Tabell’s Market Letter – July 08, 1988

Tabell’s Market Letter – July 08, 1988

Tabell's Market Letter - July 08, 1988
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209. PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 July 8, 1988 – -patt'-rnWseihna-vteW,)-8Sstoouckr -rmeaardkeerts. areInawcoanrlele. ctdieovnottenedreaw;ftaliir7wa-me-ofuanvteo'fpUs1tjuldisyrnofvde;ratth-earyouenadrsftoiBsleiamseo-neaalcf — – year. the table below, which, for each of the twelve months, shows the number of times the market has advanced for each month, the number of declines, and the average percentage change. In all, 744 months, ,comprising the 62 years from 1926 to 1987 are included in the compilation. One Month Periods 11926-19871 Two Month Per1od 11926-1987) End Month Advances Declines Average S Chg. Jonuary 40 22 1. 27 Februsry 32 30 -0.02 Horch 35 27 0 13 AprIl 34 28 1.12 H.y 31 31 -0.73 June 33 29 0.99 July 38 24 1. 65 August 40 22 1. 65 September 23 39 -1. 41 October 33 29 -0.57 November 38 24 0.70 — –December 45 17 – -1-.-2–8 TOTAL 422 322 0.51 Advance Declines Average I Chg. 41 21 36 26 30 32 39 23 35 27 29 33 38 24 42 20 36 26 28 34 37 25 –4-4 –18- 435 309 2.53 1. 26 0.03 1. 31 0.58 0.22 2.60 3.44 0.21 -1. 94 0.21 -2-..0-01. 04 As the table indicates, of the 744 months since 1926, 422—or 57—have been advancing months, and 322—or 43—have showed declines. Thus. the normal expectation for any given month would be 34-35 advances and 26-27 declines. Similar figures can be adduced for two-month periods. 1.JF'rooom…tb.e.data ahoY.ll.,w.e.have.been.ab\eto.extr.acUour patterns of a seasQnaL!la.tlU'..e which sem to be statistically significant. The most significant one is the least known, the tendency toward 8 market decline in the month of September. Since 57 of all months have been rising ones since 1926. the expectation would be a plurality of advances over declines. However. precisely the opposite is the case for September. which. in 62 years. has produced 39 declines and only 23 advances, with an average drop of 1.41 percent. The tendency held true last year. The initial phase of the 1987 market crash took place in September, with the Dow, as of September 21, down 6.4 from its August close. Despite a later recovery. September, 1987 was still a down month. The next most significant pattern has been the year-end rally. illustrated by 45 rising Decembers in 61 years. Our readers know that we have published an annual comment on this phenomenon around December or January of each year. Another seasonal manifestation which can be statistically demonstrated. although we have no idea of the reason therefore. has been the fact that the direction in which the market moves in November has appeared to be a moderately successful predictor of the market's direction for the following year. Of the four seasonal phenomena. the least significant has been the summer rally. which is due to be analyzed at this juncture. As the table shows. the 38 advances and 24 declines for July are marginally better than one would expect. August shows an even greater aberration. The percentage advances for July and August, along with that for the two-month period ending m August, are easily the largest figures in the table. Despite these fIgures, standard tests of statistical significance suggest that the summer rally is a less reliable phenomenon than the others noted above. It has been even less reliable recently I especially in July with four of the six Julys since 1982 having been down months. The pattern of August strength seems to have continued, however. There also seems to have emerged in recent years a brand new tendency—the occurrence of important market turning points during the summer months. The two most recent known market bottoms were, of course, August 12, 1982 and July 24, 1984. In the opposite direction, the top leading to the 1983 – 1984 decline began to form during the summer of 1983 and, of course, the all-time high for the Dow, prece(Ung'the198Tcrash-;-occurredon'Aug\lst'25lastyear.—- . – -f- The post-crash high to d8te interestingly enough, is a July occurrence. having taken place this Tuesday, on July 5. It will be interesting to see whether this, or any subsequent high reached on a summer rally this year. turns out to be an important turning point. AWTebh Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (717188) 2119.13 271.78 3921. 90 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. NOSlalemenl or expression of oplnronor any other matter herein contained IS, or Isla be deemed to be, directly or Indirectly, an offer orthe solicitation 01 an offer to buy or sell any secUrity referred to or mentioned The matter IS presented merely for the convenience of the subscriber While we beheve the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements made herein Any acllOn to betaken by the subscriber should be based on hiS own Investigation and InformallOn Delafield, Harvey, Tabell Inc, as a corporation end ItS officers or employees, may now have, or may later take, posrtlons or trades In respect to any securrtles menllOned In thiS or any future Issue, and such posrtlon may be different from any views now or hereafter expressed In thiS or any other Issue Delafield. Harvey, Tabellinc , which IS registered With the SEC as an Investment adVisor, may give adVice to (\S Investment adVISOry and olher customers Independently of any statements made In thiS or In any other Issue FUl1her mformahon on any secUrity mentioned herein IS available on request I

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