Tabell’s Market Letter – September 09, 1960

Walston &Co. Inc FILE Member8 New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHlCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER September 9, 1960 Last week's market action was hardly encouraging. The averages dropped off sharply in the first two days of the week, and, with declines heavily outnumbering advances, the weakness extended throughout most of the list. The Dow-Jones Industrials reached a low of 607.39 on Thursday before holding and finally staging a moderate rally on the final day of the abbreviated week. Volume, both on the decline and the subsequent rebound, was unimpressive. However, in order to be discouraged by this week's action, it would be necessary for the technician entirely to disregard all of the positive technical signs given by the market during the past month. This we refuse to do. This week's action will certainly result in some deterioration of breadth and volume figures. The deterioration will hardly be sufficient to reverse the positive trends of the past few weeks. Final breadth figures for last week are, of course, not available at this' writing. However, it is worth reviewing just where volume and breadth indices will probably stand when the final figures are in. As mentioned above, the averages declined this week to 607, very close to the thrice-tested low around the 600 level. NevertheleS's, the weekly breadth index will undoubtedly be above, or not much lower than, the level it reached in FebruaryMarch when the average was around 635 and in June when the average reached a peak over 660. 0 Volume figures are equally impressive. s s, upside volume has been 75.3 million shares and downside volume ee 8 illion. Thus, on On- – side-figu-res. volume. , the longer term .. st abve lor, side volume is slightly above upside volume. Twenty-five-week . ,w , are somewhat less susceptible to near-term market is worthy of note that this week's downside total of som 184 . i Ii well below the level of over 200 million shares which pre ai u hrough July. Upside volume of about 178 million shares is . e 150 -170 million range in which it held through most of 1960. Wit oi' to details of the interpretation of the above figures, suffice it to say that t are extremely positive. There is, of course, no law saying that the market cannot continue to drift lower in the face of favorable breadth indications. Were there such a law, market analysis would be an exact science which, most emphatically, it is not. On the basis of technical work, however, it must be considered as probable that the market will hold around the already-tested 600 level. Any projection based on probability, however, must be considered in the light of risk involved if the projection turns out to be wrong. Here again we return to the long-term projection so often voiced by this letter — the indication that the market should hold roughly within the 550-750 range over the next three to five years. This would mean that any sharp decline below 600 would bring the market to the 600-550 range which has been repeatedly mentioned as a favorable area for new stock purchases. Should the 600 level hold, the previously mentioned upside objective of 700 -720 would still be valid. Thus, in the most simple terms, with the Dow-Jones Industrials at around 615, there is a potential gain of better than a hundred points on the upside nieo.sured against some sixty points risk on the downside'. Any further weakness enhances these odds. It therefore becomes apparent that investment odds at this moment strongly favor the purchase of stocks. Any further weakness would probably present one of the best buying opportunities for equities in quite some time. Dow-Jones Ind. – 614.12 EDMUND VV. TAB ELL ,lenstances is to be construed as, an to sell or a to herem. The Information .ctto'6' not guaranteed ns to accuracy or completeness and the furnishing thereof IS not, and under no Clrcumstanees 18 to be construed 88, n representn& Co, Inc. All expressions of opmion are subJect to change Wlthout notice '\Yalston & Co, Inc, and Officers. DIrectors. Stockholders and Employees thereof, purchase, sell and maY haye an mterest in the securities mentioned herem ThlS D!a.rket.letter IS mtended and presented merely.as a general, W'J imformal commentary on day to dny market news anq not as a complete analYSIS Additional mformatlOn With respect to any securities referred to herem l 3b . 0