Tabell’s Market Letter – August 09, 1957

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. —