Tabell’s Market Letter – September 07, 1990

TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 – ' –.z – – – –.– — – Septembe.r,,7 .'1990 -.. The appearance of the table below. which shows the number of times the market was up and the number of times down for each month since the first computation of the Dow in 1897. is somewhat out of season. It normally shows up in this space some time in late spring in a discussion of the summer-rally phenomenon. that rally occurring with noticeable regularity but. as we often point out. being less ubiquitous than is widely believed. One Month Periods 11897-19901 —————————— End Month ——— A–d-v-a-n-c-e-s -D-e-c-l-in–e-s Average i Chg. ————– January 59 34 1.08 February 45 48 -0.27 March 56 38 0.73 April 51 43 0.88 May 47 47 -0.24 June 49 45 0.66 July 58 36 1. 48 August 62 31 1. 65 September 36 56 -1. 28 October 50 42 -0.12 November 55 37 0.69 December 67 26 1.38 Two Month Periods 11897-19901 —————————— A–d-v-a-n-c-e-s Declines ——– Average ——- — Chg. —- 60 33 2.48 53 40 0.82 45 49 0.38 55 39 1. 67 50 44 0.75 48 46 0.39 58 36 2.14 62 31 3.39 54 38 0.44 40 52 -1. 35 54 38 0.64 64 29 1.96 TOTAL 635 483 0.55 643 475 1.14 The summer rally this year. as everyone is aware. was conspicuous by its absence. July. which. as the table shows. has a fairly strong upward bias. barely managed to eke out an I,,….,,-,..''m(aj'dnvta;hnc;e;in'o.f;-tlhee-scsQltehnaanar1'o.verAtuhg'euspt'.astw9h4ichyeparosss'esssaews' ath'1e11hi-g-dheecslitnea-iv1eirtahgee-Dpoewrcwein1tiacghe mclhlaUnegteh-oef-maonlymr-'-' the second worse August in market history. exceeded only slightly by August. 1974. Stock-market bulls should hope that the tendency to ignore seasonal patterns continues for at least another month. As we have not'ed in this space. the most persistent seasonal tendency for the market is not the summer rally or even the well-documented year-end rally. It is the tendency toward a September decline. A breakdown of the monthly price changes for 1.118 months since 1897 reveals some interesting figures for statistics fanciers. Most are inclined to equate record-setting severe declines with either 1929 or 1987. Actually. the worst monthly decline in market history occurred in September (note the month). 1931. a 30.7 drop. The second and third worst figures were just over 23 in March. 1938 and April. 1932. October. 1987. also down around '23. was the fourth worst. and October. 1929 was next. Just as the early 1930's produced notable down months. they also produced record recoveries. History's best month was April. 1933. when. in celebration of the repeal of prohibition. the Dow advanced 40. July and August. 1932 were the next best upside months. the market moving ahead by 26.6 and 34.8. respectively. This produced an astonishing 70 gain over a two-month period. and it may well have been this upside explosion which first caused analysts to think in terms of a summer rally. Let us. however. return to September. For 92 Septembers since 1897. the Dow has been up 36 times and down 56. The average percentage change for the month has been -1.28. the worst record for any month by a considerable amount. As noted above. September. 1931 was the worst stock-market month of the century. and the best September was a 13.5 rise in 1939. Since 1969 there have been only four cases when the market moved up in September. As we said before. applying the standard tests of statistical significance reveals that a downward September is the market's stroge9t seasonal characteristic. Note that -the table above reveals the market's long-term upward bias. 635 months since 1897 have produced a market rise. and only 483 have shown declines. One would thus expect individual months to show an advancing tendency. and all but February and September do. However. fewer than 40 of all Septembers have been up months. A chi-square test indicates that the probability of such an event occurring by chance is less than one in a thousand. Likewise. the probability of finding 92 random cases with a mean of -1.28. the figure for September. also approaches the one-in-a-thousand category. No seasonal tendency is without exceptions, and September has indeed produced an up market 36 times in 92 years. However. seasonal probabilities. especially when coupled with the market's recent action, do not produce a rosy picture. ANTHONY W. TABELL DELAFIELD. HARVEY. TAB ELL INC. Dow Jones Industrials 0200) S & P 500 0200) , Cumulative Index (09/06/90) AWTebh 2622.52 323.47 4682.65 No S1alement or expression of opinion or any other matter herem contained IS, or IS to be deemed \0 be, directly or Indirectly, an cfter ortha sohcrtallon of an offer to buy or sell any secunty referred to Of mentioned The matter IS presented merely for the convenience of the subscnber While we beheve the sources of our Informallon to be rehable, we In no way represent or guarantee the accuracy thereof nor of the statements made herein Any action to be taken by the subSCriber should be based on hiS own investigatIOn and Information Delaltefd, Harvey, Tabell fnc as a corporation and rts officers or employees, may now have, or may later take, pOSitIOns or trades In respect to any secutlbes menlloned n thiS or any future Issue, and such position may be different from any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabellinc , which S registered With the SEC as an Investment adVisor, may give adVice \0 rts mvestment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further Information on any secutlty mentioned herein IS available on request …