Tabell’s Market Letter – September 16, 1960

Walston &- Co. Inc fiLE COlli' Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHJCAGO OFFICES COAST TO COAST AND OVERSEAS TAULL'S MARKET LETTER September 16, 1960, Apparently, the most important question confronting the financial world at the moment is whether or not the triple bottom formed by the Dow-Jones Industrial aver age at 596.20 in March, 596.96 in May and 597.30 in July will hold and,if it -does not hold, how much selling will come into the market on the downside penetration. Seeing that Thursday's intra-day low was 598.26, and Friday's low was 598.22, the Industrial average is, in football parlance, holding on the one-yard line. Perhaps a few technical observations might be in order at this point. (1) In my opinion, whether or not the triple bottom holds is relatively unim- portant outside of a temporary psychological effect. Regardless of theopiriion expressed in a book that is on the best seller list, buying or selling on upside or downside penetra- tions on stop orders can be an expensive procedure, particularly when there are a , large number of individuals doing the same thing. (2) My technical opinion continuously stressed for over a year is that the stock market is in the fifth and final phase of an advance that started in 1949, and is no longer undervalued. Whether the tops have been reached is still problematical. Final market phases are usually quite dynamic and are accompanied by excessive volume turnover in low-priced speculative shares. (3) This letter feels that the stock market, as measured by the Industrial average, is going to hold in a wide trading range for several years. The upper limit of this range will probably be about 700, with possible upside excursions to the 750 level. The downside potential appears to be 550 with temporary dips to around the 525'level. If the average is to hold mainly between the 700 and 550 it would appear that the upper third of this range should u e future, lrghten holdings in undesirable situations and that the lower third of e e we 00 and 550, should be used as an accumulation area for situations with a active amental and technical the 0 but, in mY….2pinion, . (4) As ew sM;' nuary, the technical top formed at the August, 1959-January 1 had three downside potentials. The first was h1\h'li 578 and 550. I, r on four occasions. The other two were 600-550 area as a broad buying range. (5) If arch lows hold, a very sizable potential base will have been formed. he Ide potentials will not be ascertainable until the pattern is but t otential would be well above 700. A downside penetration would, of course, destroy the pattern and necessitate a new base in the 600-550 area. (6) Breadth-of-the-market action has been slowly improving. The fact that this is happening while the market is going down is not at all unusual. For example, breadth action started to deteriorate late in 1956, and the averages continued higher until mid-1957. Breadth started to improve in January, 1958, but the market did not start its advance until four months later. The breadth action started to deteriorate in April, 1959, despite the fact that the advance continued until late July. The of breadth to improve in October-December, 1959 indicated the decline that started at the turn of the year. Improving action in the breadth index does not mean that new lows may not be reached by the averages. It simply indicates that the buying-appears to be slowly turning better than the selling, particularly on periods of price weakness. (7) The next advancing phase when it occurs will be selective. For the in- vestment holder, safest purchases today can be found in the issues that have not adv.anced sharply, but have a good fundamental and technical background. Issues that fall into this category include American Viscose (35 1/2), Cluett Peabody (56 3/4), Daystrom (35 3/8), Diamond National (36) Electric Storage Battery (51 3/4), Johns Manville (53 l/!) , Singer Mfg. (55 3/4)and Swift & Co. ('42 IHl. For the speculator, suggest a package purchase of the low-priced issues in the August 12th letter. EDMUND v7. TAB ELL Dow-Jones Ind. – 602.18 VvALSTON & CO.INC. Doc; TonES Rails 192.42 This market letter 15 not, and under no CIrcumstances is to be construed as, an offer to sell or a solicitation to buy RlY securities referred to herem The mformation contained herem IS not guaranteed as to accuracy or completeness and the furnIshIng thereof IS not. and under no Circumstances is to be construed as. a representa tion by Walston & Co., Inc All expresSions of opinion are Bubjeet to change Wlthout nottce. Walston & Co., Inc, and Officers, Directors, Stockholders and Employees thereof, purchase, sell and may ha\e an mterest in the secuntles informal commentary on day to day market news an4 not as a complete analysIs herem ThlS AdditIonal mformatlOn letter IS mtended With respeet to any and presented me securlttes referred retolyhae.Breamgve.n;i1c1rtblle. furnlShed upon request. . . . , \\