow was first computed in 54 -l3 62.07 O. a755 1897 and. for each month, shows the Feb. 41 47 46.59 -0.4982 number of months the market was up Mar. 52 36 59.09 0.6896 and down, the percentage of months April 49 39 55.68 0.9173 up, and the average percent change May 42 46 47.73 -0.4933 for each month. An upward tend- June 44 44 50.00 0.5751 ency in December is clearly July 54 34 61.36 1.4620 noticable. Although on average Aug. 59 28 67.82 1. 7879 the market moved ahead in Sept. 36 51 41. 38 -1.2645 only 56 of the 1050 months Oct. 47 40 54.02 0.0250 under study, 71 of all Decembers Nov. 52 35 59.77 0.7185 were upward months. The average Dec. 62 25 71.26 1.2852 performance for the month, plus Total 592 458 56.38 0.5063 1. 28, while not as good as that for July and August, is still well ahead of the normally-expected half-percent gain. There thus exists some justification for suspecting the Dow might wind up the year above the level of 1188.94, where it closed on November 30. An interesting question, given the fact that 1-,t!,h!is,–,,eyen1.ualitY.-'lastLfairlyighJteasonalprobabi1ityoftakingplace,-iswhe1heror-'lotitsocc'u'l'r- 1 rence, or lack thereof, would shed any light on what the market might do in 1985. The predictive value of the year-end rally, as we have pointed out, is based on its continu- ance into the new year. As the table below shows, the forecasting record for the month of December itself is not terribly exciting. All Years (87 Years) Dec-Jan Dec-Mar Dec-Jun Full Year Avg chg 0.88 1.12 2.12 6.61 Years Up 54 49 51 53 of YealBUp 62.1 56.3 58.6 60.9 Prev. Dec Up (62 Years) Avg chg 0.56 1. 08 3.36 7.93 Years Up 38 35 50 38 of Years Up 61. 3 56.5 64.5 61. 2 Prev. Dec Down (25 Years) Avg. chg 1.65 1.22 0.95 3.31 Years Up 16 14 11 15 of Years Up 64.0 56.0 44.0 60.0 The table covers the market performace for the initial one, three, six, and twelve months of each year since 1898. The first set of figures is for all years, and the last two sets cover years following an upward December and years following a downward December. By and large, the years after the previous December was a downward month show little difference from upward ones or from the average for all years. Interestingly enough, only slight statistical bias appears to be for the longer periods, six months and twelve months. The month of December being down has, with some reliability, suggested weakness over the first six months of the following year and has generally foreshadowed a smallerthan-average advance for the entire year. We have shown in previous studies that the only stock-market month which seems to have real predictive value is November, where, for some reason, the record at forecasting the following year's action is fairly good. November, 1984, of course, was a down month, thus producing some- what negative implications for 1985. It will be necessary to weigh these implications against the extent and durabihty of the year-end rally in producing a 1985 forecast. AWTrs ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrials (12 00 p. m.) 1176.13 S & P Composite (1200 p.m.) 162.00 Cumulative Index (12/13/84) 2030.29 No statement or expresSIOn of opinion or any otller maHer herem contained IS or Is to be deemed 10 be, directly or mdlreclly. an offer or the solicitation of an oller 10 buy or sell any security referred 10 or mentioned The matte IS presented merely for Ihe convenience of the subSCriber Whlfewe believe the sources cfour information 10 be reliable wem no way represent or guarantee the accuracy thereof nor of the statoments made herein Any action 10 be taken bylha SUbscriber should be based on hiS own Investigation and Inlorrn8110n Delaflold, Harvey, labell Inc, as a corporation .. nd I\S 01lICOI or employees, may now have, or may laler lal-e, pOSitions or trades In respect to any securities mentioned In this or any future Issue and such pOSItion may be dlfferenllrom any views now or heleafter epressed In thiS or any other Issue Delafield, Harvey Tabell fnc ,WhiCh IS registered wllh the SEC as an Investment advisor, may gleadvlce to lIs Investmenl advisory and other customers Independently of any statements made In thiS or In any other Issue FUrther Information on any security menlloneo herein IS available on request