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———— ,/ Walston &Co.– Inc, \ Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND OVERSEAS FILE CHICAGO TABELL'S MARKET LETTER Riverside, Conn. October 21, 1960 I,arri;ved horne from the, hospi!a11ate last week and expect'to spend another two or three at home aftftr my recent operation. With the limited amount of work I have been able to do, it has not been possible for me to follow individual stocks, to any great extent, but I have been checking the price movement of the averages over tq.e past sever weeks. My conclusions are somewhat ,as follows. , The tqp formed in the Dow-Jones Industrial aver-ages at a'round the 685 level of July 195'9 and 1960 indicated the triple possibility of 600, 578 and 550. This pattern wa,s earlier in ,the year. The first obj held thr.ee,times, but was finally penetrated last month. The market has declined to about midway between the two lower objectives at the September low of 565.49. There is an outside possibility that the rally to 663.64 in J.une may have broadened the top. If this proves to be the case, the downsid potential is 500. I consider this rather doubtful and would be more inclined to go along with a low somewhere around 550, with possibly a very temporary low somewhat below ') this figure during a selling climax. terms of the Standard & Poor 425-Stock Industrial average, the comparable July 1959-January 1960 top indicates a decline to 55 1/2 – 52. The recent low was 55.52.It also must be borne in mind that the areas around the triple top formed in both averages during 1956 and 1957 should furnish strong support. On the Dow-Jones Industrials, these three tops are between 524 and 523, so it would be expected that support should be met around the 530-510 area. On the Standard & Poor's Industrials, tops are around the 53-52 level, so here again support should be met at 53-50. All of this implies that if the 550- level in the Dow-Jones Industrials does not hold, there temporary dip to some where around the 530-515 level and comparable levels 0 e & Poor's. Another approach wO,uld be to use the' two clin the last fifteen years as yardsticks for a possible decline in the mar Dow-Jones Indus- .triill d,eclired from decline of roughly 25. During of he dard & Poor average deciined from a high of around 18 to a low 0 1 decline of approximately 220/0. In the 1957 decline, the 20 from 524 to 416, while the Standard & Poor's Ind rdhl around 52 1/2 to about 43, or a.decline of 17. In the pre t D ones Industrials have declined from 688 to 565, or approximately 0 h t & P's have declined from 64 to 55, or approximately 14. Declines comp 1946 and 1957 would bring the D-J Industrials to 550,based on the 11157 decline, 510 based on the 1946 decline. In terms of the S & P Industrials, the equivalent to the 1957 decline would bring the Industrial average dqwn to around 50, while an equivalent of the 1957 decline would bring the average down to around 53 1/2. All of this implies that while there is a distinct possibility that the September lows might be broken in both averages, any further weakness would probably be a long term buying opportunity. However, when such a point is reached, the action of individual groups and individual securities will be of prime importance. . The recent action of the gold stocks brings a certain aIJlount of near-term uncer- tainty into the technical pattern. Issues in this group broke out oll the upside of trading ranges in which they have held for ten years. A reaction on Friday b'rought them back to support levels. Obviously, these are extremely speculative situations based on fear . of possible devaluation of the dollar. This, according to informed sources, appears rather remote at the momt;lnt. The effect appears to be psychological, but just what form it will take is uncertain. As far as the general market'is concerned, it would appear that the result will probably be bearish over the shorter-term'and possibiy lend an in- flationary background over the 10nger-term;As far as the gold stocks are concerned, higher prices seem indicated over a period of, time .In a nutshell, I still feel that the market will'hold,in,a,wid,e tracJing area for eral years. The lower boundaries of this range are somewhere between 550 alld on the Dow-Jones, and 55 to 50 on the Standard & Poor's Industrials. a dip below 550, if it occurs, would be largely temporary. On further weakness, the tech- nical pattern suggests the purchase of selected issues. ,ltnd d 'h cumstances IS to be construed is, an offer to to herein. The informatIOn tinned-be . JII2)c K\QlT'WtCCtt or completeness and the furnJshmg thetVMikbwIi) 6s to be construed WI, a representa of opinion are subJect to change wlthout notice Walston & Co. Inc, and Offleers, Dlreetorn, Stockholders and Employees thereof sell and may have an mterest In the securities mentioned herein. This market letter 18 intended and presented merely as a general, mformsl on day to day market news any not as a complete analysis. Addltional informatIon With respect to any securities referred to herein . ., —– — — – — —–.