Tabell’s Market Letter – November 17, 1989

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC 16091987-2300 – November 17, 1989 -….,.. – Yesterday con8ti(uJga-,.!!n.niyyoforts f5'r–ll! 8toC m.!'.k.et.9!,-enler16,…!-9811,,, the DJIA was at 2038.58. From that point, it was to embark on an I1–mOlllh upswing which . -. – produced an almost-37 advance without a correction of as much as 5. That happy state of affairs ended on October 9 (or more properly, perhaps, the following Friday the 13th) with an almost-8 correction. A quasi-test of the October 13 low occurred early this month. There can be little doubt that the market climate has deteriorated substantially since early September, when breadth peaked and the Transportation Average started its own private bloodbath. We continue to feel that the decline will be intermediate-term rather than long-term in nature, although this is a forecast we would have to revise were continued evidence of distribution to take place. We think it necessary. in any case. to recognize the possibility of lows below those of October-November. Whether or not such lows occur may be especially significant, snce all this is taking place in November. a month which. for some reason, as we have noted in the past, appears to have predictive value. Action for the month of November itself has been almost precisely normal. In the 92 years since 1891, the Dow has been up 55 times in November and down 37, showing a rise some 60 of the time. This is close to the 57 rising average shown by all one-month periods since the Dow was first constructed. What is interesting, however, is what has happened following the 55 past instances of an upward November. The following table summarizes some, pertinent figures. ALL PERIODS FOLLOWING UP NOVEMBER Avg Ch Avg Ch Pe r iod Length Periods Periods Perlods Periods A1l Following In Months Up Down ————- ——- ——- Up Up Down ——- ——- Up Periods Up November ——– ———– 1 632 481 56.8 37 18 67.3 0.46 0.87 2 638 474 57.4 34 21 61.8 0.95 2.41 ;,- —- 3 4 655 -663 456 59.0 -47-97 35 -3r 20 63.6 1. 56 -r8 – – – 6 72—n- 2.30 -4.-06- 5 686 423 61. 9 39 16 70.9 2.72 5.28 6 675 433 60.9 36 19 65.5 3.33 4.75 7 683 424 61. 7 35 20 63.6 3.93 5.23 8 681 425 61.6 40 15 72.7 4.51 7.20 9 668 437 60.5 39 16 70.9 5.14 9.27 10 674 430 61.1 39 16 70.9 5.78 8.20 11 672 431 60.9 36 19 65.5 6.54 7.62 12 683 419 62.0 35 20 63.6 7.29 8.97 c The table shows the history of all market periods of one to twelve months in length since 1897 and compares it with the 55 periods of like length following an upward November. Taking the first line as an example, of the 1113 one-month periods since 1897, the Dow was up in 632 cases and down in 481, thus showing a rise some 56.8 of the time. In the 55 Decembers following an upward November, however, the average found itself up 37 times and down only 18, rising, therfore, 67.3 of the time. The average percentage change for all 1113 one-month periods was just under one half of 1. For the 55 periods following an up November, the average advance was 0.87. The table may be read in the same way for all periods of lengths from two up to twelve months. A glance through the table will show that the predictive value of November appears to be quite uncanny. For all twelve period-lengths, the market produced a greater percentage of rising periods following an upward November than was the case overall. For example, it rose 70 or more of the time over periods of five. eight, nine or ten months compared with an expectation of around 60. Likewise the average percentage Change following an up November comfortably exceeded the average percentage change for all periods of similar length, no matter what the length of the period in question4 The average -Decem15erJanuary cnarige following an upward November, for example. was 2.41 versus an expected average of under 14 Now none of the above says the market cannot go down after an upward November. and it has indeed done so on numerous occasions4 The past two years, also, have seen up markets following a November decline4 Certainly, there are large numbers of other factors, detailed at length in recent letters, which will go into the formation of a market opinion. Nonetheless, the November record is significant enough to be of interest. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWTebh Dow Jones Industrials 02 00) 2650.00 S & P 500 02 00) 341.64 Cumulative Indel (11/ 16189) 4829.62 No statement or expression of opinion or any other matter heretn contained IS, or IS to be deemed to be,dlrectly or Kldlrectly, an offar or the sohcrta\lon of an offerlo buy or sell any securrty referred to or men\loned The matter IS presented merely for the convenience of the subscriber While we behave the sources of our tnformatlon to be rehallle, we In no way represent or guarantee the accuracy thereof nor of the statements made herem Any acMn to be taken by the subSCriber should be based on hiS own tnvestlgatlon and Information Delafield, Harvey, Tabelllnc, as a corporation and ItS ofltcers or employees, may now have, or may later take, positions or trades In respect to any secunlles mentioned In thiS or any future Issue, and such posillon may be different from any VIews now or hereafter expressed In thiS or any other ISsue Delafield, Harvey, Tabef1 Inc, which IS registered With the SEC as an Investmenf advisor, may gIVe advrce o Its mveSlmenl adVISOry and other customers Independently of any Slatements made In thiS or In any o1her Issue Further Information on any securrty mentioned herein IS available on request