Tabell’s Market Letter – January 06, 1989

..,. TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 085435209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9872300 January 6. 1989 '- Following a 24-point 'slide' on-the-first-trading daYof '1989 ;ctheYear-end 'rally–in-ally– '.- -', ''– emerged, and a new postcrash high' was chalked up on Thursday. As discussed last week. the vigor of this rally will provide one clue as to the market's potential for the year ahead. It occurs to us as 1989 begins that there still remain a couple of aspects from which we hJ)ve not yet discussed its prospects. One such aspect is the decennial pattern, in which market patterns are analyzed in terms of the ending digit of the year. There are some interesting facets to such a classifaction. such as, for example. the fact that all nine years ending in 115 11 since the Dow was first computed have been advancing ones, and the average advance for those years is 35. five times as great as the 92-year average. Unfortunately. the pattern for years ending in 9 does not tell us much. Five years of nine have been up, but two-thirds of all market years have. historically. been up years. Some analysts have suggested that 9 years tend to be turning points. e.g., 1929 and 1949. but we suspect this maybe coincidence. Probably of more significance is the fact that 1989 will be a post-election year. The following table shows what the stock market did in the 23 most recent such years. It shows the average price for each month on the Dow as a percentage of the previous December's close (i.e., 110 means the market was up 10; 90 means it was down 10). Year president Jan Feb Mar Apr May Jun Ju1 Aug Sep Oct Nov Dec 1897 Cleveland 1901 McKinley 1905 Roosevelt u1909Taf,t 1913 Wilson 1917 Wilson 1921 Harding 1925 Coolidge 1929 Hoover 1933 Roosevelt 1937 Roosevelt 1941 Roosevelt 1945 Roosevelt 1949 Truman 1953 Eisenhower 1957 Eisenhower 1961 Kennedy 1965 Johnson 1969 Nixon 1973 Nixon 1977 Carter 1981 Reagan 1985 Reagan D 84 82 82 79 79 85 92 104 107 101 95 98 R 96 97 97 104 101 109 104 101 99 92 93 89 R 101 106 112 115 107 108 114 117 115 118 123 134 R 9,99.7 921,Ola.51.07 1.0–1 31.lA–1IA.L411.4 D 97 92 91 92 90 85 88 91 93 90 88 88 D 102 96 100 99 98 102 98 93 88 83 75 74 R 104 105 104 107 107 96 95 93 96 100 105 111 R 101 100 100 99 104 107 111 115 118 125 128 128 R 102 103 104 103 105 105 115 120 122 107 78 82 D 103 94 96 108 136 157 167 164 167 155 161 166 D 102 105 105 100 96 95 100 102 89 77 70 70 D 99 93 93 91 89 93 97 97 97 93 89 84 D 101 103 103 105 109 110 108 109 117 122 125 127 D 101 98 99 99 98 93 98 101 102 105 108 l11 R 99 97 98 94 95 91 93 93 90 93 95 96 R 97 93 95 97 100 101 103 98 94 89 87 87 D 103 106 109 111 113 112 112 117 115 114 118 118 D 102 102 103 104 106 100 100 102 106 108 109 109 R 99 99 97 98 101 95 89 87 88 88 89 84 R 101 95 94 93 90 88 89 87 89 95 86 81 D 97 94 94 93 92 91 90 87 85 82 82 82 R 100 98 102 104 102 103 98 96 89 89 89 91 R 102 106 105 105 106 108 111 109 109 112 118 125 The most obvious conclusion suggested by the table is. unfortunately. that such years appear to have a fairly significant bearish bias. In 13 of the 23 years, the average price for December was lower than the previous December's close. This is in direct contrast with the record noted above for all years since 1897. The market was up in 57 of those 92 years, or 62 of the time, thus suggesting that the post-election pattern, with 'only 43 advancing years, is a bit unusual. Nor does Mr. Bush's party affiliation help. Until President Reagan reversed the pattern in 1985, the market had been down in the year following the election of a Republican in every post-election year since Hoover. (This bias was apparently not present in the first part of the century with the accessions of Theodore Roosevelt, Taft, Harding, and Coolidge, all producing good years.) It will be interesting to see whether the 1985 reversal is repeated in 1989. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) 2198.21 S & P 500 (1200) 281.48 Cumulative Index (/5/89) 3985.80 AWTebh No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, directly or Indlrectty, an offer or the soliCitatIOn of an offer to buy or sell any secunty referred to or menlloned The matter 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 accuracy thereof nor of the statements made herem Any action to be taken by the subSCriber should be based on hiS own mvestlgatlon and mformallon Delafield, Harvey, Tabelllnc, as a corporation and Its officers or employees, may now have, or may later take, pOSitions or trades In respect to any securities men1lOned In thiS or any future Issue, and such position may be different from any views nowor hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabelllnc, which IS registered With the SEC as an mvestment 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 securtly mentIOned herem IS avaitable on request