Tabell’s Market Letter – June 14, 1991

Tabell’s Market Letter – June 14, 1991

Tabell's Market Letter - June 14, 1991
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TABELL'S MARKET LETTER 5 VAUGHN DRIVE, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 – June 14. 1991 If for no,reason.ther.than.Jheheat, we.are.re!DindeCthat.. summJ'. .jsupon u8,and!he so-called summer rally is. once more, a topic for discussion. We are, therefore, 'reproducing below the customary table. covering 94 years of market history since the Dow was first computed in 1897. One Month Periods (18971991) —————————— End Month ——— A–d-v-a-n-c-e-s D–e-c-l-i-n-e-s Average t Chg. ————– January 60 34 1.11 February 46 48 -0.21 March 57 38 0.73 April 51 44 0.87 May 48 47 -019 June 49 45 0.66 July 58 36 1.48 August 62 31 1.65 September 36 57 -1.34 October 50 43 -0.12 November 56 37 0.74 December 68 26 1.40 Two Month Periods (1897-1991) —————————— A–d-v-a-n-c-e-s Declines ——– A–v-e-r-a-g-e t—C-h-g-. 61 33 2.53 54 40 0.91 46 49 0.44 56 39 1. 65 51 44 0.78 48 46 0.39 58 36 2.14 62 31 3.39 54 39 0.27 40 53 -1. 41 55 38 65 29 0.68 2 02 TOTAL 641 486 0.57 650 477 1.15 As the table indicates. of the 1127 months since 1897. 641—or 57—have been advancing months. and 480—or 43—have showed declines. Thus. the normal expectation for any given —month -would -be-52-5aadVQnces- and, 39-40' decline -Slmilarfigurescanbeadducedfor-two-month' . periods. From the data above, We have been able to extract four patterns of a seasonal nature which seem to be statistically significant. The most significant one is the least known. the tendency toward a market decline in the month of September. Since 57 of all months since 1897 have been rising ones. the expectation would be a plurallty of advances OVer declines. However. precisely the opposite is the case for September. which. in 93 years. has produced 57 declines and only 36 advances. with an average drop of 1.34 percent. The probability of such a pattern being due to chance. a chi-square test tells us. is less than 1 in 1000. The next most significant pattern has been the year-end rally. illustrated by 68 rising Decembers in 94 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 we have demonstrated based on data since 1926. 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 58 advances and 36 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 in August. are the largest figures in the table. although December-January performance is close. 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. especially In July. with five of the nine Julys since 1982 having been down months. The most recent performance of the four seasonal indicators is mixed. July 1990 was up (barely). but August. along with the two-month period. saw a 10 decline. which continued through September. – validating that' particular seasonal tendency. The -average is rlow some 400 points above where it closed an up November. However, the year-end rally aborted. with a decline below the December low just before Persian Gulf success sent the market shooting upward. There seems t incidentally. to have emerged in recent years a brand new tendency—the occurrence of important market turning points during the summer months. Major market bottoms took place on 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 major high for the Dow. preceding the 1987 crash. occurred on August 25. 1987. The October-December. 1987 low was a return to the normal pattern of fall reversals. but of course the short. sharp 1990 decline started from a July peak. AWTjb Dow Jones Industrials (12 00) S & P 500 (12 00) Cumulative Index (6/13/91) 2993.74 380.94 6141.94 ANTHONY W. TAB ELL DELAFIELD, HARVEY. TABELL INC. NO S1alemenl or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, directly or Indlfectly, an offer or the sohcltatlon 01 an offerlobuy Of sell any security referred to or mentioned The mailer 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 aellonto be taken by the subscriber should be based on hiS own investigation and mformation Delafield, Harvey, Tabelllnc, as a corporation and Its officers or employees, may now have, or may later lake, posrllons Of trades In respect to any securlttes mentIOned m thiS or any future Issue, and such poSition may be dlHerenl from any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, labellinc , which IS registered With the SEC as an Investment adVISor, may gIVe adVice to I\S mvestment adVISOry and other customers Independently of any statements made m thiS or In any other Issue Further mformallOn on any secuTity men\loned herem IS available on request

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