—- —– -;. – .- —. Walston &- Co. Inc. Members New York Stack Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Swa,ed.,d) OFFICES COAST TO COAST CONNECTED BY DIRECT PIUVATE WIRE SYSTEM TABELL'S MARKET LETTER August 2, 1957 It looks like more of the same. More of the same kind of stock market, that IS, that we have been having for the past fifteen months. More of the same successive little waves of optimism followed by waves of pessimism with the market,as measured by the average not getting very far in either direction. The averages today are Just about where they were year or even almost two years ago. Date Stand. & Poor 500-Stk. Index Dow-Jones Industrials Aug. 2nd, 1957 47.68 505.10 July 15th, 1957 Aug. 2nd, 1956 SAeptfrti.l231r6dt;h-,11'995556- 49.13 49.74 –4458..-8653- — ,- — 'x, 523. 11 523.33 524.37 . vu '.–'''' The recent advance from the February lows after testing, but not passing, the 1956 highs appears to have lost momentum for the time being. From a technical point of view, there have been no signs of important dlstnbutlOn at the recent tops and probably the pre- sent declining phase will halt, at least temporarily, around the 47 level in the Standard & Poor 500-Stock Index and 500 on the Dow-Jones Industrials and will be followed by a con- solidahon and another attempt to penetrate the 1956 highs. Whether or not new highs in the averages are reached is problematlcal and probably not too important at this stage of mar t. From a longer range point of view, I still adhere to the opinion I have held for almos two years. I believe the market is in a broad consolidating area similar to 1946-1949 and 1951-1953. The duration of thIS consolldating phase is uncertain. The 1946-1949 area held fo approximately 40 months while the 1951-1953 phase lasted for roughly 28 months. If we use April, 1956 as the start of the present consolidating area, a 40-month projection would carr to August, 1959 and a 28 -month proj ection would carry to Augu st, 1958. It is, of course, not certain whether the present phase WIll be of shorter or longer duration than the two pre- vious consolidating phases. However, regardless of the time element, it is my opimon that the present consolidating area will eventually be followed by an upside penetration of the area and an advance of equal or greater proportions than the 1949-1951 advance or the 1953'1956 advance. The present consolidating phase has held in roughly the 50-43 range in the S.& P. Index and the 525 -450 range in the D-J Industrials since April,1956. While I expect the averages to remain in these broad trading areasfor some further time,this does not preclude the possibIlity that the averages might reach modest new highs while still re- maining in the broad confines of the trading area. ThIS happened in both the 1946-1949 and 1951-1953 area. In 1948 the averages reached a new high, but again returned to the trading area to broaden it. The same thing occurred in 1952. While the averages have remained in a rather restricted trading area, we all know that many individual stocks have had private bull and bear markets of their own. This will continue regardless of the action of the averages. In my work over the past two years, I ha, tried to concentrate on mdividual issues and have been using the averages as only backgro d There are many reasonably priced issues available. For instance, AMERICAN BRAKE SHC which I mentioned in last week's letter, appears to be a good value regardless of the yields and pi E ratios of the various market averages. Earnings for 6 months on ABK were releas earlier in the week and showed 3.64 a share for first 6 months of 1957 compared with 3. 'n the 1956 period. Allowing for full conversion of preferred by Sept. 30th would bring earn- 'ngs down to 3.37 for the 1957 6-month period as compared with 2.99 in 1956 period. At 52, with at least an anticipated 1957 payment of 2.90, the stock yields 5.5 and sells at onl fibout 8 times anticipated 195-7 earnings of B-. error' in pur report last week in stating that ABK operated at a proflt in every year since 1902 with he exception of 1932. Actually, company has operated at a profit every year. The 1932 deficl was after dividend payments. Actually, a profit of 260,000 was shown in 1932 before divide s. GENERAL RAILWAY SIGNAL (31) also released six months earmngs during the week 957 results of 1. 45 compared with 1. 21 in 1956. Usually, over 6070 of annual earnings pf GRS are shown in the second half, so full 1957 earnings should be at least 3.80 and probably around 4. 00. The stock looks attractive at present levels. EDMUND W. TABELL WALSTON & CO. INC.

Wdlston &Co. – – – – – I n c . – MembeTS New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Swa,.,Idj OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER August 9, 1957 The averages declined to the lower limits of the first support shelf before they were able to stage the first worthwhile rally since the July highs were reached. The Standard & Poor 500-Steck Index reached a low of 46. 13 on Wednesday and the Dow-Jones Industrials declined to 490.25. It is probable that these lows will hold for the time being and be followed by a slow consolidating period probably for the balance of the month be- fore another attempt is made to penetrate the overhead supply that exists in the 48-50 area and 510-525 area. The past two moves in the market have been sharp and rapid Intra-Day Low lntraDay High Points Intra-Day Low Points June 24th July 15th Advance Aug. 7th Decline ' S & P 500 D.J. Ind. 46.38 492.87 49.41 523.11 3.03 30.24 46.13 490.25 3.28 32.86 The rally from the June lows to the July highs was completed in fourteen trading days and the July-August decline was accomplished in seventeen trading days. On a broader scale, the same alternate moods of optimism and pessimism have been going on since April 1956. In the past fifteen months, there have been eleven advances or declines of 20 points or more in the Dow-J ones Industrial average. Date April,1956 May, 1956 Aug. 1956 Oct. 1956 Nov. 1956 Nov. 1956 Jan. 1957 – 1957 – June 1957 June 1957 July 1957 524.37 463.85 523.33 468.83 500.52 460.41 502.57 516.81 492.87 523.11 Date Points May, 1956 463.85 -60.52 Aug. ,1956 523.33 59.48 Oct. 1956 463.83 -59.50 Nov. 1956 500.52 31. 69 Nov. 1956 460.41 -40. 11 Jan. 1957 502.57 42. 16 Feb. 1957 453.07 -49.50 . June 1957 74 June 1957 492.87 -23.94 July 1957 523.11 30.24 Aug. 1957 490.25 -32.86 Wbile the averages have been backing and filling over the same territory for fifteen months and getting nowhere, many individual issues have had private bull markets and private bear markets of their own. I could fill a page with examples of this, but the reader can pick them out for himself. This type of action will, in my opinion, continue for a long time. It is logi- cal that it should. Earnings on the various averages will show little more than 10 change between 1955, 1956 and 1957. There is no reason why the averages should move very far in either direction. At 50 in the Standard & Poor 500-Stock lndex, or 525 in the Dow-Jones Industrials, the market is valued on the high side on the basis of present earnings and dividends. Any higher evaluation must borrow from the hope of future earnings and dividends not yet realized. At around 40 in the S & P lndex and 460-450 on the Dow-J ones lndustrials, the market is probably valuing the same factors on the low side. Until there is a definite change in the present earnings outlook or in the future earnings outlook, the averages will continue to hold in a broad trading area swayed by temporary changes of optimism and pessimism. The picture in individual companies is different. Some companies are show- ing sharply increased earnings while others are in a declining trend. The stocks of these companies are following their own earnings trends and not the trend of the averages The moral of all of this is that the investor or speculator should be more concerned with the outlook for individual stocks than in worrying about the roller coaster moves of the market. EDMUND W. TAB ELL WALSTON & CO. INC. —

,I Walston &- Co. – – – – – I n c , – Membm's New York Stock EXchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Swl.,land) OFfiCES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TAB Ell'S MARKET LEnER August 16, 1957 The market broke below the anticipated support level of 46.50 on Standard & Poor s 500-Stock Index and 490 on the Dow-Jones Industrials to reach intra-day lows of 45.27 anc 482.10 on Thursday. As outlined in last week's letter, this is the eleventh prIce swing up and down of about 5 or more that has occurred since the market reached its high sixteen months ago in April, 1956. The widest downside swing during this period was the 11 droR froID.ABril February to June. The present decline, at Thursday's lows, amounted to about a 7 1/2 drop from the July tops and is well within the confines of the broad consolidatlOn area. As I have continually reiterated m this letter, since January 1956, I expect this I, consolidating period to continue for quite some time – possibly well into 1958 or 1959. During this consolidating period, like similar consolidating periods in 1946-1949 and 1951-1953, there will be alternate moods of pessimism and optimism. The pessimistic mood is definitely in control at the moment just as optimism was at the wheel from February to July. Over the next year or two there will continue to be wide swings in the broad range of 50-42 in the Standard & Poor Index and 525-450 in the Dow-Jones In- dustrials with the possibility of more testing of both the highs and the lows. In fact, it would not be surprising if either or both the highs or the lows ere penetrated by a few points during the course of the next year or so. It is my conviction that the ultimate decisive penetration of the now sixteen-month trading range will be on the upside. The longer the consolidation lasts and the more swings up and down that occur, the higher the potential upside obJective will be when the breakout ultimately occurs. Obviously, the upside breakout will coincide wi.th an increase in earnings. For the last three years, 1955 -1957, earnings on the Dow-Jones Industrials have centered around 35 a share. theFei.s.. — ,- – market will undoubtedly respond. There is no indication of any important change at the moment. As for the nearer term, the market appears to be in oversold territory. My technical indicator, which signalled a secondary sell signal on August 6th, has been in oversold territory for four days and is'in a position to give a primary buy signal in the near future. As to support levels, the averages are in the middle of a broad sixteen-month trading area and the whole range between today's closes and 44-42 on the Standard & Poor Index and 460-450 on the Dow-Jones Industrials could be considered support. The best use of these technical signals is to point out buying spots for individual issues. There are two schools of thought concerning buying after a decline. The first of these holds that the best opportunities can be found among stocks that have held up the best. The second school advocates the purchase of stocks that have fared the poorest. I usually agree with the first school but when good values appear in the second category, purchase is advisable. In the first category, many issues on our recommended list have acted somewhat better than the general mar-keto Among those that may,be cited-are American -Can, Bell & Howell, Chrysler, General Railway Signal, Houdaille Industries, Ingersoll Rand, U. S. Steel and Western Pacific. In the latter category, Carrier, which reached a low of 44 on August 14th, seems to stand out. Reason for the weakness has been a number of sell recommendations by various financial services. I disagree with most of the conclusions reached by these services, but, even assuming their correctness, it must be pointed out that Carrier is sellmg today at a lower PiE ratio and a higher yield basis than at any time since 1953. For a stock of its growth potential, current price appears low and averaging down purchases are recommended. EDMUND TABELL WALSTON & CO. INC . —

rr. Walston &- Co. – – – – – I n c . ..; r\ Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Swa,ldl OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER August 23, i957 1 fter reachmg mtra -day lows on Tuesday of 44.74 on the Standard & Poor 500- Stock Index and 474.52 on the Dow-Jones Industrials, the averages rallied back to 45.83 and 488.23. However, all of this advance was lost by Fnday with intra-day lows of 44.43 and 474.81. About the only encouraging feature was the fact that volume on nse of 2,700,000 shares on Tuesday exceeded the down day's volume of 1,500,000 shares and 1,960,000 shares on Thursday and Friday. This decline so far, and almost every de- cllning phase for the past two years, has been brought about by an absence of buying powe rather than an increase in selllng pressure. The market has been in oversold territory f( mne trading days, on a short term basls, but has not yet aro,!sed any gEeat buymg mtereEl It may be necessary to agam test the 43-42 an-d 465-455 level wherestrongbuying intere-s– has appeared on four dlfferent occasions since the start of the 16 -month consolidatmg are, m April, 1956. Stock pnces are the result of four factors. Three of these factors are fundamen- tal and tangible. They are earmngs, dlvldends and money rates. These fundamental fac- tors change rather slowly. The fourth factor, investor confldence, is extremely intanglbl , dlfflcult to measure and subject to wlde swings m both dlrections. Investor confldence, or the lack of lt, lS what causes the same security to sell at posslbly 12 times earnings when mvestor confidence is hlgh and at 8 ilmes earnings when confidence in the future is at an ebb. These psychologlcal moods can temporarily have more effect on stock pnces than the more fundamental factors. Looking at the general over-all pattern rather than indivldual compames, earn- mgs have not showed much change S111ce 1955. Earnmgs on the Dow-Jones Industrials hav centered around 35. For 1957, earmngs are presently estlmated at around 37., pre- suming a plck -up m the fourth quarter. Part of thlS mcrease will be accounted for by sha earmngs jumps by two stocks m the average, Chrysler and Westinghouse Electnc. D1Vl- dends on the industrials were 21.58 in 1955 and 22.99 m 1956. They probably will be a bit hlgher in 1957. There have been no important changes m the two factors since 1955. —Therehas, of-course, -been a sharp mcrease m monerrates' drop- . in bond prices brought about by the tremendous demand for capital expansion money to fmance new plant and new eqUlpment expenditures m order to offset increasing costs and a labor shortage. The hght money pollcy of the FRB is designed to slow down these in- flationary pressures. It would appear from my work that money rates and bond prices will probably stabllize at around present levels, but tight money could have some be- lated effect on stock pnces. Speculahve confidence, as dlfferenhated from 111vestor confidence, has had wide alternatmg sWlngs of optimlsm and pesslmism for the past two years and wlll con- tmue to be subject to the same type of action for a longer penod of hme. Investor confldence has been at a hlgh level since 1955. It has been based on the underlying basls forces of (1) An mcreasing populatlOn wlth increased needs and the income to purchase these needs. (2) 1- labor shortage. (3) 1-1 high rate of capital expendlture necessltated by a need to mcrease produchvity. A 11 of these factors will result m higher earmngs and higher price levels for the common stocks of soundly managed companies. There will be temporary interruphons and restmg spells llke the present 16 -month trad111g area whlch wlll probably contmue for a year or more longer. EDMUND W. TABELL '.ALSTON & CO. INC. This market letter IS not. and under no circumstance'! IS to he construed as, an offer to sell or a soilcltnhon to buy any securitIes referred to herem The mformat!on contained herem IS not guaranteed as to accuracy or completeness and the furnishmg thereof IS not, nnd under no Circumstances IS to beconstrucd as, a repregentatlon by Walston & Co Inc All e(pressLOns of opmlOn are subject to change Without notice \Val&ton & Co, Inc, or any Officer, Director or Stockholder thereof, may hl,,'e 'In mwrest the securities mentioned herem ThiS market letter IS mtended and presented merely as a general, Informal commentary on day to day lIe\H, and nut us a complete analysls AddItIOnal mformatlOn .Ith respect to any secUrities referred to herem Will be furntshed upon request. \\ N 301

– -… … – —. ..—– .. .' Wdlston &- CO.———Inc.– Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Swa,IBnd) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIR.E SYSTEM TABELL'S MARKET LEnER August 30, 1957 After reaching intra-day lows of 43. 93 on the Standard & Poor 500-Stock Index and 469.03 on the Dow-Jones Industrials on Monday, compared with February lows of 42. 17 and 453.07, the market rallied and, after a testing of the lows on Thursday, closed the week on a strong tone at 45. 2Z and 484. 35.The decline brought the averages into oversold terntory on my technical indicator and a second buy signal was given on Tuesday confirm- ing the signal given the previous week. From a technical viewpoint, recent action has, in my opinion, highlighted two factor The first is that it has strengthened my opinion that the market will remain in the broad 16 -al.ea for a-long-otime.,-po ssiblycfor a -year-oL more .-Just- as cthe-r-e cent failure to penetrate the April, 1956 and August, 1956 highs enlarged the potential top if the l6-month tradmg range turns out to be a major top or distributive pattern, the decline has resulted in the enlargement of the potential base if the same trading area turns out to be a maJor reaccumulation or consolidating area. However, the technical patterns of in- dividual issues appear to preclude the probability of a wide move in either direction for a long time. There are not enough issues with sufficient distributive patterns to indicate a broad general decline nor are there enough issues with sufficient accumulative patterns to indicate a broad general advance. I continue of the belief that the l6-month trading range will continue for the foreseeable future. It is possible that there will be minor pene- trations on either or both sides of 50-42 and 525-450 area. After all, an average is an im- perfect indicator of an ove raIl market. However, I do not believe there will be a decisive penetration of more than a very small percentage in either direction untll well into 1958 or possibly 1959. I also continue of the belief that the eventual penetration of the area will be on the upside. The second factor is the action of individual groups and stocks on the decline. Best ,relative strength performances were turned 111 by groups that hitherto have been relati-vely mediocre performers for the past year or so. In a very broad sense, consumer and con- sum er durable issues resisted the decline and now show up very well on my relative . strength'charts. -This, of course, isf6je expected-as this 1ypeoCcompany is-more aefen- 'sive in nature and would normally be expected to hold up better during a declining phase. However, there is an added technical factor that these groups have built up fairly large 'base patterns over the past year or more and are in a position to witness a fairly strong price advance. It is entirely possible that any advancing tendencies that might take place within the continued trading area will be under new leadership. The groups that fall into this category include food, food chains, retail stores, drugs, cans, baking, finance, arm machinery, cement, glass, and automobiles. It may be that issues of this type may take over temporarily from the capital goods issues. However, there are quite a few capital goods issues that also have above average patterns. The stocks in the growth groups like the chemicals, alum1l1ums, papers, etc., mostly are in the long te- dious process of forming bases. This may take considerable time before it results in any broad upswing, but issues of this type should be added to portfolios on weakness. After a long period in the doldrums, WESTERN PACIFIC (611/2) originally recom- by this letter a year ago, has recently been one of the better acting equities in the rail group. Basis for the recent better action stems from company's current estimate earnings of better than 10 per share before funds will be shown in 1957 vs. a de- 6.29 in 1956. This compares with earlier estimates of 8 per share, and it will represent the only gain of these pr.oportions to be shown by any.major rail in 1957.- Closer examination of recent statements is even more gratifying. Most analysts had agreed tJ-at main attractiveness of WRS lay in the huge amounts spent on modernization n past years. They believed these amounts would payoff in greater efficiency by 1960-62, n;hus allowing increased earnings despite the end of accelerated-amortization tax benefits . . would now appear, however, that part of the fruits of this capital program are already Ibeing reaped. For the month of June, 1957, WRS had reduced its maintenance ratio to 25.50/0. The full-year flgure may be as low as 280/0, a level of efficiency that was not ex- pected to be reached until 1960. Operating ratio in June was 66.60/0 and may be as low as 700/0 for the full year. This could be further reduced to 650/0 with growth in traffic. Ap- these ratios to proj ected 1960 revenues of 65 million would permit earnings of 13-15 per share, making full allowance for the expiration of ta i\lJl'QT;WQ 1)/, xTPbe!inEebfiikts. . ThIS market letter is not, and under no cIrcumstances is to he construed as, nn offer to sell or n sohcltation to buy any sccurVtes re erred to herem The mformatlOn contmned herem IS not Kuaranteed &s to aCCUfIlC) or completeness and the furnlshlnK by Walston & Co, Inc All expressIOns of opinion arc subject to change wIthout notIce Walston hi'e or'1iny-Ci'rfll!et.I.I'Jlrl!l!btoer construed ns, a representatIon or Stockholder thereof, may have an Interest In the securitIes mentIOned herem. This market Jetter is mtended and presented merely as 11 general, Informal commentary on day to day market \ \-n..'.B.n.d.nU.t..B.oo.m.p..t'.Bn.B….' ,.u.,n.''.h'.d.UP.u.n..qu..t.W.N30.' I t \ \\