View Text Version (OCR)
Walston &Co. – – Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER August 19, 1960 For the first time in over a year, breadth-of-the-market action has begun to sho some strongly positive indications. Last week's action is typical. The Dow-Jones Industrial average, closing the week at 629.27, was only moderately above the close of a week ago at 626.18, and the average actually declined on Monday and Thursday. Despite the uninspiring perform- ance of the averages, more stocks advanced than declined, on every day this week, and daily advances have now outnumbered declines for twelve consecutive days. It seems safe to predict that weekly advance/ decline figures wi-ll-.show that,-for -the-period just ended, far more stocks moved ahead than retreated. All this has had a marked effect on breadth-of-the-market stUdies. At their week' high of 631. 42, the Dow Industrials were some thirty points below the high of 663.64 reached two months ago. However, a week ago, the breadth index equalled its June high and appears certain to surpass it this week. Although figures are not yet available, the breadth index could even advance sufficiently to equal the March high which would place it in new high territory for the period since the January decline. The daily breadth in- dex has already exceeded the June high. In other words, a study of the price movements of all stocks reveals considerably better action than that exhibited by the market aver- ages — the first time this has occurred in many months. Volume figures corroborate the picture above. On a 25 -week-moving-total basis, upside volume reached a new high for 1960, and downside volume, which made a new low last week, declined further. Ten-week figures, which have been favorable for some time, continued their favorable action. On both a spread between advances and declines continues to narro W basis, the tlfls action is typical of the beginning of an intermediate uptrend. –' As was pointed out last week, the base forrrwffn the -Jones now gives an upside indication of somewhere aro st i2J' become-iQC1 un– –comineaat-thls prospect, e s – -YC– -e this prediction in the of the longer term outlook for the thi etter has stated repeatedly, it is expected that the range of I c market for the next three to five'years If this is to be the cas ,a ju the mid-point of this range. A move abov 700 would place e a K 1 breadth-of-the-m c r quarter of the area. Thus, while favorable eases the probabilities of an intermediate-term up- move, any such mo ove current levels would greatly increase the risk in- volved in owning equi This is a factor which should be kept in mind, especially when, as and if, an sustained rise above current levels occurs. Most shifts in market trends in recent years have been concurrent with a pro- nounced change in leadership, and it seems probable that this will be the case over the next few months. This letter has previously mentioned laggard groups which have cently shown fairly important reversals of relative strength. The aircrafts now appear to be in a positive uptrend and preliminary buying evidences were shown last week by the coppers and oils. Steels and airlines also have shown some upturn in recent weeks, although to a less pronounced degree. Meanwhile, other groups which had previously been market leaders, have deteriorated somewhat in terms of relative action. This includes department stores, electronics, food, office equipment, and soft drinks. Drugs and tobaccos, on the other hand, also market leaders for some time, have con- tinued to act relatively well. Other groups which have shown poor relative strength, such as aluminums, autos, cheInicals, machineries, papers, and rubbers, exhibit little or no improvement. Thus, current indications are that a certain amount of judicious switching of portfolios should now be undertaken to take best advantage of a probable impending. market uptrend. If a sustained rise occurs, strength should probable be used for the acceptance of profits and the partial reduction of equity commitments. Dow-Jones Ind. 629.27 Dow-Jones Rails 139.73 EDMUND W. TABELL WALSTON & CO. INC. A ')ilT. 8rnB This market letter IS not, and under no circumstances 19 to be construed .(lS, an offer to Bell or a soliCitation to buy any secUrities referred to herein The mfor.matlon contained herem IS not guaranteed as to accuracy or completeness and the furnlshmg thereor IS under no cIrcumstances 18 to be construed as, a representa tIon by Walston & Co., Tnc All e'tpresslOns of opimon are subject to change Without notice. walston & Co. Inc., and OffIcers, Directors, Stockholders and Employees thereof, purchase, sell and may have an mterest m the SCCUTIUCI mentIOned herein ThiS market letter IS mtended and presented merely as a general, mformal commentary on day to day market news and not as a complete analYSIS AdditIOnal mformatlOn With respect to any securities referred to herein Will be .. .. . .. .. . .