Tabell’s Market Letter – December 30, 1970

– — — TABELL'S MARKET LETTER I J 909 STATE ROAD, PRINCETON NEW JERSEY 08540 DIVISION OF MEM6ER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE December 30, 1970 For some years now, we have studied the familiar seasonal tendency of the stock marl'ett9 stage a year-end rally, jl.nd it !;las peen the custom oUhis lettEr eac)1December. to point out some of the conclusions that can be derived from a study of this phenomenon. We have suggested that an exhaustive study of chart patterns since the Dow-Jones Industrial Average first was computed in 1897 indicated that such a rally, however minuscule, invariably had taken place. – A number of interesting facts about the market action of the year end may be noted. (1) – As stated above, an identifiable year-end rally has taken place in every year since 1897. This rally often has been of great magnitude with advances as great as 28 having been recorded. It also, on occasion, has continued with only minor interruptions for as long as SlX months into the new year. However, on other occasions, it has been of only a few days' duration, reaching a top extremely early. Thus, in 1960, 1962 and, most recently, in 1970, the rally reached a peak in the first week in January. In 1961, 1964 and 1967, it continued into February or March. In 1965 and 1966, the rally peak was reached in early February. (2) – There has been a perSistent tendency for the rally to begin early in years when the market has been up, and late in years when the market has been down. In recent upward years, 1959, 1963 and 1967 are examples, the rally commenced from early December. In 1962, 1966 and 1969, it began late in the year. In 1970, a strong year in the second half, the rally actually began in late November. – – — -( 3) – The impertant–thing- to watch in -connection- with -rrfonlhs — — of the new year is the low for the previous December. This low has been broken in forty- three years out of the past seventy-one. However, in twenty-five of these forty-three cases, it was broken in January and February. Since 1937, it has never been broken later than mid-March, with the single exception of 1965. Thus, if the market is able to hold above its December low for the first 2 1/2 months of the year, chances become good that this low will not be broken For example, in 1960, 1969 and 19'70, the December low was broken early in January. In 1961, 1963, 1964 and 1967, it never was broken. 1965, as noted above, was unusual with the December, 1964 low of 850. 19 being broken in June when the Dow reached an intra-day low of 832.74. (4) – In years when the December low has been broken, the subsequent trend has been downward two-thirds of the time. 1960, 1962, 1966 and 1969, of course, are typical cases. Again, 1965 was an exception. 1970, of course, was a down year in the first half. (5) – The magnitude of the rally is an important clue as to the year's market trend. For example, an advance of 10 or more from the December low has been followed by an upward or neutral market in twenty-nine of the thirty-four years that such an advance has occurred. An advance of less than 10 from the December low before an identifiable cor- rection takes place has been followed by a downward market in twenty-four of the thirty- six years. In 1961, 1963 and 1964, the year-end rally approximated Q. In 196.Qk1962 and-1970, foro-example, -it was-less than thiS-figure;- …. c- – – —— – – (6) – The length of time in which the rally continues into the new year also is important. For example, in eighteen years the rally continued into March or later. In sixteen of these eighteen years the eventual trend was upward. In 1964, the year-end rally continued into March and m 1961, 1963 and 1967, into February. In the coming year, therefore, the December low of 787.45 is an important point to watch. If the present rally tops out in early January and breaks this low, it would be strong indication of probable market weakness. A like indication would be failure of the Dow to advance 10, or to approximately 865. On the other hand, if a rally continues into February or March, or reaches above 865, an extension of the upswing might be indicated. Dow-Jones Ind. 841. 33 ANTHONY W. TABELL S&P 92.27 DELAFIELD, HARVEY, TABELL AUiJT-PBrok No statement or expression of opinion or any olher matter herein contolned IS, or IS to be deemed to be, directly or indirectly, on offer or the solicitation of on offer to buy or selJ ony security referred to or mentioned The moiler 1 presented merely for the convenience of Ihe 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 made herein Any action 10 be loken by tho sub- sCClbor should be based on hiS own investigation and information Montgomery, Scott & Co, os a limited partnership, and Its partners or employees, may now have, or may loter lake, or trades in respect to any seCUrities mentioned In thiS or any futuro lSue, and such position may be different from any Views now or hereafter exprened In thiS or any other Issue Montgomery, Scott & Co, which IS registered with the SEC as on investmenl adVisor, may give adVice to lIs Investment advISOry and olher cvstomers mdependently of any siotements mode ,n thiS or In any other Issue